german draft budgetary plan - european commission · 2019-10-15 · plan to 2023 (likewise adopted...

German Draft Budgetary Plan2020

German Draft Budgetary Plan of the general government (Federation, Länder, local authorities and social security funds) in accordance with EU Regulation No 473/2013

October 2019

German Draft Budgetary Plan2020

Page

Public finances in Germany ............................................................................................................................ 4

Tables:

Table 1: General government budget balance and debt .......................................................................6Table 2: Technical assumptions .......................................................................................................................7Table 3a: Macroeconomic prospects... .............................................................................................................8Table 3b: Price developments - deflators. ......................................................................................................9Table 3c: Labour market developments .............................. ..........................................................................9Table 3d: Sectoral balances............ .................................................................................. ..................................10Table 4a: General government budgetary targets broken down by subsector.............. .............11Table 4b: General government debt developments (Maastricht definition) ....................... ........12Table 5: Expenditure and revenue projections under the no-policy-change scenario ....... 13Table 6a: General government expenditure and revenue targets ................................................... 14Table 6b: Amounts to be excluded from the expenditure benchmark.......................................... 15Table 7: Discretionary measures at the general government and federal level ...................... 16Table 8: Divergence from April 2019 Stability Programme ............................................................. 17Table 9: Implementation of the country-specific recommendations of 2019/2020 ........... 18Table 10: Targets of the EU’s strategy for growth and jobs ................................................................. 33Table 11: Methodological aspects ................................................................................................................... 36

CONTENTS PAGE 3

Contents

Germany’s 2020 draft budgetary plan pre-sents the fiscal projections for the budgets of the Federation, Länder, local authorities and social security funds (including their off-budget entities) on the basis of current trends and planning. Sources used as the basis for making these fiscal projections include the draft 2020 federal budget (adopted by the federal gov-ernment on 26 June 2019) and the financial plan to 2023 (likewise adopted by the federal government on 26 June 2019). The draft budgetary plan also takes into account the Climate Action Programme 2030. The fed-eral government adopted a key issues paper on this programme on 25 September 2019 and a draft supplementary budget for 2020 on 2 October 2019. The federal government’s current budgetary and financial planning is based on the re-sults of the Working Party on Tax Estimates of May 2019, which, in turn, are based on the federal government’s spring projection of 17 April 2019. The spring projection fore-casts a real growth rate of 0.5% in 2019 and 1.5% in 2020. This means that Germany’s economic growth this year is expected to fall short of potential GDP. The output gap is only slightly positive at this point.

Once the federal government’s draft budget has been submitted to the parliament, the executive branch’s responsibility for the budget preparation process ends, and the legislative branch takes over. On 17 October 2019, while the parliamentary deliberations are under way, the federal government is due to publish its autumn projection. This will form the basis of the next tax esti-mate, which will be issued on 30 October 2019. The results of the tax estimate will be taken into consideration in the final parlia-mentary deliberations on the 2020 federal budget.Despite the economic slowdown and the resulting lower tax revenues, neither the draft 2020 federal budget nor the financial plan to 2023 contain any new borrowing. The federal government’s draft budget for 2020 sets out in more detail the imple-mentation of the priority measures and other measures contained in the Coalition Agreement, which already formed part of the previous (2020–2022) financial planning (see German Draft Budgetary Plan 2019 of October 2018). Further measures arise from

Public finances in Germany

Information on the draft budgetary plan in accordance with Regulation (EU) No 473/2013 of the European Parliament and of the Council of 21 May 2013 and in accordance with the related Code of Conduct

GERMAN DRAFT BUDGETARY PLAN 2020 PAGE 5

the key issues for the Climate Action Pro-gramme 2030, which were adopted by the federal government on 25 September. The draft supplementary budget for 2020, which was adopted on 2 October 2019, incorpo-rates these measures into the budgetary plan for 2020. At the federal level alone, the planned measures under the Climate Ac-tion Programme are worth approximately €9bn in 2020 and approximately €54bn up until 2023, the end of the financial planning period. In particular, they take the form of support programmes and relief for indi-viduals and businesses. The supplementary budget for 2020 does not include any new borrowing, either. To finance the measures from 2021 onwards, the government will introduce a national carbon price for the transport and heating sectors (non-ETS sectors).In terms of the change in the cyclically-ad-justed primary balance, Germany’s fiscal policy will be distinctly expansionary in 2020. Despite the considerable increases in spending and reductions in revenue, the general government budget will not take on additional debt.

Forecast for public finances

• The 2020 general government budget encompassing the Federation, Länder, local authorities and social security funds will run a smaller surplus: The budget surplus will fall from 1.9% of GDP in 2018 to roughly 1¼% of GDP in 2019 and roughly ¾% of GDP in 2020. The main reason for this is the implementation of the priority measures contained in the Coalition Agreement and other measures (see German Draft Budgetary Plan 2019 of October 2018), as well as the measures under the Climate Action Programme 2030 (see Table 7). These measures will reduce the federal

budget surplus in particular. As a result, it is mainly the budgets of the Länder and local authorities that will see surpluses in the coming years.

