Federal Finance Minister Lars Klingbeil (SPD) plans to simplify the tax system using a package of 28 measures. This comes from a draft of the Tax Simplification Act 2027, which the Handelsblatt has reported on and which is currently being discussed in an early stage within the federal government. The plan provides for a tax exemption for smaller severance packages under certain conditions and mandates electronic tax returns.
The exemption should apply to severance payments up to 5,000 Euros if a new employment relationship begins within four months. The draft specifies that the tax exemption is only valid if the new employment relationship lasts uninterruptedly for at least six months. Furthermore, the severance payments must be regulated within a collective bargaining agreement. Individuals earning 800 Euros in supplementary income per year will no longer be required to submit a tax return. Klingbeil also intends to abolish tax classes III and V with the law. Tax classes III and V will no longer be applied for wage tax deduction starting January 1, 2030.
The plan also includes relief measures for companies. Partnerships should be able to switch to corporate tax more easily, among other things, through more flexible handling of special business assets such as real estate. According to the draft, the law will not bring about major financial relief. The primary goal is to ease the burden on citizens and companies, reduce bureaucratic workload, and accelerate the taxation process.
