Despite criticism: draft law on employee participation likely to remain as planned

Finance Minister Olaf Scholz's fund location law continues to be harshly criticized. Now the federal government is defending itself.Changes are thus probably not foreseen for the time being

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The dispute over the Fund Location Act goes into the next round: to a small question of the FDP Member of Parliament Bettina Stark-Watzinger answered the Ministry of Finance on the critical points of the plans for employee ownership in start-ups. The paper is available to Gründerszene

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According to the paper, the law is likely to apply only to certain startups: For example, start-ups that are older than ten years fall out, because "the founding and growth phase" is then completed, according to the federal government, and the companies can compete internationally without support.

The federal government is aligning the bill with the definition of small or medium-sized enterprises (SMEs). So for the planned regulations to apply, startups must have no more than 250 employees, annual sales of 50 million euros or total assets of 43 million euros. According to Gründerszene

, the letter states that the definition of SMEs is more precise than that of start-ups and is therefore taken as a basis.

"One offers the industry a fig leaf to be able to say, we have done something after all," is the verdict of FDP politician Stark-Watzinger to Gründerszene. Current criticism also comes from investor Frank Thelen. On Twitter, he wrote in

view of the latest statement to Olaf Scholz. "Dear Olaf Scholz we want employees to share in the success of startups. This brings broader prosperity and "fires up" the startup eco-system. The entire scene rates the current draft as flawed. Do you seriously care about startups? It looks like pure PR."

For months, the startup scene and the German government, headed by Olaf Scholz, have been arguing over the draft law. The cabinet has approved the proposed law, but it still has to pass through the Bundestag and Bundesrat and is due to come into effect on July 1. The aim is to strengthen Germany as a business location in international competition and to retain talent through certain regulations on employee participation.

For the Federal Association of German Start-ups, the current draft does not go far enough. It does not cover the needs of start-ups in practice. The planned adjustment to the SME definition alone would lead to many employees in fast-growing start-ups being left out, the association said in a statement.

The association sees another problem in the design of the tax breaks. Employees still have to pay tax on their shares as soon as they receive them from the start-up. The new draft law provides that they can take ten years to do so - or pay tax on their shares when they change their employer. The addition with the change of employer puts a burden on employees "for no reason that is apparent to us," the association's statement said. But the federal government apparently doesn't see a problem with it. Ten years is a "reasonable period of time for employees to adjust to the tax situation that will arise in the future," the paper says, according to Gründerszene

. The federal government even expects more employee ownership to occur as a result of the rule.