# Bundesrat Calls for Amendments to the 2026 Annual Tax Act > The opinion on the 2026 Annual Tax Act concerns § 15a EStG, low-value assets, earn-outs, § 8c KStG and trade tax rates. Source: https://www.mtrlegal.com/en/bundesrat-calls-for-amendments-to-2026-annual-tax-act/ · Language: en · Updated: 2026-10-21 --- **Update of 21 October 2026:** The Federal Government has responded to the Bundesrat’s opinion on the government draft of the [2026 Annual Tax Act](https://www.mtrlegal.com/wiki/jahressteuergesetz/). With regard to the VAT-related points, it rejects two of the Bundesrat’s proposals and has agreed to review the VAT identification number for partnerships as potential controlled companies within a VAT group. ## Bundesrat issues opinion on the 2026 Annual Tax Act On 25 September 2026, the Bundesrat (Federal Council) issued an extensive opinion on the government draft of the 2026 Annual Tax Act. The draft was referred to the Bundesrat on 14 August 2026 pursuant to Art. 76 Abs. 2 GG (Basic Law for the Federal Republic of Germany) and was processed there under [printed matter number 447/26](https://www.bundesrat.de/SharedDocs/beratungsvorgaenge/2026/0401-0500/0447-26.html). In the 1068th session of the Bundesrat, the 2026 Annual Tax Act was the subject of deliberations as agenda item 35. The deliberations were accompanied by a committee recommendation under BR-Drs. 447/1/26 (Bundesrat printed matter) and a plenary motion under BR-Drs. 447/2/26. The government draft was preceded by a ministerial draft of the Bundesministerium der Finanzen (Federal Ministry of Finance). According to the procedural overview, this draft is dated 19 May 2026; the deadline for associations to submit comments ended on 12 June 2026. According to the source document, the ministerial draft is dated 19 May 2026; the deadline for associations’ statements ended on 12 June 2026. According to the press release of the Bundesministerium der Finanzen, the Federal Cabinet adopted the government draft on 12 August 2026. The source document states 13 August 2026 in this regard. In the Bundestag (Federal Parliament), the draft is processed under [printed matter number 21/8283](https://dserver.bundestag.de/btd/21/082/2108283.pdf). In the government draft, the Bundesministerium der Finanzen highlights in particular the new independent rules on [VAT group taxation](https://www.mtrlegal.com/wiki/organschaft/) as a core element. ## Classification of the government draft in the legislative process ### Deliberation in the Bundestag and referral to committees The Bundestag deliberated on the government draft in its first reading on 8 October 2026 and subsequently referred it to the committees. The Finance Committee is the lead committee. According to reports, the Bundestag’s resolution in the second and third readings is scheduled for 13 November 2026. On Monday, 2 November 2026, from 4:00 p.m. to 5:30 p.m., the Finance Committee of the Bundestag will hold a public hearing on the 2026 Annual Tax Act in the Paul-Löbe-Haus, room E 400. The registration deadline for participation is 1 November 2026. In addition to the 2026 Annual Tax Act, the same hearing will also address a bill by the AfD parliamentary group to amend the Abgabenordnung (AO, Fiscal Code), which is listed under BT-Drs. 21/3025 (Bundestag printed matter). A key point of the government draft concerns full interest accrual pursuant to § 233a AO (Fiscal Code). An increase in the interest rate from 0.15 percent to 0.3 percent for each full month is planned from 2027. This corresponds to an annual interest rate of 3.6 percent. The legal basis for the planned increase is § 238 Abs. 1a AO-E (draft Fiscal Code); it is intended to apply in all cases in which interest arises after 31 December 2026. ### Participating Bundesrat committees Before the Bundesrat issued its opinion, recommendations from several committees were available. In addition to the lead Finance Committee, the Committee on Labour, Integration and Social Policy, the Committee on Agricultural Policy and Consumer Protection, the Economic Affairs Committee and the Committee on Urban Development, Housing and Regional Planning dealt with the proposal. In addition to individual tax provisions, the committee recommendations also contain references to specific risk situations faced by agricultural and forestry businesses. In the plenary session, representatives from Baden-Württemberg, Lower Saxony and North Rhine-Westphalia issued statements on the 2026 Annual Tax Act. ## Key demands of the Bundesrat ### § 15a EStG: simplification through capital contribution model The Bundesrat advocates a fundamental simplification of § 15a EStG (Income Tax Act). To facilitate the application of the law, the loss offset volume arising from contributions is to be determined across fiscal years. This concept is referred to as the capital contribution model. At the same time, loss