Changes due to the Tax Amendment Act 2024
Withdrawal of assets from partnerships
A large part of the changes relate to the Income Tax Act (EStG). The tax treatment of the transfer of assets from the private to the company assets of a partnership (= contribution) was already created last year. Now the reverse process, i.e. the withdrawal of assets from the company assets of partnerships to private assets, is recognised.
Like the contribution, the withdrawal process should be treated differently between minority interests and equity interests and divided into a sale and a withdrawal process. Accordingly, the transfer from the company's assets only constitutes a sale to the extent that the assets are no longer attributable to the other shareholders after the withdrawal. Accordingly, if the withdrawing taxpayer already held a 100% substantial interest in the partnership before the transfer to his private assets, there is no disposal transaction. The transaction is tax-neutral.
Start-up employee shareholdings
Recently, more and more virtual shares (phantom shares) have been issued to employees as a form of employee participation. This has enabled start-ups in particular to retain qualified employees without having to pay them high salaries due to a lack of liquid funds. The holders of phantom shares participate in the profits like conventional shareholders, but have no shareholder status or rights.
Since the tax regulation for start-up employee shareholdings has been in place since 1 January 2024, the possibility is now to be created to convert the previous remuneration in the form of virtual shares to start-up employee shareholdings by the end of 2025. To do so, the already known requirements for employee share ownership must be met. This regulation is necessary as the exchange would otherwise lead to a valuation and taxation of the non-cash benefit from the redemption of the virtual shares.
VAT exemption for small businesses from third countries
In the area of VAT, entrepreneurs who operate their business in another member state of the European Union (EU) will also be able to claim the VAT exemption for small businesses in future. The regulation does not apply to companies from third countries. The company's registered office is decisive. It is therefore not sufficient to have a permanent establishment in the EU. Entrepreneurs who operate their business in another member state must fulfil additional requirements in addition to the national turnover limit for the exemption to apply. For example, the EU-wide annual turnover must not exceed € 100,000 either in the previous calendar year or in the current calendar year and a corresponding application must be submitted.
Food donations
Food donations are currently treated as a withdrawal for VAT purposes. An adjustment to European requirements is now to be made. Accordingly, donations of food for charitable purposes are to be exempt from VAT without the exclusion of input tax deduction.