In late 2014, the Federal Cabinet approved a key points paper on cutting red tape. This paper was added to the existing work programme, making it more powerful. Many of the points that are part of this programme have since been implemented or are currently being put into practice. The main relief under the first Cutting Bureaucracy Act was rolled out in 2016, and the Second Cutting Bureaucracy Act further reduces the administrative burden on companies by an additional 360 million euros per year.
The Cutting Bureaucracy Act
Under the new legislation, a greater number of small companies are exempt from the accounting and record-keeping obligations set out in the Commercial Code and the Tax Code. New companies now have more time until they must submit data to be used as part of the official statistics. This has been achieved by way of raising the relevant reporting thresholds from 500,000 to 800,000 euros. For the first time, this is also being piloted for parts of the environmental statistics. The thresholds that apply for the intra-Community statistics have also been raised. The energy sector has seen the red tape affecting it cut in numerous ways. For instance, the reporting duties for biogas monitoring have been streamlined.
The Cutting Bureaucracy Act has also amended our tax law in three places: reporting obligations for persons subject to church tax have been reduced, and the threshold up to which a flat-rate income-tax rate applies for persons employed on a short-term contract raised to 68 euros. The calculation method used to determine the amount of income tax to be deducted from the income of spouses/civil partners has been simplified. This too has helped reduce the burden borne by our citizens.
Overall, the private sector has seen its administrative burden reduced by 705 million euros per year.
The Second Cutting Bureaucracy Act
The seeks to quickly ease the administrative burden felt by small firms, particularly those with only two or three employees, as are typically found in the skilled-crafts sector. The main focus of the draft legislation is to eliminate red tape in tax law and to promote the use of digital technology. The latter applies to the use of digital technology in administrative procedures and also in the skilled-crafts sector (modernising the Crafts Code). The Second Cutting Bureaucracy Act will enhance the notion of points of single contact and promote eGovernment (see additional measures), for instance by ensuring that uniform information on legislation and regulation is made available on internet platforms. The rules on social-security contributions will also be simplified by means of the introduction of new deadlines for payment. All this will reduce the burden on business by 362 million euros per year.
Making it easier to carry forward losses
On the initiative of the Federal Ministry for Economic Affairs and Energy, the Federal Government is making improvements to the tax system. On 14 September 2016, the Federal Cabinet approved draft legislation making it easier for corporations to carry forward their loses. The new rules eliminate the tax barriers that have made it difficult for companies to access the capital they need, notably improving the situation for young companies in need of capital.
Higher thresholds for the depreciation of low-value assets
Since 1 January 2018, companies have been able to immediately write off purchases like office materials, tablets and word processing equipment up to a value of 800 euros. Previously, it was only possible to immediately write off purchases up to a limit of 410 euros (net); higher-value assets had to be depreciated over several years. The raising of this threshold means that many assets will no longer have to be listed in tax returns over several years, and this will reduce the amount of bureaucracy for small and medium-sized enterprises in particular. Find out more here.
'Brake on bureaucracy'
The , is a rule that the Federal Government has imposed on itself in a political commitment to limit the regulatory burden on businesses in an effective way, and which has been in force since 1 January 2015. Under this rule, any additional regulatory burden imposed on companies must be fully offset within a year, meaning that the burden on business must be eased elsewhere. The advantage of this rule is that it does not restrict the government in introducing new policies.
The SME test
The has become mandatory as of 1 January 2016. It is an internal working aid designed to support the federal ministries in taking the needs of SMEs into account as legislation is being drafted, and to help them look at alternative ways of achieving the same regulatory objective. In this way, the SME test helps to draw attention to the cost of specific pieces of regulation for small and medium-sized companies. The objective here is to prevent bureaucratic burdens being placed on SMEs as much as possible. The guidelines that form the SME test are based on findings including those from a study on .
There are many places where there is still red tape to be cut. Much can be achieved by introducing electronic procedures and making better use of data that is already available. This will eliminate the need for multiple notification of the same information. It will also allow companies to meet their notification requirements in less time.
Reform of procurement law: making life easier for companies
The entered into force on 18 April 2016. The introduction of greater flexibility, e.g. in negotiations between contracting authorities and bidders, and the fact that the process largely takes place online, has facilitated the procurement process and thus made life easier for the participating companies. The public procurement system is being taken into the digital age.
Register for the electricity and gas industry brings reporting and information obligations together
As far as the energy sector is concerned, a central register for the electricity and gas industry is to be established in 2017, to be kept by the Bundesnetzagentur. This register will streamline notification and information requirements for companies. The Federal Statistics Act has been revised to allow for better use of data that is already available within the administration.
In summer 2016, the Federal Government updated its work programme for cutting red tape and implementing better regulation.
Electronic trust services and secure digital identities
The Federal Government adopted the on 29 March 2017. The key piece of this omnibus act is the “Trust Services Act” which facilitates the use of electronic trust services in Germany. The best-known trust service is the electronic, or digital signature. eIDAS introduces more such services: the electronic seal, the electronic time stamp, electronic delivery services and web page certificates.
Electronic trust services enable companies and citizens throughout the EU to conduct secure electronic transactions. These services provide a high technical level of security, high legal value and make it possible to conduct user-friendly paper-free business transactions and e-government services across the EU at low cost. Practical examples can be found (in German) in the .