10.09.2025German Tax and Legal News
MOF issues draft Tax Amendment Act 2025
Draft bill includes mainly tax relief measures for individuals and several other tax technical amendments
The German Ministry of Finance (MOF) on 5 September 2025 published a first draft of the Tax Amendment Act 2025 (Steueraenderungsgesetz 2025), which proposes mainly tax relief measures for individuals and several other tax technical amendments.
The main content of the draft tax bill can be summarized as follows:
- Permanent application of the reduced 7% VAT rate to food supplies in restaurants and bars starting from 1 January 2026 (the reduced VAT rate would not include supplies of beverages); the measure aims to provide economic support to the catering industry and to prevent distortions of competition and (re-)introduce the reduced 7% VAT rate that was already in place for the period 1 July 2020 to 31 December 2023 on a permanent basis;
- Increase of the standardized deduction for commuters to EUR 0.38 per kilometer for travel between home and the place of work and for long-distance commuters for family visits when maintaining two separate households;
- Increase of the tax exemption for part-time activities of trainers and volunteers working for public entities engaged in charitable, benevolent, and ecclesiastical purposes to EUR 3,300 and EUR 960, respectively;
- Increase of the threshold for nontaxable commercial activities carried out by tax-exempt entities that pursue exclusively and directly charitable purposes from EUR 45,000 to EUR 50,000 per year;
- Qualification of operating a photovoltaic system as not being harmful for purposes of a charitable purpose; and
- Introduction of e-sports as a new charitable purpose.
Once approved by the governing coalition, the draft bill will enter into the formal legislative process for consideration in the lower house of parliament (Bundestag) and the upper house of parliament (Bundesrat).
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