The Federal Government intends to lay the groundwork in the coming days to enable the state to directly transfer funds to citizens based on their income during future economic crises. According to the “Süddeutsche Zeitung,” citing internal sources, the Federal Ministry of Finance is currently developing a ‘formulation aid’ that is expected to be submitted to the coalition parliamentary groups of the CDU/CSU and SPD by next week. This framework will subsequently be incorporated into the 2026 Annual Tax Law.
If both the Bundestag and the Bundesrat approve this measure, it would establish the necessary legal basis to allow the Federal Central Tax Office (BZSt) to exchange tax data with the state tax authorities. This is a prerequisite for the federal government to disburse income-dependent crisis aid to citizens starting in 2027.
The “Direct Payment Mechanism” (DAM) has been a long-standing topic of political discussion. Furthermore, most economic experts agree that in the event of a cyclical, financial, or energy crisis, direct monetary transfers to citizens are far more targeted and effective than mass handouts such as gas rebates, tax cuts, new subsidies, or other costly, broad-stroke support measures.
The newspaper further reports that the Ministry of Finance has already completed the technical development of the DAM. However, two critical issues remain: linking the bank accounts of many individuals to their respective tax IDs, and ensuring the BZSt possesses accurate knowledge of each citizen’s income status.
This second gap is now being addressed. Regarding the missing bank account information, the government anticipates that millions of people will report their IBANs as soon as the first direct payment is announced. Currently, data submission is possible through the online tax portal Elster, the “BZSt IBAN+” app, or via one’s domestic bank.
