Germany's Bundestag Finance Committee approved an amended Annual Tax Act 2026 on 11 November, with coalition parties voting in favour and opposition groups divided. The committee's report describes the removal of a proposed tax disadvantage for people on prolonged assignments away from their regular workplace. The bill still envisages doubling certain tax arrears and refund interest rates from 2027. The committee vote advances proposed legislation; it does not itself put the changes into force.
Key facts
- The CDU/CSU and SPD supported the bill in committee; AfD and Greens opposed it, while The Left abstained.
- A proposal to shorten the period for identifying a first workplace from 48 months to 24 months was dropped.
- Certain tax arrears and refund interest rates are proposed to rise from 1.8% to 3.6% annually starting in 2027.
- Additional provisions concern tax allowances for children living elsewhere in the EU or EEA and limits on deductions for cash business payments.
Why the travel-expense amendment matters
The government's original proposal would have shortened the period after which a person working on an extended assignment could be treated as having a first workplace. Instead of the existing 48-month period, the draft envisaged 24 months. That distinction can affect the tax treatment of journeys and meal allowances, depending on an employee's actual circumstances and how an assignment is classified.
The change drew objections from experts concerned about professional and fixed-term soldiers, construction workers and staff working on long infrastructure projects. In the committee account, coalition lawmakers say they responded by deleting the proposed reduction. The original 48-month period therefore remains the relevant benchmark on this point, rather than the shorter period the government initially sought. This is a specific amendment to a broader tax bill, not a general reversal of every other proposed measure.
The committee also refers to changes meant to remove tax disadvantages when a property is sold in certain divorce situations. Separate provisions seek to prevent abusive share-exchange arrangements. A ban on deducting business expenses is proposed where the relevant payments were made in cash above a €10,000 threshold. Their full practical application will depend on the precise final statutory wording, rather than the committee's short account alone.
How interest and cross-border families would be affected
The tax interest proposal has a clear numerical comparison. The initial Bundestag account of the bill said the monthly rate for certain tax arrears and refunds would rise from 0.15% to 0.3%, equivalent to 1.8% and 3.6% a year. The committee report retains the proposed 2027 timing. Those interest rules apply in defined tax-law circumstances; they should not be confused with every late-payment penalty, loan interest rate or commercial charge.
The Federal Finance Ministry's explanation of the original draft linked the revision to changes in wider interest-rate conditions. The proposal could mean more interest owed when qualifying tax liabilities are subsequently assessed, but also higher interest paid to taxpayers when a qualifying refund arises. Whether that happens, and the relevant transitional dates, remain matters for the final enacted law.
The draft also addresses parents whose children live in another member of the European Union or the European Economic Area. Instead of reducing child tax allowances by reference to what was considered necessary and appropriate in the child's state of residence, the measure would allow the full allowances in the specified cross-border cases. The Bundestag says it responds to European Court of Justice case law concerning unequal treatment of mobile workers and families.
Party reactions underline that a committee majority does not erase disputes over the wider tax package. Coalition lawmakers welcomed changes following expert testimony and input from the Bundesrat. Greens criticised outstanding concerns including international minimum-tax arrangements; The Left raised distributional issues affecting workers and single parents; AfD objected to other features of the package. These are attributed political positions, not independently established effects.
For employees, cross-border families and businesses, the next decisive point is parliamentary adoption of the precise wording and applicable commencement provisions. The 11 November committee decision is a procedural advance, not confirmation that the proposed 2027 amounts or deductions already apply.