• Compliance with medium-term budgetary objective: Germany expects to post a structural balance (i.e. the fiscal balance adjusted for cyclical and one-off effects) of approximately ½% of GDP in 2020. This means that Germany will achieve its medium-term budgetary objective – i.e. a structural deficit no greater than 0.5% of GDP – with a considerable safety margin.

• Steady reduction of the debt-to-GDP ratio: Thanks to the general government budget surplus, Germany’s debt-to-GDP ratio (Maastricht definition) is expected to fall to 59¾% in the current year. The continued healthy state of public finances and the ongoing winding down of resolution authority portfolios are helping to reduce the debt ratio. Germany’s debt level will fall below the 60% upper limit by the end of 2019. This will help to secure the sustainability of public finances in the face of various risks and the budgetary effects of demographic change.

Implementation of the country-specific recommendations

Germany’s draft budgetary plan for 2020 includes key measures that aim to imple-ment the Council’s country-specific recom-mendations of 9 July 2019 (see Table 9). The measures will have effect in 2019 and the years that follow. The federal government will report further on the implementation of the country-specific recommendations over the course of the coming European semester.

Basis for the 2020 draft budgetary plan

The 2020 draft budgetary plan is based in particular on the following sources and in-formation:

• Act Adopting the Federal Budget for the 2019 Fiscal Year (Gesetz über die Feststel-lung des Bundeshaushaltsplans für das Haushaltsjahr 2019) of 17 December 2018

• Federal government spring projection of 17 April 2019, which was endorsed by

the Joint Economic Forecast group as an independent body in accordance with the Forecasting Act (Vorausschätzungs-gesetz) and the Forecasting Ordinance (Vorausschätzungsverordnung)

• Results of the Working Party on Tax Esti-mates of 9 May 2019

• Press release issued by the Bundesnet-zagentur (Federal Network Agency for Electricity, Gas, Telecommunications, Post and Railway) on 12 June 2019 on the results of the spectrum auction to expand the network for 5G

• Draft federal budget for 2020 and the financial plan to 2023, adopted by the federal government on 26 June 2019

• Draft Act on Further Tax Incentives for Electric Mobility and Amending Fur-ther Tax Provisions (Gesetz zur weiteren steuerlichen Förderung der Elektromobil-ität und zur Änderung weiterer steuerli-cher Vorschriften) of 31 July 2019

2018 2019 2020

in % of GDP

Budget balance 1.9 1¼ ¾

Structural balance 1.5 1¼ ½

Maastricht debt-to-GDP ratio 61.9 59¾ 57¾

Figures for the projection period are rounded to quarter percentage points of GDP.

Table 1: General government budget balance and debt


Table 2: Technical assumptions

2018 2019 2020

Short-term interest rate (annual average in %) 0.00 0.00 0.00

USD/€ exchange rate (annual average) 1.18 1.14 1.14

Growth of German sales markets (% change yoy)1) 3.6 2½ 3

Oil price (Brent, USD/barrel) 70.9 65 65

2019 and 2020: Federal government spring projection on macroeconomic trends, April 2019. 1) Figures for the projection period are rounded to quarter percentage points.

• Draft Act on Phasing Out the 1995 Sol-idarity Surcharge (Gesetz zur Rück-führung des Solidaritätszuschlags 1995) of 21 August 2019

• Results for the general government budget in the national accounts, pub-lished by the Federal Statistical Office on 27 August 2019

• Key issues paper on the Climate Action Programme 2030, adopted by the federal government on 25 September 2019

• Draft supplementary budget for 2020 to implement the Climate Action Pro-gramme 2030, adopted by the federal government on 2 October 2019

ESA code

2018 2018 2019 2020 2021 2022 2023

€ billion Year-on-year change in %

1. Real GDP B1*g 3222.5 1.5 0.5 1.5 1.2 1.2 1.2

2. Potential GDP1) 3193.6 1.5 1.4 1.4 1.4 1.2 1.1

contributions (percentage points):

- labour 0.5 0.4 0.4 0.3 0.1 -0.1

- capital 0.5 0.5 0.5 0.5 0.5 0.5

- total factor productivity 0.5 0.5 0.6 0.6 0.7 0.7

3. Nominal GDP B1*g 3344.4 3.1 2.8 3.5 3.0 3.0 3.0

Components of real GDP

4. Private final consumption expenditure2) P.3 1681.7 1.3 1.2 1.6

5. Government final consumption expen-diture P.3 640.8 1.4 2.0 1.8

6. Gross fixed capital formation P.51g 666.6 3.5 2.2 2.8

7. Changes in inventories (% of GDP) P.52 + P.53

- 0.3 -0.3 0.0

8. Exports P.6 1557.2 2.1 2.0 3.0

9. Imports P.7 1353.6 3.6 3.8 4.0

Contributions to real GDP growth - in percentage points -

10. Final domestic demand - 1.7 1.4 1.7

11. Changes in inventories P.52 + P.53 - 0.3 -0.3 0.0

12. External balance of goods and services B.11 - -0.4 -0.6 -0.2

2018: Federal Statistical Office, August 2019.2019 to 2023: Federal government spring projection on macroeconomic trends, April 2019. 1) 2018 figure calculated as the difference between GDP (August 2019) and output gap (spring projection).2) Including private non-profit organisations serving households.

