Proposals for Reforming Corporate Tax Law
Attractive tax conditions are a key factor in Germany’s appeal as a business location. This includes not only the level of the tax burden but also modern corporate tax systems. To date, however, these have contained numerous obstacles for German companies. As a result, important, standard, and business-necessary initiatives—such as restructuring, investments, and their financing—are hindered.
Bureaucracy Hinders Investment and Transformation
Modernization is needed in many areas of corporate tax law to make the current legislation more efficient, less bureaucratic, and more conducive to economic growth. We need a tax code that supports innovation and risk-taking and guarantees entrepreneurial flexibility.
The goal of modernizing corporate taxes is not to reduce the tax burden, but rather to refine specific regulations. By reducing bureaucracy and ensuring systematic consistency in corporate taxes, the competitiveness of businesses can be stabilized through small steps without a significant impact on tax revenue.
Advancing Structural Reform of Corporate Taxes
The tax framework for German companies must undergo structural reform, and barriers to investment in Germany must be removed. The BDI therefore proposes the following measures to modernize corporate taxes:
Introduce group taxation
Current Situation:
- A formally concluded profit transfer agreement (EAV) effective for at least 5 years
Objective:
- A simple group taxation system through a joint application by the companies within the tax group
- Minimum Ownership
- No mandatory 5-year commitment required
Ease the interest deduction limitation
Revise the “gold-plating” of the EU directive:
- Convert the exemption threshold into a tax credit
- Repeal of the prohibition on carrying forward EBITDA and the partial prohibition on deducting carried-forward interest
- Repeal the restriction on funding for public infrastructure projects requiring that such funds come from public budgets
Remove obstacles to restructuring
- Standardize holding periods
- Simplifying documentation requirements
- Enabling the carryover of losses in typical corporate reorganizations
- Facilitation of tax-neutral conversions and contributions in cases involving a tax consolidation group
- Moving away from the “overall plan” concept, including in the case of contributions of SBVs
Expand loss carryback
Loss carryback:
- Expansion to an unlimited amount or, at a minimum, permanently to more than ten million euros
- Introduction of a corresponding loss carryback for trade tax
Loss carryforward:
- Complete elimination of the minimum tax requirement for loss carryforwards