offsetting on the basis of existing external liability within the meaning of § 171 HGB (Commercial Code) is to be eliminated. The demand therefore concerns not only a simplification of the calculation, but also a restriction of liability circumstances previously taken into account. ### Low-value assets and pooled depreciation According to the Bundesrat’s opinion, the threshold for the immediate write-off of low-value assets pursuant to § 6 Abs. 2 EStG is to be raised to EUR 1,200. At the same time, the collective item or pooled depreciation pursuant to § 6 Abs. 2a EStG is to be abolished. The demand is therefore aimed at changing the depreciation system for assets with low acquisition or production costs. According to the demand, a parallel continuation of pooled depreciation alongside the increased immediate write-off amount is not envisaged. ### Tax-neutral transfer subject to a reserved usufruct The Bundesrat calls for § 6 Abs. 3 EStG to be supplemented by a new sentence 4. Under this provision, the transfer of businesses or parts of businesses subject to a reserved usufruct is to be possible on a tax-neutral basis. The background is the judgment of the Bundesfinanzhof (BFH, Federal Fiscal Court) of 29 January 2025, case no. X R 35/19. The proposed rule is intended to restore the previous administrative view on this point. ### Shorter useful life for buildings For depreciation of buildings, a useful life shorter than the typified useful life is in future to be taken into account only under more restrictive conditions. Under § 7 Abs. 4 Satz 2 EStG-E (draft Income Tax Act), this is to be possible only if the building already has a shorter useful life at the time of its completion. The demand therefore concerns cases in which taxpayers claim a shorter actual useful life. Under the proposed rule, the relevant factor is to be the condition or useful life already at the time of completion. ### Transfers between sister partnerships For transfers of assets between sister partnerships, the Bundesrat calls for an amendment to § 6 Abs. 5 Satz 3 Nr. 4 EStG. For all transfers after 31 December 2026, the requirement of identical participation ratios of the same co-entrepreneurs is to be dispensed with. In addition, the provision is to be expanded to include transfers in exchange for the granting or reduction of partnership rights. The demand therefore concerns both the participation ratios and the consideration level in the transfer. ### Earn-out payments in disposals The Bundesrat also addresses the tax treatment of earn-out payments. In response to the judgment of the Bundesfinanzhof of 9 September 2023, case no. IV R 9/21, such payments are to be attributed back to the assessment period of the disposal. This is envisaged in § 16 Abs. 2 Satz 4 EStG-E and § 17 Abs. 2 Satz 4 EStG-E. For reasons of legitimate expectations, the new rule is to apply for the first time to taxable events under §§ 16 and 17 EStG that occur after 31 December 2026. ### Advance payments and retained profits By deleting § 37 Abs. 3 Satz 5 EStG, the preferential treatment for retained profits under § 34a EStG is to be taken into account already when determining advance payments. The demand therefore concerns the point in time at which the tax benefit may be included in the calculation of advance payments. ### Use of losses under § 8c KStG The Bundesrat calls for clarification in § 8c Abs. 1 KStG (Corporate Income Tax Act) by inserting a new sentence 9. According to this provision, in addition to current losses and loss carryforwards, particularly under § 10d EStG, losses under § 2a EStG, § 15 Abs. 4 EStG, § 15a EStG and § 15b EStG as well as comparable losses are also to be included among the losses under § 8c Abs. 1 Satz 1 KStG. The proposed clarification therefore concerns the scope of application of the restriction on loss deduction for corporations. It is intended to determine which loss items are to be included in the rule. ### Minimum trade tax assessment rate According to the Bundesrat’s demand, the minimum assessment rate for trade tax is to increase from 280 percent to 300 percent as of 1 January 2027. This would require an amendment to § 16 Abs. 4 Satz 2 GewStG-E (draft Trade Tax Act). The demand follows on from earlier deliberations. In committee recommendations on another legislative proposal, a further prompt increase in the minimum assessment rate to 300 percent was already described as appropriate in order to counteract tax-motivated corporate relocations. The starting point was an initiative by the Hamburg Senate of 28 April 2026 calling for a higher minimum assessment rate to combat what is known as trade tax dumping. An increase in the minimum assessment rate from 200 percent to 280 percent from the 2027 assessment period had previously already been adopted by the Ninth Act Amending the Steuerberatungsgesetz (Tax Consultancy Act). The Bundesrat’s