German Tax Overhaul Reshapes Travel Rules, Expands Audits, and Reignites Reform Debate
16.06.2026 - 16:34:05 | boerse-global.de
A recent ruling by the Federal Labour Court (8 AZR 83/25) has sharpened the boundaries of pay transparency in Germany. The court clarified that employees can request salary information only for the last completed calendar year before their demand. That right is limited to their own business unit, not the entire company, and applies only if the unit employs at least 200 people and includes six or more workers of the opposite sex in comparable roles. The decision gives employers a clearer benchmark but also places a tighter timeframe on disclosure obligations.
That ruling arrives as the government pushes ahead with a sweeping set of tax changes in the draft Annual Tax Act 2026. The bill is already drawing attention from businesses and tax advisers for several provisions that will directly affect payroll and travel expense management.
One of the most significant shifts concerns the definition of a worker’s first place of employment (“erste Tätigkeitsstätte”). Under the draft, the qualifying period for a long-term external assignment drops from 48 months to 24 months. That change will hit employees who spend extended periods away from their home office, potentially reclassifying their tax treatment of travel expenses. The legislator is also responding to a Federal Fiscal Court ruling (VI R 11/21), with plans to restrict tax-free surcharges under Section 3b of the Income Tax Act (EStG) to base pay only from 2027. Tax-free benefits will no longer count toward the calculation.
The German Tax Advisers’ Association (DStV) welcomed the alignment with European Union requirements but criticised the lack of structural relief for businesses and individuals. The association said the bill misses an opportunity to deliver meaningful simplification.
On the audit front, the draft expands the scope of the payroll tax spot check (“Lohnsteuer-Nachschau”). Tax inspectors will gain broader access to digital accounting systems, prompting tax experts to advise companies to review their electronic record-keeping processes sooner rather than later. Starting in 2028, the deadline for correcting wage tax certificates will move to the end of February of the following year. At the same time, the list of data items that must be reported grows, including details on wage replacement benefits and company cars.
For employees who are voluntarily covered by statutory health insurance, a change is scheduled for 2030: the old-age provision lump sum will then be based on actual social security contributions, not the standardised rate used today. In parallel, the Finance Ministry released an updated data schema for the electronic balance sheet taxonomy (version 6.10) on June 8, which becomes mandatory for fiscal years ending on or after December 31, 2026.
Beyond the annual tax bill, the government is debating a broader income tax reform. Finance Minister Klingbeil has put two models on the table: one offering relief of €10 billion, the other €20 billion. Both variants involve shifting the tax brackets. The top marginal rate of 42 percent would kick in only at a significantly higher income than the current threshold of roughly €70,000. To finance the relief, a rise in the wealth-tax rate (45 percent) is under consideration. The larger package also envisions an increase in inheritance tax.
The Finance Ministry declined to officially confirm the plans, but opposition is already mounting. Several state premiers have threatened to block the legislation in the Bundesrat unless the federal government compensates Länder for the resulting revenue shortfalls.
Additional savings proposals came from the Ifo Institute on Tuesday. The economic research body suggested cutting the income threshold for parental allowance to €50,000 and gradually reducing the “mother’s pension.” Those ideas are not yet part of the draft law but feed into the wider fiscal debate shaping up for 2026.
