Germany's upper house of parliament approves tax relief for companies

As a result, the annual 3.2 billion euros size of the tax relief package is less than half the 7 billion euros ($7.57 billion) a year from 2024 that the German government had originally planned through the Growth Opportunities Act. The opposition CDU/CSU conservatives made approval in the Bundesrat conditional on the government reversing its decision on agricultural diesel.

Germany's upper house of parliament passed on Friday a 3.2 billion euro ($3.46 billion) tax relief package for small and medium-sized companies, aimed at unleashing new investment amid weak foreign demand and high-interest rates. The government's Growth Opportunities Act passed the lower house of parliament in November but then faced opposition in the Bundesrat, the legislative body that represents the 16 German states at the federal level.

The states and municipalities would have had to shoulder the bulk of the expected tax revenue shortfall and opposed the law, which was referred to a parliamentary mediation committee. As a result, the annual 3.2 billion euros size of the tax relief package is less than half the 7 billion euros ($7.57 billion) a year from 2024 that the German government had originally planned through the Growth Opportunities Act.

The opposition CDU/CSU conservatives made approval in the Bundesrat conditional on the government reversing its decision on agricultural diesel. German farmers took to the streets in December to protest against a cut to diesel subsidies, part of a wave of action across Europe in the past several months over issues ranging from EU environmental policies to what they say is unfair competition from abroad.

The government said reversing the decision on diesel subsidies was not an option but it offered other concessions, such as income smoothing. The proposal would let farmers spread their earnings over several financial years to help reduce their taxes. German Finance Minister Christian Lindner said on Wednesday he wanted to include so-called "income smoothing" in the 2024 Annual Tax Act.