Table 3a: Macroeconomic prospects


Table 3b: Price developments - deflators

2018 2018 2019 2020 2021 2022 2023

Index (2015=100) Year-on-year change in %

1. GDP 103.78 1.5 2.3 2.0 1.8 1.8 1.8

2. Private consumption expenditure1) 103.69 1.5 1.4 1.7

4. Public consumption expenditure 103.88 1.8 2.5 2.2

5. Gross investment 104.84 3.2 3.0 3.2

6. Exports 101.83 0.9 0.6 0.4

7. Imports 101.93 1.8 -0.3 0.4

2018: Federal Statistical Office, August 2019.2019 to 2023: Federal government spring projection on macroeconomic trends, April 2019. 1) Including private non-profit organisations serving households.

Table 3c: Labour market developments

2018: Federal Statistical Office, August 2019.2019 and 2020: Federal government spring projection on macroeconomic trends, April 2019. 1) Domestic concept, national accounts definition.2) National accounts definition.3) Unemployed (ILO) / economically active population.4) Real GDP per person employed (domestic); 2015=100.5) Real GDP per hour worked; 2015=100.

ESA code

2018 2018 2019 2020

Level Year-on-year change in %

1. Employment - persons1) (in millions) 44.85 1.4 1.1 0.8

2. Employment - hours worked2) (bn hours) 62.34 1.3 0.8 0.9

3. Unemployment rate (%)3) - 3.2 2.9 2.7

4. Labour productivity, persons4) 102.2 0.1 -0.6 0.7

5. Labour productivity, hours worked5) 103.0 0.3 -0.3 0.6

6. Compensation of employees (€bn, domestic) D.1 1770.3 4.6 4.6 3.8

7. Compensation per employee (thousand €) 43.6 2.9 3.2 2.9

Table 3d: Sectoral balances

ESA code

2018 2019 2020

in % of GDP

1. Net lending/net borrowing vis-à-vis the rest of the world B.9 7.5 7.5 7.4

of which:

- Balance on goods and services 6.2 6.4 6.0

- Balance of primary incomes and transfers 1.5 0.9 0.8

- Capital account -0.1 0.3 0.6

2. Net lending/net borrowing of households B.9 5.7 5.2 5.0

3. Net lending/net borrowing of general government1) B.9 1.9 1¼ ¾

4. Statistical discrepancy - -

2018: Federal Statistical Office, August 2019.2019 and 2020: Federal government spring projection on macroeconomic trends, April 2019. 1) Figures for the projection period are rounded to quarter percentage points of GDP.


Table 4a: General government budgetary targets broken down by subsector

ESA code

2019 2020 2021 2022 2023

in % of GDP

Net lending (+)/net borrowing (-) (B.9) by subsector1)

1. General government S.13 1¼ ¾ ¼ ¼ ½

2. Central government S.1311 ½ 0 -¼ 0 ¼

3. State government S.1312 ½ ½ ¼ ¼ ¼

4. Local government S.1313 ¼ ¼ ¼ 0 0

5. Social security funds S.1314 ¼ 0 0 0 0

General government (S.13)

6. Interest expenditure D.41 ¾ ¾ ¾ ¾ ¾

7. Primary balance2) 2¼ 1½ 1 1 1¼

8. One-off and other temporary measures 0 0 0 0 0

9. Real GDP growth (% change yoy) 0.5 1.5 1.2 1.2 1.2

10. Potential GDP growth (% change yoy) 1.4 1.4 1.4 1.2 1.1

contributions (percentage points):

-labour 0.4 0.4 0.3 0.1 -0.1

-capital 0.5 0.5 0.5 0.5 0.5

-total factor productivity 0.5 0.6 0.6 0.7 0.7

in % of potential GDP

11. Output gap 0.1 0.2 0.0 0.0 0.0

12. Cyclical budgetary component 0 0 0 0 0

13. Cyclically adjusted balance (1 - 12) 1¼ ½ ¼ ¼ ½

14. Cyclically adjusted primary balance (13 + 6) 2 1¼ 1 1 1¼

15. Structural balance (13 - 8) 1¼ ½ ¼ ¼ ½

1) TR - TE = B.9.2) The primary balance is calculated as (B.9, item 1) plus (D.41, item 6). Figures for the projection period are rounded to quarter percentage points of GDP.Any discrepancies in totals are due to rounding.

Table 4b: General government debt developments (Maastricht definition)

ESAcode

2019 2020 2021 2022 2023

in % of GDP

1. Gross debt 59¾ 57¾ 56¼ 54¾ 52¾

2. Change in gross debt ratio -2¼ -2 -1½ -1½ -1¾

Contributions to changes in gross debt

3. Primary balance -2¼ -1½ -1 -1 -1¼

4. Interest expenditure D.41 ¾ ¾ ¾ ¾ ¾

5. Other adjustments -¾ -1¼ -1¼ -1¼ -1¼

p.m.: Implicit interest rate on debt1) 1¼ 1¼

Figures for the projection period are rounded to quarter percentage points of GDP.Any discrepancies in totals are due to rounding. 1) Proxied by interest expenditure divided by debt level of the previous year.


