Changes for all taxpayers
Increase in the tax-free basic allowance
The basic allowance up to which your income remains tax-free will be increased from €10,908 to €11,784 from 2024. This adjustment takes into account the general rate of inflation and is intended to help reduce the tax burden. For married or civil partners who are taxed jointly, the double amount applies, i.e. €23,568, which is a relief especially for families.
Maintenance payments: increase in the maximum amount
The maximum amount for maintenance payments to needy persons will rise to €11,784 in 2024. This corresponds to the new basic allowance and ensures that support payments remain fully tax deductible.
Higher exemption limit for solidarity surcharge
Since 2021, the solidarity surcharge has been abolished for the majority of taxpayers. For those who are still subject to the solidarity surcharge, the exemption limit was increased to €17,543 in 2023. This exemption limit will remain in place in 2024 and will help to relieve the burden on taxpayers whose income was just above the previous threshold.
Full deductibility of pension contributions
From the 2024 tax year, contributions to statutory pension insurance, professional pension schemes, agricultural pension funds and Rürup pensions are fully deductible as special expenses. This means that 100% of your pension provision expenses are taken into account, provided the maximum amount is not exceeded. For 2024, this maximum amount is €27,566, and for married couples or registered life partners it is €55,132.
End of the environmental bonus for electric vehicles
The environmental bonus to promote electromobility will end early on December 18, 2023. From this date, no new applications can be submitted. This decision reflects a realignment of the funding policy, as the market for electric vehicles has now achieved greater independence. However, funding that has already been promised will continue to be paid out and applications submitted by December 17, 2023 will be processed in the order in which they are received.
Changes for employees, employers and self-employed persons
Increase in the employee lump sum
The employee flat-rate allowance, which is automatically taken into account if no higher business expenses are proven, will be set at €1,230 from 2024. This represents a moderate increase that reflects the increased costs associated with practicing the profession.
Home office flat rate: unlimited validity
The home office allowance will remain in place indefinitely beyond 2023. Employees who work from home can continue to claim €6 per day as business expenses, but a maximum of €1,260 per year. This regulation applies to up to 210 days in the home office and takes into account the special burdens that arise from working from home.
New regulations for home offices
From 2024, the costs of a home office will only be deductible if it is the centre of the entire professional or business activity. As an alternative to the actual costs, taxpayers can choose a flat-rate deduction of €1,260, which simplifies the tax return and offers some compensation for the use of a home office.
Changes to VAT in the catering industry
The temporary reduction in the VAT rate to 7% for restaurant and catering services, which only applies to food, expires on December 31, 2023. From 2024, regular tax rates will apply again, which could require an adjustment of pricing in the catering industry.
Changes for families and parents
Increase in child benefit
From 2024, child benefit will be set at a uniform €250 per child. This measure will improve financial support for families, especially for the first and second child, who will each receive €31 more per month. The child allowance will be increased accordingly to €8,952.
Raising the training allowance
Parents who financially support their adult children during vocational training and whose children no longer live in the parental household will be able to claim a higher training allowance of €1,200 per year from 2024. This increase reflects the rising cost of living for students and trainees.
Increased relief amount for single parents
The relief amount for single parents will be increased to €4,260 from 2024. This measure is intended to take greater account of the special financial challenges faced by single parents.
Changes for investors
Increase in the saver’s allowance
The saver’s allowance, which replaces the deduction of actual business expenses for income from capital assets, will be increased to €1,000 for single people and €2,000 for spouses/life partners from 2024. This takes into account the increased capital gains and the persistently low interest rates.
Changes for property owners
Promoting climate-friendly construction
To support climate-friendly housing construction, the linear depreciation rate for residential buildings will be increased from 2% to 3% from 2024. In addition, owners can claim a special depreciation of 5% per year for buildings that meet the Efficiency House Standard 40 (EH40) including the QNG sustainability seal. This special depreciation is limited to four years and is intended to create incentives for sustainable construction.
Changes for pensioners
Increase in the taxable portion of the pension
For new pensioners who retire from 2024 onwards, the taxable portion of the statutory old-age pension will increase to 83%. This means that only 17% of the pension amount will remain tax-free, which will further increase the tax burden for pensioners.
Reduction of the pension allowance for new pensioners
From 2024, the pension allowance for civil servants and company pensions will be reduced to 13.6% of the pension for new pensioners, but not more than €1,020. The additional allowance will then be €306, so that the total of both allowances will be a maximum of €1,326. These adjustments reflect the progressive taxation of pension income and the gradual reduction of the tax-free amounts.
Conclusion
The tax changes from 2024 will bring both relief and new challenges for taxpayers. While some allowances and flat rates will be increased, other regulations will become more stringent, particularly in the case of pension taxation. It is advisable to regularly review your own tax strategies and adjust them if necessary in order to make the best use of tax advantages.
