Episode 2: Growth Opportunities Act - an overview
The Growth Opportunities Act was introduced by the federal government in response to several economic and social challenges. It aims to address the economic consequences of the Corona pandemic and the Russian invasion of Ukraine.
In the Stückmann Podcast episode #2, Prof. Dr Oliver Middendorf, Niels Doege and Florian Weeg give an assessment from their experience as tax advisors, auditors and lawyers on the structuring opportunities and challenges posed by this new "small tax reform" with the following main topics:
Tax depreciation
According to the government draft for a Growth Opportunities Act, the threshold values for low-value assets and collective items as well as the special depreciation according to § 7g EStG will be increased. The HLB Stückmann Tax Podcast also discusses the planned (re-)introduction of declining balance depreciation for fixed assets and residential buildings.
Accumulation relief
The retention allowance according to § 34a EStG is to be improved. The HLB Stückmann Tax Podcast outlines the future opportunities and application risks in connection with the planned § 34a EStG.
Interest barrier/interest rate barrier
From 2024, the interest deduction restriction under Section 4h EStG and Section 8a KStG is to be adapted to the requirements of the EU Anti-Tax-Avoidance-Directive (ATAD). The HLB Stückmann Tax Podcast is dedicated to the expansion of the previous definition of interest as well as the further tightening changes in the exemptions and its effects on taxation practice. In addition, the introduction of a limit on the amount of interest is critically discussed.
Loss offsetting
In the area of loss offsetting, the HLB Stückmann Tax Podcast deals with the planned tax relief measures in the area of the carry-forward and carry-back of losses and practical application examples that illustrate the possible relief effects in the future.
CONCLUSION
What remains of the Growth Opportunity Act in the area of taxation? The improved depreciation conditions are to be welcomed. These could contribute to a growth spurt. The regulations on the taxation of retained profits in partnerships and on offsetting losses are somewhat improved. However, the significant improvements still contained in the draft bill have unfortunately not found their way into the legislative process.
However, the significant tightening of the interest expense deduction is not likely to encourage companies to invest, but rather to slow them down. This is especially true if the investments have to be debt-financed.
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