Germany’s Jahressteuergesetz 2026 (Annual Tax Act 2026) would bring six changes covered below, including full child allowances for children in another EU or EEA country.
Most of its roughly 20 measures reduce bureaucracy and close loopholes, but a few affect people with income abroad.
The cabinet adopted the draft on August 12, 2026. The Bundestag held its first reading on October 8, 2026, and its finance committee (Finanzausschuss) held a hearing on November 2, 2026.
NOTE: The law has not passed yet. The bill still needs a Bundestag vote and Bundesrat approval, and both can still amend or drop these changes.
Here are six proposed changes in the draft.
#1 Full child allowances for children living in another EU or EEA country
If your children live in another EU or EEA country, you would still get the full German child allowance (Kinderfreibetrag).
Until now, the amount depended on costs in your child’s home country.
This matters if your family has not fully moved to Germany yet. Many expats face this in their first years here.
#2 Higher tax-free threshold for licence fees paid abroad
The tax-free threshold for licence fees paid abroad would rise from €10,000 to €100,000 per year. Below that amount, you would skip Germany’s withholding-tax procedure.
The change matters if your business pays licence fees to a vendor abroad.
#3 Platform reporting extends to non-EU providers
Digital platforms based in the EU report seller income to German tax authorities. The new law would extend this duty to providers in third countries.
If you sell through international platforms, expect more income reported to German authorities.
#4 Interest on tax back payments and refunds doubles
From 2027, the monthly interest rate on tax back payments and refunds would rise from 0.15% to 0.3%. That works out to 3.6% a year instead of 1.8%.
The higher rate would apply both ways, to what you owe the tax office and to what the tax office owes you.
At the hearing, tax advisers wanted broader reform of the interest rules, and the Federal Chamber of Tax Advisers (Bundessteuerberaterkammer) made the same point.
#5 Shorter window before a business trip counts as your regular workplace
The qualifying period for a regular workplace (erste Tätigkeitsstätte) would shrink from 48 months to 24 months. This rule decides when a business trip becomes your regular workplace.
This matters for your taxes. A regular workplace gets less favorable treatment than a genuine business trip.
The Federation of Taxpayers (Bund der Steuerzahler) warned that more employees would be hit sooner, naming soldiers on long postings and construction workers on long assignments.
#6 Tax assessments will be sent digitally by default
From 2027, your tax notices could arrive only online. This applies if you have an ELSTER account, Germany’s online tax portal.
Income tax assessments and objection decisions would go out this way. You would not need to give separate consent first.
Unions Criticized the 2026 Tax Act Draft
The Deutsche Steuer-Gewerkschaft union said the draft ignores organized VAT fraud, which it called the largest unresolved gap in tax enforcement.
The DGB union separately warned about shift-pay tax breaks. Tax-free limits for weekend and night shifts would be reached sooner. That shrinks how much of that pay stays tax-free during a labor shortage.
WARNING: None of these changes are final. The Bundestag and Bundesrat can still amend or drop them before the vote.
