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The income taxation of German partnerships has a special feature in the form of "special business assets" (“Sonderbetriebsvermögen”). The consequences of an allocation of assets to the special business assets are far-reaching. These assets do constitute business assets (“Betriebsvermögen”), and unlike private assets for tax purposes, a non-taxable sale is no longer conceivable. In addition, in the case of commercial partnerships, special business assets are also included in the trade tax assessment basis. The German Federal Fiscal Court has described the "subtleties" of a contribution to and withdrawal from the special business assets in detail in a new ruling (file number IV R 20/23).

Alterations to a “tax regime” are notoriously difficult. Whether it is the transition from the tax-ation of capital income (Sect. 20 of the German Income Tax Act) to the flat-rate withholding tax regime (Sect. 32d of the German Income Tax Act) or the fundamental switch from the credit method to the half/partial income method for the taxation of corporations and their shareholders, frictions always arise at the intersection of the regimes. Which problems arose during the transition from the previous system of semi-transparent taxation of public investment funds to an opaque system on December 31, 2017?

The liability to trade tax (under Sect. 2 of the Trade Tax Act) is a prerequisite for any trade tax being charged in the first place. In many cases, this prerequisite is fulfilled without any problems – for example, in the case of an original commercial (“trading”) activity pursuant to Sect. 15(2) of the Income Tax Act (picked up by Sect. 2(1) sent. 2 of the Trade Tax Act). The situation is even more straightforward for corporations due to an assumption of a trad-ing activity by law (Sect. 2(2) sent. 1 of the Trade Tax Act). However, in which manner are foundations (“Stiftungen”) to be taxed under the Trade Tax Act?

From 1 January 2026 the reduced rate of 7 percent applies again to food, while beverages continue to be taxed at 19 percent. This change not only affects restaurants, but also canteens, food-trucks and event catering. For businesses this means that prices, cash register systems and processes have to be updated on time. The risks of errors and liability are particularly high at the turn of the year and in handling vouchers.

The European Court of Justice (ECJ) has clarified that tooling supplies, as they are known, are to be considered distinctly for VAT treatment and are not automatically an ancillary supply to the supply of parts, especially if the goods are not supplied in the same way. The judgement therefore has a crucial effect on the automotive and supplier industry and a direct impact on contract drafting, invoicing and input tax deduction.

The publication by the Federal Central Tax Office (Bundeszentralamt für Steuern) of the final version of the MiKaDiv Communication Handbook (in German) as of 10 December 2025 means the framework for the reporting procedure is in technical and processing terms now set in its binding form.

Since 1 January 2026 an important change came into force for all employers: the old paper-based procedure for reporting contributions to private health and private care insurance was replaced by a completely electronic data exchange procedure. The aim of this transition is to simplify the processes involved with payroll deduction, reduce sources of error and make the tax treatment of premiums for privately insured employees more efficient and legally certain.

Active pensions, electronic allowances, income thresholds, electric cars – as 2026 begins, employers are again facing numerous challenges in payroll and social security. These have come about from recent court decisions, the authorities changing their interpretations and new legal regulations.

German tax authorities appear to be re-evaluating the availability of withholding tax relief on dividend distributions to US-owned German entities treated as disregarded for US tax purposes. While no formal denial has yet occurred, recent information requests indicate a potential shift in administrative practice with significant implications for US investors.

Electromobility continues to gain importance—and there are also significant new developments in tax law: Starting January 1, 2026, the electricity price allowance will come into effect. Its purpose is to enable both employers and employees to settle electricity costs much more easily when the charging of a company car is initially paid privately, for example via a home charging station. The basis for this is the average annual electricity price for private households published by the Federal Statistical Office. In the future, employers can choose between providing proof of actual costs and using the new electricity price allowance. This not only reduces administrative effort but also allows for optimal tax treatment when reimbursing electricity costs.

Price is important, but by no means everything. Multinational companies must evaluate professional expertise, technology, governance, and transformation capability in a holistic way. This article shows which criteria really matter and what is essential in practice.

The selection of a global service provider is complex and strategically crucial. A properly structured selection process creates transparency, reduces risks and allows well-founded decisions to be made. Find out how you can carry out the market analysis, requests for proposal and evaluation of the bids.

A year after publishing its first circular on e-invoices, the Federal Ministry of Finance (BMF) has published a second circular to further define the rules on electronic invoicing. The Circular, dated 15 October 2025, updates the Circular of 15 October 2024 and amends the VAT Application Decree (Umsatzsteueranwendungserlass – UStAE). In this article, we explain the main changes and clarifications in the second Federal Ministry of Finance circular on e-invoicing. Businesses should familiarise themselves with the new requirements to check and validate e-invoices in advance to efficiently push forward the digitalisation of their invoicing processes.

Since 2022 the “everlasting deferral” for exits from Germany has also been rescinded and not replaced for changes to residence within Europe. Businesspeople and natural persons with shares in corporations of more than one percent now have to pay exit tax straight away. Distributing this in instalments over seven years is only a little help with liquidity planning be-cause the tax authorities usually require the full amount to be paid up front as security. A Polish court has now referred three questions to the ECJ, which, with regard to the European law concerns, could also be relevant to Germans moving abroad.

In our previous post we examined the success factors for international outsourcing projects. Now we show you which KPIs are crucial for quality, performance and compliance.

On October 15, 2025, the German Federal Government issued the draft for the so-called "Flexible Retirement Act" (“Aktivrentengesetz”). The aim of this law is to provide tax relief for employees who continue to work in jobs subject to social security contributions after reaching the statutory retirement age.