Good news – especially for foreign executives living in Germany!

According to a legislative initiative of the Second Chamber of the German Parliament (Bundesrat), consulting expenses incurred in regard to a taxpayer’s individual tax return will once again be deductible. The new regulation will be part of the so-called Citizen Relief Law (“Bürgerentlastungsgesetz”) which was initially intended to govern the deductibility of social insurance contributions.

The reason for this move is not, however, that the German Treasury has presents to make. Rather, the abolishment of the tax deductibility proved so difficult in practice for the tax offices that the Federal States represented in the Bundesrat insisted on a re-introduction of the tax deductibility.

This simplification for the tax offices is estimated to cost the German Treasury around Eur 600 million (approximately USD 774 million). The new rule is expected to pass Parliament by mid-June.