Table 5: Expenditure and revenue projections under the no-policy-change scenario*

General government (S. 13) ESA code

2019 2020

in % of GDP

1. Total revenue with no change in policy TR 46½ 46¼

of which:

1.1. Taxes on production and imports D.2 10½ 10½

1.2. Current taxes on income, wealth, etc. D.5 13¼ 13¼

1.3. Capital taxes D.91 ¼ ¼

1.4. Social contributions D.61 17¼ 17¼

1.5. Property income D.4 ¾ ½

1.6. Other1) 4½ 4¼

p.m.:Tax burden (D.2+D.5+D.61+D.91-D.995)2)

41¼ 41

2. Total expenditure with no change in policy TE3) 45¼ 45¼

of which:

2.1. Compensation of employees D.1 7¾ 7¾

2.2. Intermediate consumption P.2 5¼ 5¼

2.3. Social payments D.62 + D.632 24½ 24¾

of which: unemployment benefits4) 1¼ 1¼

2.4. Interest expenditure D.41 ¾ ¾

2.5. Subsidies D.3 1 1

2.6. Gross fixed capital formation P.51 2½ 2½

2.7. Capital transfers D.9 1¼ 1¼

2.8. Other5) 2¼ 2¼

* Please note that the no-policy-change scenario involves the extrapolation of revenue and expenditure trends before adding the impact of the measures included in the forthcoming year’s budget.

Figures for the projection period are rounded to quarter percentage points of GDP.Any discrepancies in totals are due to rounding.

1) P.11 + P.12 + P.131 + D.39rec + D.7rec + D.9rec (other than D.91rec).2) Including those collected by the EU and including an adjustment for uncollected taxes and social contributions (D.995), if appropriate.3) TR - TE = B.9.4) Includes social benefits other than social transfers in kind (D.62) and social transfers in kind via market producers (D.632) related to unemployment benefits.5) D.29pay + D.4pay (other than D.41pay) + D.5pay + D.7pay + P.52 + P.53 + NP + D.8.

Table 6a: General government expenditure and revenue targets

General government (S. 13) ESAcode

2019 2020

in % of GDP

1. Total revenue TR 46½ 46¼

of which:

1.1. Taxes on production and imports D.2 10½ 10½

1.2. Current taxes on income, wealth, etc. D.5 13¼ 13¼

1.3. Capital taxes D.91 ¼ ¼

1.4. Social contributions D.61 17¼ 17¼

1.5. Property income D.4 ¾ ½

1.6. Other1) 4½ 4¼

p.m.: Tax burden (D.2+D.5+D.61+D.91-D.995)2)

41¼ 41

2. Total expenditure TE3) 45¼ 45½

of which:

2.1. Compensation of employees D.1 7¾ 7¾

2.2. Intermediate consumption P.2 5¼ 5¼

2.3. Social payments D.62 + D.632 24½ 24¾

of which: unemployment benefits4) 1¼ 1¼

2.4. Interest expenditure D.41 ¾ ¾

2.5. Subsidies D.3 1 1

2.6. Gross fixed capital formation P.51 2½ 2½

2.7. Capital transfers D.9 1¼ 1¼

2.8. Other5) 2¼ 2¼


1) P.11 + P.12 + P.131 + D.39rec + D.7rec + D.9rec (other than D.91rec).2) Including those collected by the EU and including an adjustment for uncollected taxes and social contributions (D.995), if appropriate.3) TR - TE = B.9.4) Includes social benefits other than social transfers in kind (D.62) and social transfers in kind via market producers (D.632) related to unemployment benefits.5) D.29pay + D.4pay (other than D.41pay) + D.5pay + D.7pay + P.52 + P.53 + NP + D.8.


Table 6b: Amounts to be excluded from the expenditure benchmark

2018 2018 2019 2020

€bn in % of GDP

1. Expenditure on EU programmes fully matched by EU funds revenue 4.2 0.1 0 0

2. Cyclical unemployment benefit expenditure -1.0 0.0 0 -¼

3. Effect of discretionary revenue measures -4.2 -0.1 -¼ -¼

4. Revenue increases mandated by law 0.0 0.0 0 0

Figures for the projection period are rounded to quarter percentage points of GDP.

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Table 8: Divergence from April 2019 Stability Programme

ESA code 2018 2019 2020

Target general government net lending/net borrowing (% of GDP) B.9

Stability Programme - April 2019 1.7 ¾ ¾

Draft Budgetary Plan 1.9 1¼ ¾

Difference 0.2 ½ 0 General government net lending/net borrowing at unchanged policies (% of GDP)

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tion

Titl

e of

the

mea

sure

D

escr

ipti

on a

nd e

xpec

ted

impa

ct o

f mea

sure

Stat

us a

nd ti

met

able

Whi

le re

spec

ting

the

med

ium

-te

rm b

udge

tary

obj

ectiv

e, u

se

fisca

l and

str

uctu

ral p

olic

ies

to

achi

eve

a su

stai

ned

upw

ard

tren

d in

pri

vate

and

pub

lic in

vest

men

t, in

par

ticul

ar a

t the

regi

onal

and

m

unic

ipal

leve

l.

