We have already reported on the Annual Tax Act 2018whose draft bill was presented by the Federal Ministry of Finance on 25 June 2018. The government draft adopted by the Federal Cabinet on 1 August 2018 has the amended title "Draft Act to Avoid VAT Losses in the Trade of Goods on the Internet and to Amend Other Provisions". The title corresponds to one of the main focuses of the draft, which is to curb VAT fraud in online trade, particularly by companies based in third countries that are not registered for tax in Germany. This objective is to be achieved by obliging all operators of electronic marketplaces to collect certain data from sellers. In addition, the operators are to be liable for unpaid taxes from deliveries via their marketplaces, with the possibility of being exempted from this liability if certain record-keeping obligations are complied with and tax-dishonest traders are excluded from the marketplaces.

Compared to the draft bill, the government bill contains the following additions and amendments in particular:

  • The assessment basis for determining the non-cash benefit in connection with the provision of company cars to employees (so-called 1% method) will be halved for electric and certain hybrid vehicles purchased or leased between 1 January 2019 and 31 December 2021. This means that only half the gross list price is to be recognised for these vehicles. Half the assessment basis should also apply to journeys between home and the first place of work.
  • The old restructuring clause in Section 8c (1a) KStG is to be applied again retroactively to acquisitions of shareholdings after 31 December 2007. This change is the result of a decision by the ECJ on 28 June 2018, in which it annulled a decision by the EU Commission from 2011, which had declared this restructuring clause to be state aid in breach of EU law.
  • Compared to the draft bill, a provision has been removed according to which a limited tax liability can also arise on the sale of shares in property corporations with a stake of less than 1%. The minimum shareholding requirement of Section 17 EStG (1%) now applies.

The legislative process should be completed by the end of 2018 so that the regulations can enter into force as planned.