Federal Government Counter-Statement on the JStG 2026
The Federal Government has commented on the Bundesrat (Federal Council) statement regarding the government draft of the Jahressteuergesetz 2026 (JStG 2026, Annual Tax Act 2026). The counter-statement is dated 30 September 2026 and forms part of Bundestagsdrucksache 21/8283 (German Bundestag printed paper 21/8283), which contains the Federal Government’s draft bill with annexes. The lead ministry is the Bundesministerium der Finanzen (BMF, Federal Ministry of Finance).
The Bundesrat had previously deliberated on the draft on 25 September 2026 at its 1068th session and adopted a comprehensive statement. The basis included, among other documents, Bundesratsdrucksachen 447/26 (Bundesrat printed papers 447/26), 447/1/26, 447/2/26 and 447/26(B). The draft had been submitted to the Bundesrat on 14 August 2026.
In the further legislative process, the Bundestag (German Federal Parliament) deliberated on the draft at first reading on 8 October 2026. Following the planned debate, referral to the Finance Committee as the lead committee was to take place. The first deliberation is documented in the verbatim record of the 99th session of the Bundestag.
Status of the Procedure and Key Lines of the Draft
Lead-up to the Annual Tax Act 2026
The government draft was preceded by a ministerial draft of the Bundesministerium der Finanzen dated 19 May 2026. A deadline of 12 June 2026 was set for comments from associations. The Federal Cabinet adopted the government draft on 12 August 2026.
In addition to numerous individual amendments, the main focuses of the draft include, in particular, adjustments to tax interest, the purchase price allocation for developed real estate, withholding tax relief under § 50c EStG (German Income Tax Act), and the wage tax withholding procedure. The draft also contains provisions on VAT fiscal unity. Compared with the ministerial draft, the planned start date for the new provisions on § 2c UStG-E (Draft German VAT Act) was postponed from 1 January 2029 to 1 January 2030; in future, the legal consequences of fiscal unity are to arise only upon an express declaration.
Interest Rate Increase as a Core Measure
The planned doubling of the interest rate for late-payment interest and refund interest from 2027 is regarded as a central measure of the government draft. The monthly interest rate is to rise from 0.15 percent to 0.3 percent. This corresponds to an increase from 1.8 percent to 3.6 percent annually.
The Federal Government justifies this adjustment by reference to the generally increased interest rate level. The increased interest rate is to apply not only to late-payment interest to the detriment of taxpayers, but equally to refund interest in favour of taxpayers.
Federal Government Approval of Federal State Demands
The counter-statement shows that the Federal Government agrees with several proposals from the Bundesrat. These relate in particular to amendments in income tax law and corporate income tax law.
Tax-Neutral Share-for-Share Exchange under § 20 para. 4a EStG
The tax-neutral share-for-share exchange under § 20 para. 4a sentence 1 EStG is to be narrowed in future. It is planned that the provision will apply only to the exchange of shares within the meaning of § 43 para. 1 sentence 1 no. 1a EStG, i.e. shares held in custody accounts, or comparable foreign shares for corresponding shares.
According to the explanatory memorandum, this amendment is intended to remove the basis for structuring arrangements in this area. The Federal Government’s approval therefore concerns a limitation of the scope of application of the tax-neutral share-for-share exchange.
Earn-Out Payments in Disposal Transactions
The Federal Government also agrees to a statutory provision on the retroactive allocation of earn-out payments to the assessment period of the disposal. The background is the judgment of the Bundesfinanzhof (BFH, Federal Fiscal Court) of 9 September 2023, case no. IV R 9/21.
The provision is to be included in § 16 para. 2 sentence 4 EStG-E (Draft German Income Tax Act) and § 17 para. 2 sentence 4 EStG-E. For reasons of legitimate expectations protection, it is to apply for the first time to taxable events under §§ 16 and 17 EStG that occur after 31 December 2026.
Loss Rule under § 8c KStG
A clarification is also to be made in corporate income tax law. A new § 8c para. 1 sentence 9 KStG (German Corporate Income Tax Act) is to provide that, in addition to current losses and loss carryforwards, particularly under § 10d EStG, further categories of losses also count as losses under § 8c para. 1 sentence 1 KStG.
Losses under § 2a EStG, § 15 para. 4 EStG, § 15a EStG and § 15b EStG, as well as comparable losses, are mentioned. The intended addition therefore has a clarifying character for the scope of application of § 8c KStG.
Requests for Review and Bundesrat Demands Still Outstanding
With respect to further proposals by the federal states, the Federal Government intends, according to its counter-statement, to carry out a review or comply with the corresponding requests for review. According to the status described, this is not associated with final incorporation into the law.
Simplification of § 15a EStG
The Bundesrat proposes fundamentally simplifying § 15a EStG. This would involve determining the loss offset volume across fiscal years on the basis of contributions, referred to as the capital contribution model.
At the same time, the loss offset based on existing external liability within the meaning of § 171 HGB (German Commercial Code) is to be eliminated. The Federal Government intends to review this demand.
Retention Relief under § 34a EStG
A further request for review concerns retention relief under § 34a EStG. In future, the application to claim this relief is to be revocable, following the model of the two-year loss carryback, until the notice for the second following assessment period becomes final.
