On October 18, 2024, the Bundesrat approved the "Fourth Act to Reduce Bureaucracy for Citizens, Business and the Administration" (BEG IV). The Bundestag had already passed the Bureaucracy Relief Act on September 26, 2024. The most important points at a glance.
BEG IV brings shorter retention periods
The aim of the law is to simplify processes and rules and to give businesses, especially the self-employed and entrepreneurs, more time for their actual tasks, according to the explanatory memorandum. The federal government expects financial savings of 944 million euros per year.
The measures adopted include, among others:
- Shorter retention periods for accounting documents
The retention periods under commercial and tax law for accounting documents such as copies of invoices, bank statements and wage and salary lists will be reduced from ten to eight years (Art. 3 BEG IV). - Text form instead of written form
In many cases, the written form requirement will be abolished and downgraded to text form (e.g. email). For example, the employment contract will become completely digital. Overall, more digital legal transactions are to be carried out by email, SMS or messenger message without the requirement for a handwritten signature (see in particular Art. 15 BEG IV). - Power of attorney database
In future, employers will no longer have to issue numerous powers of attorney to their tax advisors for the respective social security institutions - a database enables the electronic registration of a general power of attorney (Art. 30 BEG IV). - No hotel registration obligation
The hotel registration requirement is abolished and the inconvenience of filling out registration forms for German nationals is eliminated (Art. 7 BEG IV).
- Stock Corporation Act becomes more digital
Facilitation of general meetings of listed companies by allowing documents to be made available online in future and (Art. 19 BEG IV) - Raising the thresholds for accounting and financial reporting
The monetary thresholds for determining the company size classes in commercial accounting law were raised by around 25%. The monetary thresholds determine whether a company changes from a "micro" to a "small" company, from a "small" to a "medium-sized" company and from a "medium-sized" to a "large" company within the meaning of commercial accounting law. The scope of the accounting and reporting obligations depends on the size of the company: for example, a "small" company has significantly less intensive obligations than a "large" company. As a result of the increase, many companies will slip into a lower size category - which is associated with a significant reduction in bureaucracy and considerable cost reductions for them (Art. 5 BEG IV).
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Business associations do not go far enough with the Bureaucracy Reduction Act
"This is good news for our economy - and for everyone suffering from bureaucracy burnout," explains Federal Minister of Justice Marco Buschmann. But for many entrepreneurs and the self-employed, BEG IV is just a drop in the ocean.
"This is not a breakthrough," says Christoph Ahlhaus, Managing Director of the German Association of Small and Medium-Sized Enterprises, in an interview with Tagesschau. On the one hand, bureaucracy is to be reduced, but on the other hand, the Supply Chain Act creates a "huge amount of bureaucracy with little benefit", says Ahlhaus. "Reports have to be written, control obligations have been imposed that many medium-sized companies cannot fulfill at all with reasonable effort." This is where the EU in particular is called upon: "The axe must be laid to the bureaucracy monster here too. Unfortunately, we are seeing the opposite at the moment."
Even if the BEG IV should bring relief from January 2025: There is still a lot to do!
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