2019

Fed

eral

Bud

get

The

2019

Bud

get A

ct (B

unde

shau

shal

tsge

setz

) pro

vide

s fo

r a b

alan

ced

budg

et

that

doe

s no

t cre

ate

any

new

deb

t. Th

is re

pres

ents

a c

ontin

uatio

n of

Ger

man

y’s

solid

cou

rse

of b

udge

tary

and

fisc

al p

olic

y w

hich

is fo

cuse

d on

gro

wth

and

soc

ial

equa

lity

and

whi

ch in

vest

s in

the

futu

re. S

et in

vest

men

t spe

ndin

g fo

r 201

9 (€

38.9

bi

llion

) is

high

er th

an th

e va

lue

spec

ified

for 2

018

(€37

.4 b

illio

n) (e

xcl.

inve

stm

ent

allo

catio

n to

the

inve

stm

ent f

und

for d

igita

l inf

rast

ruct

ure

of €

2.4

billi

on).

A pr

iorit

y ha

s be

en p

lace

d on

tran

spor

t inf

rast

ruct

ure,

fund

ing

for t

he c

onst

ruct

ion

of s

ocia

l hou

sing

, and

chi

ld b

enefi

ts fo

r hom

ebuy

ers.

A to

tal o

f €24

.3 b

illio

n ha

s be

en e

arm

arke

d fo

r edu

catio

n an

d re

sear

ch s

pend

ing

in 2

019,

som

e €1

.4 b

illio

n m

ore

than

the

set a

mou

nt in

201

8. In

add

ition

, the

bur

den

on th

e Lä

nder

and

lo

cal a

utho

ritie

s is

to b

e co

nsid

erab

ly re

duce

d, e

nabl

ing

addi

tiona

l inv

estm

ent

mea

sure

s to

be

take

n at

thes

e le

vels

and

thus

edu

catio

n an

d re

sear

ch to

be

stre

ngth

ened

.

2019

Bud

get A

ct in

ef

fect

sin

ce

1 Ja

nuar

y 20

19.

2020

Fed

eral

Bud

get

The

draf

t fed

eral

bud

get f

or 2

020

(incl

udin

g th

e su

pple

men

tary

bud

get)

sim

ilarly

do

es n

ot e

nvis

age

any

new

deb

ts. F

urth

erm

ore,

inve

stm

ent s

pend

ing

is s

et to

ris

e to

aro

und

€41.

7 bi

llion

– a

new

reco

rd le

vel.

A pr

iorit

y ha

s be

en p

lace

d on

tr

ansp

ort i

nfra

stru

ctur

e, fu

ndin

g fo

r the

con

stru

ctio

n of

hou

sing

and

mea

sure

s ai

med

at r

each

ing

the

clim

ate

targ

ets

for 2

030.

A to

tal o

f rou

ghly

€25

.0 b

illio

n ha

s be

en e

arm

arke

d fo

r edu

catio

n an

d re

sear

ch s

pend

ing.

The

Länd

er a

nd lo

cal a

utho

ritie

s w

ill c

ontin

ue to

ben

efit f

rom

sub

stan

tial

finan

cial

relie

f, w

hich

will

giv

e th

em s

cope

for a

dditi

onal

inve

stm

ent a

ctiv

ities

Fede

ral C

abin

et

deci

sion

of

26 Ju

ne 2

019

and

supp

lem

entin

g am

endm

ent o

f 2

Oct

ober

201

9.

MTO

Sinc

e 20

12, G

erm

any

has

com

plie

d w

ith it

s m

ediu

m-t

erm

bud

get-

ary

obje

ctiv

e of

a g

ener

al p

ublic

-sec

tor s

truc

tura

l defi

cit n

o hi

gher

than

0.5

% o

f GD

P an

d w

ill

also

be

able

to m

eet t

his

obje

ctiv

e in

the

com

ing

year

s (p

roje

ctio

n pe

riod

up to

20

23).

GERMAN DRAFT BUDGETARY PLAN 2020 PAGE 19Ta

ble

9:

cont

inua

tion

The

Coun

cil o

f the

Eur

opea

n U

nion

reco

mm

ends

that

G

erm

any

take

s ac

tion

in 2

019

an

d 20

20 to

:Re

com

men

dati

on 1

: In

vest

men

t, ta

xes

and

com

peti

tion

Titl

e of

the

mea

sure

D

escr

ipti

on a

nd e

xpec

ted

impa

ct o

f mea

sure

Stat

us a

nd ti

met

able

Act

on

stru

ctur

al

chan

ge in

coa

l min

ing

area

s (S

truk

turs

tär-

kung

sges

etz

Kohl

ere-

gion

en)

The

Stru

ctur

al D

evel

opm

ent A

ct in

coa

l min

ing

area

s ta

kes

up a

nd fl

eshe

s ou

t th

e pr

inci

ples

and

the

finan

cial

sco

pe s

et o

ut b

y th

e Fe

dera

l Gov

ernm

ent i

n its

ke

y po

ints

on

impl

emen

ting

the

stru

ctur

al p

olic

y re

com

men

datio

ns p

rovi

ded

by

the

Com

mis

sion

for G

row

th, S

truc

tura

l Cha

nge

and

Empl

oym

ent.