demand now raised in connection with the 2026 Annual Tax Act builds on this. ## Further points in the Bundesrat opinion ### Private disposal transactions involving divorce real estate At the initiative of Baden-Württemberg, the Bundesrat calls for real estate arising from divorces to be exempted in future from taxation as a private disposal transaction under § 23 EStG. The background is the case law of the Bundesfinanzhof, according to which making a property available to a divorced spouse does not constitute use for one’s own residential purposes. In this context, the Bundesrat refers to a situation of compulsion that may arise from the separation year required under civil law. Baden-Württemberg’s Minister of Finance Danyal Bayaz has publicly commented on the Bundesrat’s decision and described the current legal situation as a tax trap. ### Requests for review regarding further individual rules Beyond specific demands for amendments, the opinion contains several requests for review. These include the question of whether the amendment to § 50c Abs. 2 Satz 6 EStG necessitates an accompanying adjustment to § 50j EStG. A further request for review concerns § 39e Abs. 4 Satz 5 EStG in the event of late notification by the employer. The wording as a request for review shows that, in this respect, no final statutory amendment is being demanded, but rather that a need for further clarification is seen. ### VAT group taxation For the planned new regulation of VAT group taxation in § 2c UStG-E (draft Value Added Tax Act), the government draft provides for a later introduction than the ministerial draft. According to the government draft, the rule is to apply only from 1 January 2030. By contrast, the ministerial draft had provided for 1 January 2029. According to the text of the government draft, § 2c Abs. 1 UStG-E covers legal entities and partnerships. The effects of the VAT group are to be limited to internal supplies between the parts of the enterprise located in Germany. During the consultation process with associations, the new rule was also viewed critically. In its statement, the Verband kommunaler Unternehmen in particular criticised that, while the draft would prevent undiscovered VAT groups, it would not protect taxpayers from the consequences of a wrongly assumed VAT group and would not include public-law institutions. ## Federal Government’s counterstatement on VAT issues ### Suspension of the limitation period in the case of a wrongly assumed VAT group The Bundesrat proposes an amendment to § 2c Abs. 2 Satz 3 UStG-E. Under this amendment, the assessment period should in this respect not end before the expiry of one year after the amended tax assessment notice has been issued, cancelled or amended. In the Bundesrat’s view, the draft version of § 2c Abs. 2 Satz 3 UStG-E is linked to a specific chronological sequence of tax assessment notices. The intended suspension of the limitation period would therefore only take effect after the tax assessment notice of one member of the VAT group has been cancelled, amended or issued for the first time within the assessment period because of the wrongly assumed VAT group. This issue was illustrated in the opinion by means of an example. The Federal Government rejects this proposal. It justifies this on the grounds that the wording proposed by the Bundesrat would also first require an amended tax assessment notice in order for the suspension of the limitation period to take effect. The objective of extending the assessment period for tax assessment notices of the other parties to the wrongly assumed VAT group independently of the sequence of notices would therefore not be achieved. At the same time, the Federal Government shares the assessment that possible tax shortfalls resulting from incorrect notifications should be effectively addressed. The federal-state working group “Reform of VAT group taxation” is to examine organisational measures on the basis of the described facts in order to counter such case constellations in a legally secure manner. ### VAT identification number for partnerships For VAT purposes, controlled companies in a VAT group are not independent taxable persons in Germany. Nevertheless, at the application of the controlling company, they may be issued their own VAT identification number. The basis for this is § 27a Abs. 1 Satz 3 UStG (Value Added Tax Act), which to date provides this application right only for controlled companies in the form of legal entities. Since § 2c UStG-E is to allow partnerships as controlled companies in a VAT group in future, the Bundesrat asks the Federal Government to review an adjustment. It is to be examined whether the application right for the issuance of a VAT identification number should also be extended to partnerships until the new rules on VAT group taxation become applicable. The Federal Government has announced that it will comply