BDO Analyzes Key Changes in German Tax Law Proposal for 2026
BDO AG has released an analysis of the German government's draft for the 2026 Tax Law. The proposal includes changes to the allocation of purchase prices for properties, simplifications for withholding tax relief, and a reform of VAT group taxation.
BDO AG Wirtschaftsprüfungsgesellschaft, a prominent German auditing and consulting firm, has provided an analysis of the government's draft for the 2026 Tax Law (Jahressteuergesetz 2026).
The analysis outlines several significant proposed changes that will affect both businesses and individuals. These include new regulations for allocating the total purchase price of developed properties, procedural simplifications for withholding tax relief, and a fundamental reform of the VAT group taxation system. The draft also addresses adjustments to interest calculations on tax liabilities.
A notable aspect is the proposed clarification on how to allocate the total purchase price of a developed property between land and building if the contractual allocation is missing or does not reflect market realities. The new provision aims to ensure that the allocation is based on market values and judicial precedent.
Furthermore, the draft proposes reducing the minimum duration for an assignment to be considered a "first place of work" within Germany from 48 months to 24 months, while keeping it at 48 months for foreign assignments. These changes are relevant to remote work and employee assignments. The new provisions are set to be implemented gradually, and BDO's analysis offers an overview of both the government's initial draft and subsequent comments from the Bundesrat and the government.