Up

until

203

8 at

the

late

st, u

p to

€40

bill

ion

will

be

prov

ided

by

the

Fede

ral

Gov

ernm

ent f

or tr

ansf

orm

ing

form

er li

gnite

min

ing

area

s. Th

e Fe

dera

l G

over

nmen

t will

mak

e us

e of

its

pow

er to

gra

nt fi

nanc

ial a

ssis

tanc

e fo

r pa

rtic

ular

ly im

port

ant r

egio

nal i

nves

tmen

ts b

y th

e Lä

nder

and

loca

l aut

horit

ies

purs

uant

to A

rtic

le 1

04b

of th

e Ba

sic

Law

(Gru

ndge

setz

) wor

th u

p to

€14

bill

ion.

So

me

€26

billi

on h

as b

een

earm

arke

d fo

r add

ition

al F

eder

al G

over

nmen

t m

easu

res.

Thes

e in

clud

e in

par

ticul

ar in

fras

truc

ture

(roa

ds a

nd ra

ilway

line

s) a

nd

rese

arch

and

dev

elop

men

t pro

ject

s (in

clud

ing

for e

xam

ple

regu

lato

ry s

andb

oxes

, th

e es

tabl

ishm

ent o

f res

earc

h in

stitu

tes)

, but

als

o th

e es

tabl

ishm

ent o

f fed

eral

go

vern

men

t ins

titut

es.

The

Stru

ctur

al D

evel

opm

ent A

ct in

coa

l-m

inin

g ar

eas

also

set

s ou

t the

det

ails

for

the

stru

ctur

al a

ssis

tanc

e to

be

prov

ided

to d

isad

vant

aged

har

d-co

al m

inin

g si

tes

and

the

Hel

mst

edt d

istr

ict –

whi

ch w

ill b

e up

to €

1.09

bill

ion.

The

Fede

ral G

over

nmen

t and

the

Länd

er c

once

rned

hav

e ag

reed

to a

dopt

an

emer

genc

y pr

ogra

mm

e so

that

str

uctu

ral c

hang

e-re

late

d pr

ojec

ts in

the

thre

e lig

nite

min

ing

area

s co

ncer

ned

can

be im

plem

ente

d be

fore

the

end

of 2

019.

U

nder

this

em

erge

ncy

prog

ram

me,

add

ition

al m

easu

res

will

be

impl

emen

ted

in

the

ligni

te m

inin

g re

gion

s ba

sed

on a

pplic

atio

ns fr

om th

e Lä

nder

con

cern

ed a

nd

finan

ced

unde

r exi

stin

g Fe

dera

l Gov

ernm

ent f

undi

ng p

rogr

amm

es. T

he F

eder

al

Gov

ernm

ent w

ill p

rovi

de u

p to

€24

0 m

illio

n in

add

ition

al fu

nds.

Fede

ral C

abin

et

deci

sion

of

28 A

ugus

t 201

9.

10th

amen

dmen

t to

the

Act

aga

inst

Re

stra

ints

of C

ompe

-tit

ion

(Ges

etz

gege

n W

ettb

ewer

bsbe

-sc

hrän

kung

en)

The

10th

am

endm

ent t

o th

e A

ct a

gain

st R

estr

aint

s of

Com

petit

ion

was

ado

pted

w

ith th

e in

tent

ion

to m

oder

nise

Ger

man

y’s

com

petit

ion

law

, par

ticul

arly

the

supe

rvis

ory

sche

me

to p

reve

nt a

buse

s of

mar

ket p

ower

, and

to p

rovi

de a

dequ

ate

answ

ers

to th

e ch

alle

nges

pos

ed b

y th

e di

gita

l tra

nsfo

rmat

ion.

In a

dditi

on,

the

amen

dmen

t mak

es b

indi

ng th

e im

plem

enta

tion

of E

urop

ean

law

(ECN

+ D

irect

ive)

. It i

s ex

pect

ed th

at th

e am

endm

ent w

ill im

prov

e th

e en

forc

emen

t of

com

petit

ion

law

, str

engt

hen

com

petit

ion

for t

he b

enefi

t of b

usin

esse

s an

d co

nsum

ers

and

ther

efor

e he

lp im

prov

e G

erm

any’

s in

vest

men

t env

ironm

ent.

Und

er c

urre

nt p

lans

, a

draf

t act

will

be

pres

ente

d be

fore

the

end

of 2

019.

