On 10 July 2009, the German Bundesrat held its last meeting before the summer break. Since Germany is facing federal elections in late September, this session potentially represented the current government’s last chance to pass the draft laws which it has submitted in the past few months. Therefore, the meeting held on 10 July 2009 was a marathon session involving voting on 62 different laws.

Among these draft laws were the German Act on the Combat of Tax Fraud, which increases a taxpayer’s duty to provide information in regard to transactions involving tax havens or the placing of funds in such countries. If certain requirements are not met, the taxpayer may face the disallowance of tax deductions related to such transactions or investments. For further details of this draft act please see our blog entries of 19 March and 28 April.

Another act which passed the Bundesrat on Friday is the Citizen Relief Act which, as initially formulated, would merely have governed the tax deductibility of social insurance contributions. The amended act also governs the temporary suspension of the so-called “Zinsschranke” and “Mantelkauf” regulations, both of which were introduced by the German Business Tax Reform of 2008. The Citizen Relief Act includes a temporary revision of these regulations in order to ease the negative impacts which they would create in the current economic crisis. For details please see our blog entries of 29 May, 5 June and 24 June.

With the Bundesrat´s consent, the draft acts completed passage through the legislative process and will enter into force once they have been published in the Federal Law Gazette (Bundesgesetzblatt).

Side note:

The legislative process in Germany is divided between the Bundestag and Bundesrat, of which the former is the central body where all federal legislation is adopted. The Bundesrat subsequently addresses the draft bills approved by the Bundestag. The scope of the Bundesrat’s right to participate in the legislative process varies depending on whether the bill is a consent bill or a bill which does not require Bundesrat consent.