Key points of the planned tax reform 2022

The Ministry of Finance has published an overview of the planned tax reform. Further legislation and entry into force remain to be seen.

Relief for work and pensions:

Reduction of wage and income tax: from 1.1.2022 reduction of the 2nd rate bracket from 35% to 32,5% and from 1.1.2022 reduction of the 3rd rate bracket from 42% to 41%.

Reduction of health insurance contributions by up to 1.7 percentage points from 1.7.2022 for employees and self-employed persons up to a gross monthly income of € 2,500 and for pensioners up to a gross monthly income of € 2,200.

Employee profit-sharing: From 1 January 2022, employers can pay their employees a profit-sharing bonus of up to € 3,000 per year tax-free in addition to their salary.

The Family Bonus Plus will be increased from € 1,500 to € 2,000 per child and year (up to the 18th birthday). The higher Family Bonus Plus will be taken into account for the first time from 1.7.2022. Consequently, the Family Bonus Plus will increase by € 250 in 2022 and by € 500 per year from 2023.

Relief for the economy:

Corporate income tax will be reduced in stages: to 24 % in 2023 and to 23 % from 2024.

Increase in the limit for low-value assets: The value limit for the immediate depreciation of "low-value assets" (GWG) will be increased from € 800 to € 1,000 as of 1 January 2023.

Profit allowance: The basic allowance of the profit allowance will be increased from 13% to 15%.

Compensation of the CO2 price:

CO2 pricing and compensation: CO2 pricing is an independent levy. The technical implementation of the introduction of this levy is to take place in stages in order to be able to build up the necessary structures for a trading system on the one hand and to keep the administrative burden for those affected as low as possible on the other. It will not be the emitters of CO2 emissions (e.g. car drivers) who will be obliged to implement the CO2 pricing, but those companies that bring fuels and heating fuels into circulation (trading participants, e.g. manufacturers of fuels and heating fuels).

Regional climate bonus: To cushion the CO2 price, a regional climate bonus will be introduced for households. This should be regionally graduated. In urban centres with the highest-ranking public transport accessibility, the bonus should amount to € 100. In rural communities it will be € 200.

Clean-Heating-Offensive: A total of € 500 million has been earmarked for the phase-out of oil and gas heating and the switch to renewable energy.

Introduction of an investment allowance:

As of 1 January 2023, there will be a basic investment allowance of 10% and a bonus for ecological investments of 5%.

Taxation of cryptocurrency: