Further criticism of the fund location law

The tax-free allowance for employee shareholdings has been increased to 1,440 euros per year. Industry representatives continue to criticize the law.

The government factions have once again pushed through improvements for start-ups in the negotiations on the Fund Location Act in the Bundestag. On Wednesday, the amendments were passed by a majority in the Finance Committee, as announced by the coalition partners. This means that nothing stands in the way of approval in the plenary session.

The changes include doubling the tax-free allowance for employee shareholdings, which the government had originally planned at 720 euros. Start-ups are now to benefit from an allowance of 1,440 euros. "In future, employees of start-ups will no longer have to pay tax on company shares transferred to them in the year of transfer," explains Antje Tillmann (CDU), member of the Bundestag, member of the Finance Committee and financial policy spokesperson for her parliamentary group. "Taxation will only take place at the time of sale, after twelve years at the latest." Unlike planned in the government draft, companies up to twelve years old can now benefit from the regulation.

"If the employer pays the income tax on the value of the employee participation to be taxed subsequently, there are no further tax payments for the employee when they leave the company," says Wiebke Esdar (SPD), also a full member of the Finance Committee. "This option is made easier by the fact that the non-cash benefit from the employer's assumption of wage tax will now remain tax-free for the employee in these cases." The Bundestag will vote on the Fund Location Act on Thursday.

Christian Miele from the German Startups Association calls the current resolution, like the federal government's plan from January, a "pipe-dream". Although the law will bring about improvements, "the new law will hardly be applied in practice". "If we want to make Germany fit for the future, we need to focus more on the needs of start-ups. The issue of employee share ownership is crucial here. We urgently need a separate share class for employees under GmbH law and internationally competitive taxation for share options too."

The FDP and Bündnis90/Die Grünen had tabled amendments, but these were rejected by the Finance Committee. Danyal Bayaz from the Greens wrote on Twitter: "Missed opportunity".