Current Tax Policy
The coalition agreement between the political parties CDU, CSU and SPD contains no major tax-policy plans for the 18th parliamentary session (2013 to 2017). Instead of structural tax reforms, the coalition is concentrating principally on maintaining the status quo and safeguarding its tax revenue. The only larger tax-policy measure is a modernisation of the tax law, combatting transnational tax-base erosion and profit shifting is planned as well asthe introduction of a financial transaction tax. Tax increases are not envisaged; in particular the German Government has correctly not included in the coalition agreement for this parliament session the much discussed, economically detrimental wealth tax, or an increase in the top rate of tax.
The German automotive industry’s competiveness and willingness to invest represent a major requirement for maintaining Germany’s business activities. The tax policy in the 18th parliamentary session should therefore primarily pursue the aim of supporting companies in the international competition between locations, and making investments in Germany more attractive. The proven and appropriate method of taxing company cars should remain in place and the general tax situation for electric vehicles should be improved. Structural reform is still urgently needed in the taxation of corporations and businesses, which requires ongoing modern structural adjustment. Furthermore, the network of double taxation agreements (DTAs) must be expanded and international tax law should be applied as an economic-policy instrument. In order to strengthen corporate investment and research activities in Germany, a competitive form of R&D promotion will be needed – for example by introducing tax incentives for research and development. At the very least, the Government should ensure that research investments are not hampered by the overall tax situation, for instance in the event of taxing the relocation of corporate functions. Another point is preventing risks of double taxation during DTA negotiations and the procedures for reaching an understanding on DTAs.
What the VDA is calling for
- Retention of the proven and appropriate taxation of company cars (“1% method”), and no orientation on aspects inconsistent with German tax systematics, e.g. ecological targets.
- Further improvements to the general taxation rules for electric vehicles (e.g. by introducing a special form of depreciation).
- No increase in fuel taxes; diesel in particular should not be subject to higher taxation.
- Continued environmental adjustment of the motor-vehicle tax.
- Measures to combat international tax evasion that do not disadvantage German companies.
- Improve Germany’s standing as an R&D location and avoid risks of double taxation in DTA policy.
- Continued reform of corporate taxation (modernise group taxation, facilitate re-structuring).
- Continued structural adjustment of trade tax.
- No tax increases, plus consistent simplification of tax law.
- Increased planning security and legal security in tax law.