Exemption limit in Germany from 35 to 50 Euros  

On 22 March 2024, the German Federal Council (Bundesrat) approved the Growth Opportunities Act. The draft bill already included an increase of the exemption limit for “expenses to persons who are not employees of the taxpayer” from 35 to 50 Euros. The passage passed the vote in both the German Parliament (Bundestag) and Federal Council (§ 4 Para. 5 Clause 1 No. 1 of the Income Tax Act – EStG).

For clarification due to many enquiries at the PSI: in this case, no administrative order of the Ministry of Finance to the tax authorities is required. It is rather a new legal regulation, which stipulates a new exemption limit for the tax authorities. It applies retroactively from 1 January 2024. The retroactive effect will only be significant for the industry in individual cases at best. The fact that the limit for promotional products has been raised from 35 to 50 Euros per recipient per year is likely to be very welcome in some industry segments. For a long time, this was desired, but it was also feared for a long time that this passage would fall victim to some legislative hurdle that the law would have to overcome.

However, other new regulations are also significant for companies in the promotional products industry as well as other companies: the digressive depreciation scheme for residential buildings and movable assets, the introduction of electronic invoices in the B2B segment starting next year, and the new regulation on loss carryforwards for four years. It can therefore be very worthwhile to discuss the new regulations of the Growth Opportunities Act with tax advisors and auditors.

Picture credits: Adobe Stock, Daniel Ernst