To date, reference has been made in this respect to the next assessment period. In addition, it is to be examined whether retention relief can already be taken into account when setting advance payments.
Low-Value Assets and Pool Depreciation
The Bundesrat also calls for an increase in the threshold for immediate depreciation of low-value assets. According to this, the threshold in § 6 para. 2 EStG is to rise to EUR 1,200.
In return, the collective item rule or pool depreciation is to be abolished. According to supplementary specialist information, this relates to § 6 para. 2a EStG; in the initial presentation, § 6 para. 3 EStG was mentioned differently in this respect.
Transfer Subject to Reserved Usufruct
By adding a new sentence 4 to § 6 para. 3 EStG, a tax-neutral transfer of businesses or parts of businesses subject to reserved usufruct is to be made possible. The proposal is connected with the judgment of the Bundesfinanzhof of 29 January 2025, case no. X R 35/19.
The aim of the proposal is to restore the previous view of the tax authorities. In this respect as well, the counter-statement initially provides for a review.
Depreciation Based on Shorter Useful Life
With regard to building depreciation, the request for review provides that depreciation based on a shorter useful life than the typified useful life should in future be possible only if the building already has a shorter useful life at the time of its completion. This concerns § 7 para. 4 sentence 2 EStG-E.
The scope of this amendment depends on whether, and in what version, the legislator takes up the proposal in the further procedure. The Federal Government has not held out the prospect of immediate adoption, but rather of a review.
Transfers Between Sister Partnerships
The Bundesrat’s statement also contains a proposal for transfers of assets between sister partnerships. In § 6 para. 5 sentence 3 no. 4 EStG, the requirement of identical participation levels of the same co-entrepreneurs is to be waived for transfers after 31 December 2026.
In addition, the provision is to be extended to transfers in return for the granting or reduction of partnership rights. This point, too, is among the demands that the Federal Government intends to review.
Structural Measures and Reduction of Bureaucracy in Corporate Tax Law
The federal states have also called on the Federal Government to develop packages of measures together with them. These are to concern structural measures in the area of corporate taxation as well as simplification and the reduction of bureaucracy.
Simplification, typification, lump-sum approaches and digitalisation are mentioned in particular. According to the status described, this request is also to be reviewed. In specialist reporting, it was noted in this context that, according to reports, a further draft bill could be expected in the foreseeable future.
Rejection of an Increase in the Minimum Trade Tax Multiplier
Particularly noteworthy is the Federal Government’s negative stance on the further increase in the minimum multiplier for trade tax demanded by the Bundesrat. The Bundesrat had suggested an increase from 280 percent to 300 percent as of 1 January 2027.
The Federal Government rejects this demand in its counter-statement. According to the professional assessment of the Bundesministerium der Finanzen, the target figure of 280 percent set out in the coalition agreement sufficiently takes account both of the tax policy objective and of the constitutional requirements to be observed.
The tax policy objective cited is the avoidance of purely tax-motivated use of municipalities with low multipliers. At the same time, the Federal Government refers to the remaining right of local self-government of the municipalities, which must continue to be sufficiently safeguarded.
Further Content of the Government Draft
In addition to the points particularly highlighted in the counter-statement, the government draft contains further regulatory areas. According to the BMF press release, these include, among other things, an amendment concerning relief from withholding tax on investment income.
In future, large shareholders subject to limited tax liability with shareholdings of at least 10 percent are to be treated in the relief procedure like large shareholders subject to unlimited tax liability. In addition, the draft deals, among other things, with statutory purchase price allocation for developed real estate and simplifications for withholding tax relief under § 50c EStG.
Outlook for the Parliamentary Procedure
Following the first reading in the Bundestag, the legislative procedure is in the further parliamentary process. The draft was to be deliberated on by the Finance Committee as the lead committee.
Whether and to what extent the Bundestag will incorporate Bundesrat demands into the Jahressteuergesetz 2026 remains to be seen. According to the information reproduced in the source text, the Bundestag resolution in the second and third readings was reportedly planned for 13 November 2026. The specialist press expected the legislative resolution by the end of 2026.
Frequently Asked Questions
What is contained in the Federal Government’s counter-statement on the Annual Tax Act 2026?
The counter-statement contains approvals, commitments to review and rejections regarding Bundesrat demands on the government draft of the Annual Tax Act 2026. It forms part of Bundestagsdrucksache 21/8283 as an annex.
What practical consequences could the planned interest rate increase in the JStG 2026 have for companies?
The planned increase in the interest rate for late-payment and refund interest from 2027 may have a greater financial impact on tax payments and tax refunds. The rate is to apply equally to subsequent payments to the detriment of taxpayers and refunds in favour of taxpayers.
Will the minimum trade tax multiplier be increased to 300 percent in the Annual Tax Act 2026?
The Federal Government rejects the increase in the minimum multiplier from 280 percent to 300 percent demanded by the Bundesrat. According to the status described, it remains open whether the Bundestag will adopt rules deviating from this in the further procedure.
Assessment for Tax Matters
The Annual Tax Act 2026 affects numerous areas of tax law and, depending on the structure of the final act, may be of varying significance for companies, investors and high-net-worth individuals. MTR Legal Rechtsanwälte advises clients on the tax law classification of legislative changes and their significance for business and private structures. Further information is available at Legal advice in tax law.
