New law bringing relief to German SMEs passed

The lower house of German parliament, the Bundestag, passed the so-called relief law for SMEs some days ago.

Starting on the first of January 2007 the limit from which companies are obliged to fiscal book-keeping is raised to 500.000 Euros of turnover (hitherto 350.000 Euros).

The duty of preparing documents for statistical reasons will be reduced in the goods-producing industry. In future only companies employing at least 50 people (till now 20 people) will have to fill in these documents. Any company below this limit will have to deliver a detailed statistical document only once a year.

Data protection commissioners have to be designated only by companies in which at least ten people (hitherto 5) process personal data.

In a next step the upper house of German parliament, the Bundesrat, will finally discuss the law on the 7th of July and is expected to approve it. By the year 2009 additional measures aimed at bringing relief to small and medium-sized entities (SMEs) are to follow. From the first of July companies in the West of Germany with a total turnover of at least 250.000 Euros will have to pay their turnover tax only after their invoices have been settled. This will provide SMEs with improved liquidity. For the federal states in the East a similar law relating to a total turnover of 500.000 Euros has already been in place for some time and will remain valid until the year 2009.

Starting from the first of January 2007 there is also a reform of wage tax statistics planned. This reform is to strongly reduce bureaucracy for SMEs. Several other kinds of relief are being prepared. A detailed measure catalogue is available for download in PDF format. GERMAN