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 Fiscal Code. New companies now have more time to submit data for the official statistics. This has been achieved by way of raising the relevant reporting thresholds from €500,000 to €800,000. 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 is raised to €68. 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 per year.
The Second Cutting Bureaucracy Act
The eases 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 legislation is to eliminate red tape in tax law and to promote the use of digital technology – the use of digital technology both in administrative procedures and also in the skilled-crafts sector (modernising the Crafts Code). The Second Cutting Bureaucracy Act enhances the notion of points of single contact and promote eGovernment, for instance by ensuring that uniform information on legislation and regulation is made available on internet platforms. The rules on social-security contributions are also simplified by means of the introduction of new deadlines for payment. Overall, the private sector has seen its administrative burden reduced by around €360 million per year.
Making life easier for companies
Since the reform of the Act making it easier for corporations to carry forward their losses (in German), the Federal Government has achieved great improvements of the tax barriers that had made it difficult for companies to access the capital they need, notably improving the financing options for young companies.
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. Previously, it was only possible to immediately write off purchases up to a limit of €410 (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.
Since 1 January 2015, the , has limited the compliance costs for businesses. Under the brake on bureaucracy, the Federal Government has made a political commitment to offset any now regulatory burden imposed on companies within a year, meaning that the burden on business must be eased elsewhere.
Avoiding red tape as far as possible
The SME test (), () became mandatory on 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 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 SMEs.
Much red tape can be cut in all sorts of areas, for example 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.
The has also substantially reduced the amount of red tape to be coped with by the bidding companies. 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 moved public procurement into the digital age.
Core energy market data register brings reporting and information obligations together for the electricity and gas industry
A central core energy market data register for the electricity and gas industry is being established to streamline notification and information requirements for companies. The Federal Network Agency will operate the register as an online database. The website is currently being set up. Further information can be found here from the .
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.