The Federal Ministry of Finance has withdrawn its plan to eliminate the tax allowance for employee discounts. This decision was outlined in the new draft of the Income Tax Reform Act 2027, as reported by the newspaper “Die Welt” (Thursday edition). The draft, dated August 18th, no longer includes any change to Section 8, Paragraph 3 of the Income Tax Act. Initially, the Ministry, led by Lars Klingbeil (SPD), aimed to save around 240 million euros through the scrapping of this allowance.
According to sources within the Ministry of Finance cited by the newspaper, the abolition of the allowance for employee discounts will not be pursued under this specific legislative initiative. It was stated that all measures for cutting subsidies that had not been explicitly agreed upon by the coalition committee have now been removed from the draft. However, the possibility of further pursuing the elimination of subsidies in a separate future project remains, and those discussions are not yet concluded.
The removal of the subsidy cuts from the legislative draft raises the projected minimum tax revenue for 2027 to a total of 1.55 billion euros. Previously, the Ministry had projected minimum revenues of 935 million euros. Furthermore, tax revenues for the subsequent years are expected to be approximately 600 million euros lower.
The initial plan to abolish the tax allowance for employee discounts had caused disagreements within the Black-Red (SPD-Greens) coalition. Fritz Güntzler (CDU), the financial policy spokesperson for the Union parliamentary group, sharply criticized the Finance Ministry’s initiative in “Die Welt.” He argued that such a reduction contradicted the coalition’s goal of supporting low- and middle-income citizens, stating it was “the opposite: it would be equivalent to a disguised salary cut.”
Although the “Handelsblatt” (Thursday edition), referencing an email from the Chancellor’s Office to the Ministry of Finance, had previously reported that the abolition of tax subsidies was “unified” among the parties, the Ministry of Finance is now retracting its plan.