Ta

ble

9:

cont

inua

tion

The

Coun

cil o

f the

Eur

opea

n U

nion

reco

mm

ends

that

G

erm

any

take

s ac

tion

in 2

019

an

d 20

20 to

:Re

com

men

dati

on 1

: In

vest

men

t, ta

xes

and

com

peti

tion

Titl

e of

the

mea

sure

D

escr

ipti

on a

nd e

xpec

ted

impa

ct o

f mea

sure

Stat

us a

nd ti

met

able

Com

mis

sion

‘C

ompe

titio

n La

w 4

.0’

The

Com

mis

sion

‘Com

petit

ion

Law

4.0

’ rec

omm

ends

ado

ptin

g a

num

ber

of d

iffer

ent m

easu

res

in th

e ar

ea o

f the

dig

ital e

cono

my

that

will

enh

ance

co

mpe

titio

n la

w a

nd s

ecto

r-sp

ecifi

c re

gula

tion

at E

U le

vel.

The

Com

mis

sion

‘Com

petit

ion

Law

4.0

’ bel

ieve

s th

at:

• th

e pr

actic

al a

nd a

ctua

l pow

er o

f con

sum

ers

to d

ispo

se o

f the

ir ow

n da

ta

mus

t be

impr

oved

,

• cl

ear r

ules

of c

ondu

ct fo

r dom

inan

t pla

tfor

ms

mus

t be

intr

oduc

ed,

• le

gal c

erta

inty

for c

oope

ratio

n in

the

digi

tal s

ecto

r mus

t be

enha

nced

,

• an

d th

e in

stitu

tiona

l lin

kage

bet

wee

n co

mpe

titio

n la

w a

nd o

ther

dig

ital

regu

latio

n m

ust b

e st

reng

then

ed.

With

a v

iew

to a

ttai

ning

thes

e go

als,

the

Com

mis

sion

has

dra

wn

up 2

2 sp

ecifi

c re

com

men

datio

ns re

latin

g to

onl

ine

plat

form

s, da

ta a

cces

s an

d di

gita

l ec

osys

tem

s.

The

Fede

ral G

over

nmen

t is

curr

ently

stu

dyin

g th

e re

com

men

datio

ns in

det

ail

and

will

wor

k to

war

ds a

furt

her d

evel

opm

ent o

f com

petit

ion

law

at t

he

Euro

pean

leve

l. It

is a

lso

look

ing

at h

ow th

e re

com

men

datio

ns c

an b

e in

tegr

ated

in

to th

e up

com

ing

refo

rm o

f nat

iona

l com

petit

ion

law

. It i

s ex

pect

ed th

at a

n ov

erha

ul o

f the

com

petit

ion

fram

ewor

k w

ill m

ake

it ea

sier

to a

ttra

ct p

rivat

e in

vest

men

t.

The

Com

mis

sion

’s

reco

mm

enda

tions

w

ere

pres

ente

d on

9

Sept

embe

r 201

9.

Com

mis

sion

on

‘E

qual

Sta

ndar

ds o

f Li

ving

’

The

‘Equ

al S

tand

ards

of L

ivin

g’ C

omm

issi

on w

ill im

plem

ent a

num

ber o

f di

ffer

ent m

easu

res.

Thes

e in

clud

e:

• th

e pa

n-G

erm

an fu

ndin

g pr

ogra

mm

e fo

r str

uctu

rally

wea

k ar

eas:

this

pr

ogra

mm

e ex

tend

s fu

ndin

g pr

ogra

mm

es th

at w

ere

form

erly

rest

ricte

d to

ea

ster

n G

erm

any

to a

ll st

ruct

ural

ly w

eak

area

s, no

mat

ter w

heth

er th

ese

are

loca

ted

in th

e ea

ster

n or

wes

tern

par

t of t

he c

ount

ry; s

ever

al n

atio

nal

fund

ing

prog

ram

mes

will

be

adju

sted

to fo

cus

on p

rovi

ding

fund

ing

for

regi

ons

that

are

str

uctu

rally

wea

k,

Fede

ral C

abin

et

deci

sion

of

10 Ju

ly 2

019.

Impl

emen

tatio

n of

the

pan-

Ger

man

fund

ing

prog

ram

me

star

ts o

n

1 Ja

nuar

y 20

20.


ble

9:

cont

inua

tion

The

Coun

cil o

f the

Eur

opea

n U

nion

reco

mm

ends

that

G

erm

any

take

s ac

tion

in 2

019

an

d 20

20 to

:Re

com

men

dati

on 1

: In

vest

men

t, ta

xes

and

com

peti

tion

Titl

e of

the

mea

sure

D

escr

ipti

on a

nd e

xpec

ted

impa

ct o

f mea

sure

Stat

us a

nd ti

met

able

• to

ppin

g up

the

Fede

ral G

over

nmen

t’s in

vest

men

t aid

for i

mpr

ovin

g tr

ansp

ort i

n m

unic

ipal

ities

and

pro

mot

ing

inve

stm

ent i

n ba

sic

serv

ices

in

rura

l are

as th

at a

re e

asily

acc

essi

ble

to th

e pe

ople

ther

e.

