Germany's 'One-Click' Tax Filing Poised to Free 4.4 Million Retirees From Annual Returns
Published on 06/21/2026 at 21:58 | Redaktion boerse-global.de
A digital shortcut rolling out in July could let roughly 4.4 million German pensioners skip the annual tax return altogether, as the Finance Ministry pushes a broader push to cut red tape for workers and businesses.
Finance Minister Lars Klingbeil is steering two reform packages — called "Citizen-Friendly Income Tax" and "Simplified Corporate Tax" — toward a coalition committee debate on July 1. The centerpiece is a pilot project for a "one-click tax return," initially limited to single, childless employees and retirees.
Under the proposal, a flat daily work allowance would replace today's patchwork of itemized deductions for commuting, home-office costs and a dedicated workroom. For pensioners, a new "pension deduction tax" is planned. The ministry estimates that 4.4 million retirees would no longer have to file any return. A separate retiree lump-sum allowance of €102 is also under discussion. Full implementation is scheduled for January 1, 2027.
Businesses stand to gain, too. The government aims to cap the combined tax burden on corporate profits at 25%. Two variants being examined could generate relief worth between €10 billion and €20 billion. Companies would also get a free choice of which taxation method they use, and rules on loss carry?forwards would be streamlined. While simplifying trade tax is politically tricky, the ministry says it is working on leaner structures there as well.
Political fights are already brewing over the top tax rate and value?added tax. Christian Democratic Union (CDU) General Secretary Carsten Linnemann wants to raise the income threshold for the top rate from €69,879 to €80,000. The Social Democrats (SPD) have signaled willingness to relieve the middle class but insist on higher taxation for top earners. The German Trade Union Federation (DGB) goes further, demanding the top rate climb from 42% to 49%, kicking in at a taxable income of €88,900.
Economist Bert Rürup has floated a bolder trade?off: lift the standard VAT rate from 19% to 22% while cutting the reduced rate to 5%. The extra €40 billion in revenue, he argues, should be used to slash income and corporate tax. Bavarian premier Markus Söder (CSU) rejects both moves — no VAT increase, no higher top rate, and no end to spousal income splitting.
The Council of Economic Experts member Monika Schnitzer takes a different view. She calls for reforming spousal splitting to mobilize extra labor, and for rolling back tax breaks such as those on agricultural diesel and the reduced VAT rate for restaurants — the latter costing the state €3.4 billion a year without fully achieving its intended effect for small businesses.
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