Germany approves 2026 tax law draft featuring digital assessments

The German Federal Cabinet has approved the draft for the Annual Tax Act 2026, which introduces significant shifts toward digitalization. A key measure is the transition to electronic income tax assessments, which will be issued via data retrieval by default unless a taxpayer explicitly objects. This change requires the tax return to have been submitted electronically.

The legislation also includes administrative adjustments, such as raising the threshold for certain foreign license payments from 10,000 to 100,000 euros to reduce bureaucracy. However, stricter rules are being implemented for large foreign shareholders with at least a 10 percent stake; they will no longer receive advance exemption certificates but must instead undergo a reimbursement process after tax withholding.

Separately, regional challenges in tax consultancy are emerging. In Lower Saxony, the Tax Advisory Chamber reports that while there is no overall shortage of advisors, finding local assistance is becoming difficult in rural areas. This is due to the consolidation of individual offices into larger central locations and an increasing trend toward digital-only services, which may pose challenges for elderly clients who prefer traditional paper-based methods.