with this request for review. ### Revocation of the waiver of the small business VAT exemption The Bundesrat also proposes reformulating § 19 Abs. 3 Satz 4 UStG concerning the revocation of the waiver of the tax exemption for small businesses. Under this proposal, the revocation would take effect from the beginning of the taxable period following the revocation, but no earlier than from the beginning of the first taxable period after the expiry of the binding period of the waiver pursuant to § 19 Abs. 3 Satz 3 UStG. By way of justification, the Bundesrat points out that the current wording could be understood differently in practice and therefore requires clarification. The Federal Government rejects the proposal. It states that the rule applicable since 1 January 2025 corresponds to the version applicable until 31 December 2024. No ambiguities in application had been known in this regard; for that reason, the rule was incorporated unchanged in substance into the revised version of § 19 UStG. The Federal Government does not see any need for a clarifying amendment. ## Structural changes and reduction of bureaucracy A plenary motion by the State of Hesse also found a majority in the Bundesrat. Accordingly, the Bundesrat sees a further need for structural changes in tax law beyond the provisions of the bill. The Bundesrat asks the Bundesministerium der Finanzen to work together with the Länder to develop packages of measures and to present corresponding bills promptly. The request concerns in particular the following areas: - structural measures in the area of corporate taxation, - simplification and reduction of bureaucracy, in particular through simplification, typification, lump-sum arrangements and digitalisation. Beyond the VAT-related points presented, the Bundesrat opinion concerns, among other things, loss offsetting for limited partners, preferential treatment for retained earnings, low-value assets, real estate taxation, business succession and trade tax. The Federal Government adopts individual demands made by the Länder. The extent to which further demands of the Bundesrat will be incorporated into the legislative process remains subject to parliamentary deliberation. According to current planning, the parliamentary procedure for the 2026 Annual Tax Act is to be completed by the end of 2026. Further amendments to the government draft are possible in the ongoing legislative process. The Bundesrat’s opinion and the Federal Government’s counterstatement are important for the further deliberations, but they do not replace the Bundestag’s final decision on the definitive content of the Act. ## Frequently asked questions ### JStG 2026 Bundesrat opinion: What changes is the Bundesrat calling for? The Bundesrat calls, among other things, for amendments concerning § 15a EStG, low-value assets, transfers subject to reserved usufruct, earn-out payments, § 8c KStG and the minimum trade tax assessment rate. The opinion also contains requests for review and demands regarding structural changes to tax law. ### JStG 2026 VAT: How does the Federal Government respond to the Bundesrat? With regard to the VAT-related points, the Federal Government rejects the proposed amendment on the suspension of the limitation period in the case of a wrongly assumed VAT group as well as the reformulation of § 19 Abs. 3 Satz 4 UStG. It intends to take up the request for review concerning the VAT identification number for partnerships as controlled companies in a VAT group. ### JStG 2026 § 16 Abs. 4 Satz 2 GewStG: What does a minimum assessment rate of 300 percent mean for companies? The Bundesrat’s demand would raise the minimum trade tax assessment rate to 300 percent from 1 January 2027. Practical effects could arise in particular for companies in municipalities with previously low assessment rates, provided that the Bundestag takes up the demand. ### JStG 2026 divorce real estate § 23 EStG: What is the Bundesrat demanding? The Bundesrat calls for real estate arising from divorces to be exempted in future from taxation as a private disposal transaction under § 23 EStG. The background is the case law of the Bundesfinanzhof on the lack of use for one’s own residential purposes when the property is made available to the divorced spouse. ## Tax classification of the further legislative process Following the Bundesrat’s opinion and the Federal Government’s counterstatement, the 2026 Annual Tax Act remains a multifaceted legislative project with numerous individual provisions. For companies, investors and high-net-worth private individuals, the precise scope of individual amendments, transitional rules and application dates in particular may be significant. For legal questions regarding the tax implications of the legislative process, MTR Legal Rechtsanwälte provides support with [legal advice in tax law](https://www.mtrlegal.com/rechtsberatung/steuerrecht/).