German Federal Bar Association Criticizes Draft Law on Tax Incentives for Employees

Strategic Insights -

The German Federal Ministry of Finance has presented a draft bill for a law on tax incentives for employees of retirement age, known as the Active Pensions Act. The draft proposes a tax allowance of EUR2,000 for employees who continue working after reaching the statutory retirement age. However, the German Federal Bar Association (BRAK) has strongly criticized the draft legislation, describing the extremely short deadline for submissions as "completely inappropriate." The BRAK emphasizes that a well-founded and nuanced response to the draft can only be provided if participating organizations are given sufficient time for internal coordination and expert evaluation.

Key Takeaways:

  • The German Federal Bar Association (BRAK) has criticized the draft legislation for the Active Pensions Act, citing a lack of time for internal coordination and expert evaluation.
  • The BRAK argues that the planned restriction of the tax allowance to employees above the standard retirement age violates the principle of equality enshrined in Article 3 of the German Basic Law (GG).
  • The BRAK also criticizes the lack of data for calculating the additional financial burden and the expected number of benefiting employment relationships.
  • The purpose of the law - promoting productivity and employment in old age - is considered inadequate to justify unequal treatment of self-employed individuals.
  • The BRAK's legally mandated obligations under Section 177 of the German Federal Bar Act (BRAO) are considered practically impossible to fulfill due to the short deadline.

Statistics:

  • The draft law proposes a tax allowance of EUR2,000 for employees who continue working after reaching the statutory retirement age.
  • The draft law aims to promote productivity and employment in old age.
  • The BRAK objects to the planned restriction of the tax allowance to employees above the standard retirement age, citing unequal treatment of self-employed individuals.

Sources:

  • The German Federal Ministry of Finance's draft of the Active Pensions Act
  • The German Federal Bar Association's news release on the draft legislation (https://www.brak.de/)