The Annual Tax Act 2022 (JStG 2022) is a typical article law consisting of more than 100 individual regulations across the board in tax law. It also contains important plans by the traffic light coalition to ease the tax burden on citizens. In doing so, it is also responding to the results of court rulings and to EU requirements. The law was passed by the Bundestag at the beginning of December. The Bundesrat gave its approval on December 16, 2022.
THE ANNUAL TAX ACT 2022 AND ITS MAIN CONTENTS
The Annual Tax Act 2022 contains a number of important changes, including but not limited to the following:
- Domestic study room and home office
- Income tax exemption for certain photovoltaic systems
- Increase in the straight-line depreciation rate for new residential buildings
- Special depreciation for the construction of new rental housing
- Increase in employee lump sum
- Increase in savers’ lump sum
- Pension expenses
Expenses for a home office can only be claimed as income-related expenses or business expenses for tax purposes if the home office is the center of the entire professional and business activity. In this case, the expenses for the study can be deducted for tax purposes without limitation. If the center of activity is not in the home office and no other workplace is available for the professional or business activity, the expenses are limited to a maximum of EUR 1,250 per calendar year. Previously, this was a personal maximum amount. Under the Annual Tax Act 2022, this can now be claimed by all persons who use the same workroom, so that this amount is multiplied.
The home office allowance has been continued and improved by the Annual Tax Act 2022. For each calendar day on which taxpayers work exclusively at home, an amount of EUR 6 can be claimed for tax purposes. The maximum amount increases in 2023 from the previous EUR 600 to EUR 1,260. It is important to know that the home office flat rate is included in the income-related expenses flat rate. It is therefore not granted in addition. This does not apply to expenses for work equipment that are not covered by the home office flat rate.
2. INCOME TAX EXEMPTION FOR CERTAIN PHOTOVOLTAIC SYSTEMS
The tax framework has been expanded for the acquisition of small private photovoltaic systems. The income tax exemption is limited in amount to a gross nominal capacity of 30 kWp on commercial properties and single-family homes, and to 15 kWp per residential and commercial unit for other buildings. Examples include multi-family dwellings and mixed-use properties. The phrase “used predominantly for residential purposes” was deleted from the law, so that photovoltaic systems located on buildings used for business purposes can also benefit from the tax exemption. The income tax exemption will apply retroactively from January 1, 2022, unlike the draft bill.
The 2022 Annual Tax Act increases the straight-line depreciation (AfA) rate for new residential buildings, from 2 to 3 percent, beginning in 2023.
4. SPECIAL DEPRECIATION FOR THE CONSTRUCTION OF NEW RENTAL housing
In addition to the above-mentioned increase in the straight-line depreciation rate, the possibility for special depreciation in new rental housing construction is reactivated, subject to the fulfillment of specific efficiency criteria. For example, the building in which the new apartment is constructed must meet the criteria for an “efficiency house 40”. Changes were also made to the maximum eligible assessment basis and the construction cost ceiling to be complied with.
5. INCREASE IN EMPLOYEE LUMP-SUM ALLOWANCE
Under the Annual Tax Act 2022, the employee lump-sum allowance will be increased again in 2023, from previously EUR 1,200 (in 2022) to EUR 1,230.
6. INCREASE IN SAVERS’ LUMP-SUM ALLOWANCE
The annual tax law of 2022 will also significantly increase the lump-sum savings allowance from EUR 801 to EUR 1,000 per year, and from EUR 1,602 to EUR 2,000 in the case of joint tax assessment. Trainees will benefit even more, as the training allowance will increase from EUR 924 to EUR 1,200 in 2023.
7. PENSION EXPENSES
Good news is that the full tax allowance for pension contributions has been brought forward in the 2022 Annual Tax Act. What was originally planned for 2025 will be implemented as early as 2023. The reason for this change is several rulings by the German Federal Fiscal Court (Bundesfinanzhof, BFH), which criticized the double taxation of pensions. Work is still underway on extending the taxation of pensions over time, but this is also to apply from 2023.
Source: Federal Ministry of Finance (in German only)
Photo: Steve Buissinne (Pixabay)
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