Less bureaucracy for craft businesses?

No longer keeping all delivery notes, small-value invoices up to 200 euros and a small business limit of up to 20.000 euros: The Federal Ministry for Economic Affairs and Energy wants to relieve smaller businesses of bureaucracy.

This article is part of the special topic Bureaucratic madness in the craft industry

The Federal Ministry for Economic Affairs and Energy aims to reduce the burden on businesses by €358,2 million annually. This is the proposal in the draft bill for the Second Bureaucracy Reduction Act. The German Association of Tax Consultants (DStV) has reviewed the legislative initiative and raises concerns about certain aspects:

Delivery notes are only subject to retention requirements

Positive: The retention periods for delivery notes are to be relaxed. Delivery notes that are not accounting documents can be destroyed. The Association of Tax Consultants believes this is particularly helpful for income surplus calculators, where delivery notes are classified as received or sent commercial letters. Such delivery notes no longer need to be retained.

Criticism: However, this is unlikely to provide much relief for those preparing financial statements, according to the report. For them, delivery notes often serve as accounting documents, which are not covered by the simplification. The change will apply retroactively to all delivery notes whose retention period according to Section 147 Paragraph 3 of the German Fiscal Code (AO) has not yet expired.

Furthermore, the relaxed retention periods for delivery notes would not resolve the difficult practical question of determining whether documents requiring recording and/or retention are present within the meaning of the GoBD. Furthermore, delivery notes are not always easy to identify as such, for example, if they are part of a consignment note that must continue to be retained.

Wage limit for quarterly income tax filing higher

Positive: The threshold for quarterly payroll tax returns is to be raised from €4.000 to €5.000. This will particularly ease the burden on employers with few employees, according to the German Association of Tax Consultants. Instead of the twelve monthly payroll tax returns, they will only have to submit four quarterly payroll tax returns to the tax office. The association welcomes this change.

Small businesses with a turnover of up to 20.000 euros

Positive: Entrepreneurs can make use of the small business VAT regulation if they generated no more than €17.500 in sales in the previous year. This limit is to be raised to €20.000. Small businesses, for example, are not required to submit advance VAT returns.

Criticism:  The DStV considers an increase in the small business threshold to 20.900 euros or 22.500 euros to be appropriate.

Estimate of social security contributions based on the previous month legalized

Positive: Instead of estimating social security contributions for the current month, the actual contribution values ​​from the previous month will be used as a basis. Previously, this method was only permitted in exceptional cases for companies with particularly fluctuating payroll. However, it was also widely used by other companies. The DStV welcomes this new regulation, saying it will make work a little easier for employers and their tax advisors.

Criticism: The DStV is in favor of restoring the legal situation prior to January 2006. A return would be an even more efficient tool for reducing bureaucracy. At that time, social security contributions could be calculated based on the wages paid. They were therefore due by the middle of the following month. This saved time and effort.

Small-amount invoices up to 200 euros

Positive: For recipients of small-value invoices, the time-consuming invoice review for input tax deduction purposes will no longer be required up to an amount of €200. The current limit has remained unchanged at €150 since 2007. 

Criticism: The DStV welcomes this new regulation, but suggests raising the limit to 400 euros, as it applies in Austria.