As a counterpart to the favourable taxation of employees’ 13th and 14th monthly salaries, all self-employed individuals operating a business are entitled to the profit allowance (Gewinnfreibetrag, GFB), regardless of the method used to determine profit.
The Budget Accompanying Act 2027–2028 (Budgetbegleitgesetz, BBG) will soon bring a significant change that will particularly disadvantage small business owners — specifically those without major investments in tangible assets. The option of covering the investment-related profit allowance through the purchase of securities will be abolished without replacement for the years 2027 to 2029.
Anyone wishing to make use of the profit allowance (beyond the basic allowance) during these three years will need to invest in tangible, depreciable fixed assets in order to do so.
The only exception: if a security acquired for the profit allowance by the end of 2026 is redeemed early, a replacement purchase of qualifying securities will still be possible between 2027 and 2029.
This will primarily affect freelancers, small business owners and service providers who have relied on securities to date for lack of suitable tangible investments. For them, the years 2027 to 2029 will bring a tax disadvantage compared to employees benefiting from the preferential treatment of the 13th and 14th salary payments.
Forward-looking tax planning is now ESPECIALLY IMPORTANT in this situation!
- Where sensible from a tax and business perspective, bring profits forward into 2026.
- Also consider shifting profits to the years from 2030 onwards.
- Plan your managing director’s salary accordingly if you are a shareholder-managing director.
The abolition of the securities-based GFB is currently intended to be temporary, limited to the years 2027 to 2029. According to the draft legislation, the option is due to be reinstated from 2030. Whether this will actually happen remains to be seen.
In any case, please be sure to get in touch with us in good time. Together, we’ll optimise your individual situation!