Proposed changes in Germany’s annual tax bill drew criticism from trade unions, business associations and tax specialists at a public hearing of the Bundestag’s Finance Committee on November 2. Several participants warned of disadvantages for employees working unusual hours and additional obligations for businesses, according to the Bundestag’s report of the hearing.
The objections centre on pay supplements for Sunday, public-holiday and night work. The German Trade Union Confederation, or DGB, said the proposed rules could reduce the amount of those supplements that remains exempt from tax. It highlighted the consequences for occupations already carrying the burden of demanding working hours.
Supplements and employment contracts
Germany’s leading business associations also opposed the provision, the parliamentary report says. They expect employers to face extensive changes to employment contracts if they want to prevent workers from becoming worse off when tax-exempt components of their pay are reduced. The federal association of wage-tax assistance organisations likewise warned that supplements could reach the tax-free limit sooner under the proposed rules.
These are objections raised by organisations invited to the hearing. The parliamentary account does not calculate how much any individual employee would lose under the proposed change. It therefore does not support a blanket claim about the financial impact on all shift workers.
Travel expenses and reporting requirements
A separate dispute concerns the tax treatment of longer-term work locations. According to the report, the bill would shorten the relevant period for treating a location as an employee’s primary workplace from 48 months to 24. The German Taxpayers’ Association warned that some workers could consequently lose the more favourable treatment available for work away from their primary workplace.
The DGB also criticised those plans. The association of wage-tax assistance organisations singled out career and fixed-term military personnel and construction workers, warning of new difficulties in determining how the rules apply.
Taxpayer and business organisations also opposed the collection of additional information for annual wage-tax certificates. The German tax advisers’ association described the proposal as a continuation of the growing burden of reporting and cooperation requirements. The criticism therefore covers both possible consequences for employees and administrative work for employers.
Tax interest is also under discussion
The hearing also addressed a proposal to raise the monthly interest rate on tax arrears and refunds from 0.15 per cent to 0.3 per cent from 2027. Those figures correspond to annual rates of 1.8 per cent and 3.6 per cent. Germany’s federal chamber of tax advisers called for a broader restructuring rather than a change to individual interest provisions, the Bundestag reported.
The parliamentary account records an expert hearing on a bill, rather than a decision adopting it. The changes and potential disadvantages described there should consequently be understood as matters under legislative consideration and assessments made by participating organisations.