The Act to Strengthen Growth Opportunities, Investment and Innovation as well as Tax Simplification and Tax Fairness — the Wachstumschancengesetz — is intended to improve the liquidity of companies. Relief worth EUR 3.2 billion is to encourage investment and innovation. That matters for the economic transformation, for competitiveness and for Germany as a business location.
This article sets out the key changes brought by the Wachstumschancengesetz.
1. Private use of electric vehicles
The ceiling on the gross list price for the private use of company electric vehicles rises from EUR 60,000 to EUR 70,000.
For electric vehicles with no CO2 emissions (fuel cell vehicles included), only a quarter of the assessment base has to be applied under the 1% rule and under the logbook method — until now only up to a gross list price of EUR 60,000.
To promote sustainable mobility and to reflect higher purchase prices, the ceiling rises to EUR 70,000. This applies to vehicles made available to employees as well, and to electric cars acquired after 31 December 2023.
2. Gifts to non-employees
From 2024, higher amounts may be spent on gifts to clients or business partners. The threshold for deductible gifts to non-employees rises from EUR 35 to EUR 50.
This applies to financial years beginning on or after 1 January 2024.
3. Declining-balance depreciation
Declining-balance depreciation is reintroduced for a limited period.
Declining-balance depreciation for movable assets was introduced on 1 January 2020 by the Second Corona Tax Assistance Act and extended to 31 December 2022.
In view of the current situation, declining-balance depreciation may also be used for assets acquired or produced between 31 March 2024 and 1 January 2025. The rate applied may not exceed twice the straight-line annual rate and is capped at 20%.
4. Cross-border financing arrangements
New rules for cross-border financing arrangements and financing services in the Foreign Tax Act replace the interest rate ceiling that has been removed (§ 1 Abs. 3d and 3e AStG).
The adjustments are intended to curb profit-shifting strategies and to define the arm’s length principle more clearly, so that profits are taxed where they arise. International groups are to be prevented from deducting interest expenses through cross-border financing and thereby reducing their taxable base. Strict requirements apply to loan interest, which has to withstand an arm’s length comparison, and the debtor has to be able to demonstrate credibly that the loan will be repaid.
This applies from the 2024 assessment period.
5. E-invoicing from 2025
From 2025, e-invoicing becomes mandatory and forms the basis for the future transaction-based reporting of B2B turnover to a nationwide reporting system.
Only invoices in a structured electronic format meeting the requirements of Directive 2014/55/EU count as electronic invoices. Other formats and paper invoices are referred to as “other invoices”.
The rules set out when e-invoices are mandatory and when other invoices remain permissible. For small-value invoices within the meaning of § 33 UStDV and for travel tickets within the meaning of § 34 UStDV, any type of invoice may still be used. For turnover between 1 January 2025 and 31 December 2026, other invoices may be issued instead of e-invoices with the recipient’s consent.
For companies with turnover of up to EUR 800,000 in the previous year, that exception runs until 31 December 2027. Electronic formats may be agreed where they meet the requirements of the European standard (EN 16931). The EDI procedure can be used on those terms after 2027 as well.
This applies from 1 January 2025.