This is thought leadership article by PrimeGlobal member firm RGT Group which looks at new tax regulations in Germany to improve the climate.
On 20 September 2019, the governing parties in Germany presented various measures aimed to achieve the 2030 climate change targets. The package also includes some tax changes.
Travelling allowance, train journeys: The travelling allowance for commuters is to be increased from € 0.30 to € 0.35 when travelling more than 21 kilometres from 2021. The scheme is limited to the end of 2026. Long-distance rail travel with ICE and IC will be more affordable by reducing the applicable VAT rate from 19% to 7%.
Electric vehicles: Entrepreneurs using an electric vehicle or a plug-in hybrid vehicle for business purposes currently pay tax on 1% of the half of the list price as a private share of the tax. The climate package aims to reduce the tax base for the private use of pure electric vehicles from 0.5% to 0.25%. In addition, the exemption under the Motor Vehicle Tax Act (Section 3d KraftStG) is to be extended until 31.12.2025. In addition, the establishment of private car charging infrastructures in multi-family houses will be supported with a craftsman's bonus. Landlords should be obliged to tolerate such facilities.
Higher taxes on combustion vehicles: Anyone who buys a new vehicle with an internal combustion engine from the following year will have to reach deeper into their pockets when it comes to vehicle tax. For example, the tax base will mainly relate to the carbon dioxid emissions of a vehicle per kilometre and will be gradually increased above 95 g carbon dioxid/km.
Energetic refurbishments: Tax subsidies are also planned for property owners who carry out environmentally sound renovation measures. For example, the replacement of heating systems, the installation of new windows, the insulation of roofs and exterior walls will be promoted for tax purposes from 2020. According to the key points programme, tax support is to be 20% of the modernisation costs. These should be deducted from the tax liability.
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