• ex

pand

ing

the

optic

al fi

bre

netw

ork

in a

reas

whe

re th

is w

ould

be

unpr

ofita

ble

for b

usin

esse

s, pa

rtic

ular

ly if

thes

e re

ceiv

e no

gov

ernm

ent

fund

ing,

and

pur

suin

g an

am

bitio

us e

xpan

sion

cou

rse

for e

stab

lishi

ng a

n ef

fect

ive

mob

ile c

omm

unic

atio

n ne

twor

k ac

ross

Ger

man

y.

Third

Act

to R

educ

e Bu

reau

crea

cy (B

üro-

krat

ieen

tlast

ungs

ge-

setz

III)

The

Third

Act

to R

educ

e Bu

reau

crac

y w

ill re

lieve

the

Ger

man

eco

nom

y of

mor

e th

an €

1.1

billi

on o

f cos

ts p

er y

ear.

The

relie

f con

sist

s pr

imar

ily o

f the

follo

win

g m

easu

res:

• In

trod

uctio

n of

an

elec

tron

ic s

ick

leav

e ce

rtifi

cate

,

• Im

prov

ed ru

les

for t

he re

tent

ion

of ta

x-re

late

d da

ta p

roce

ssin

g sy

stem

s,

• O

ptio

n to

use

a d

igita

l reg

istr

atio

n fo

rm in

the

hosp

italit

y se

ctor

.

Fede

ral C

abin

et

deci

sion

of

18 S

epte

mbe

r 201

9.

Focu

s in

vest

men

t-re

late

d ec

onom

ic p

olic

y on

edu

cati

on;

rese

arch

and

inno

vati

on;

digi

talis

atio

n an

d ve

ry-h

igh

capa

city

bro

adba

nd; s

usta

inab

le

tran

spor

t as

wel

l as

ener

gy

netw

orks

and

aff

orda

ble

hous

ing,

taki

ng in

to a

ccou

nt

regi

onal

dis

parit

ies.

Agr

eem

ent b

etw

een

the

Fede

ral

Gov

ernm

ent a

nd th

e Lä

nder

Dig

ital P

act f

or

Scho

ols

Broa

dly

desi

gned

fina

ncia

l ass

ista

nce

prov

ided

by

the

Fede

ral G

over

nmen

t in

part

icul

ar fo

r sch

ool i

nfra

stru

ctur

e an

d eq

uipm

ent,

but a

lso

to a

chie

ve s

truc

tura

l ef

fect

s by

pro

vidi

ng fu

ndin

g fo

r inf

rast

ruct

ure

with

in a

nd a

cros

s th

e Lä

nder

.

The

Pact

pro

vide

s th

e ba

sis

for c

ontr

ibut

ing

to th

e su

cces

s of

the

Stra

tegy

for

Educ

atio

n in

a D

igita

l Age

ado

pted

by

the

Stan

ding

Con

fere

nce

of th

e M

inis

ters

of

Edu

catio

n by

hel

ping

the

Länd

er to

impr

ove

thei

r cur

ricul

a an

d te

ache

r tra

i-ni

ng, a

nd to

dev

elop

sui

tabl

e ed

ucat

iona

l too

ls a

nd e

-gov

ernm

ent f

or s

choo

ls. I

ts

obje

ctiv

es in

clud

e:

• Cr

eatin

g/op

timis

ing

an e

ffic

ient

, lea

rnin

g-en

hanc

ing,

dur

able

and

in

tero

pera

ble

digi

tal a

nd le

arni

ng in

fras

truc

ture

in s

choo

ls, e

duca

tion

auth

oriti

es a

nd th

e Lä

nder

,

• Pr

ovis

ion

of IT

sup

port

by

the

loca

l aut

horit

ies

as a

sup

plem

ent;

in th

e D

igita

l Pac

t for

Sch

ools

, thi

s is

sup

plem

ente

d by

a p

ossi

bilit

y to

rece

ive

fund

ing

for n

ew, p

rofe

ssio

nal s

ervi

ce s

olut

ions

at r

egio

nal a

nd n

atio

nal l

evel

.

The

Dig

ital P

act w

as

laun

ched

on

17

May

201

9 an

d ha

s a

dura

tion

of 5

yea

rs.

The

Coun

cil o

f the

Eur

opea

n U

nion

reco

mm

ends

that

G

erm

any

take

s ac

tion

in 2

019

an

d 20

20 to

:Re

com

men

dati

on 1

: In

vest

men

t, ta

xes

and

com

peti

tion

Titl

e of

the

mea

sure

D

escr

ipti

on a

nd e

xpec

ted

impa

ct o

f mea

sure

Stat

us a

nd ti

met

able

Com

mis

sion

‘C

ompe

titio

n La

w 4

.0’

The

Com

mis

sion

‘Com

petit

ion

Law

4.0

’ rec

omm

ends

ado

ptin

g a

num

ber

of d

iffer

ent m

easu

res

in th

e ar

ea o

f the

dig

ital e

cono

my

that

will

enh

ance

co

mpe

titio

n la

w a

nd s

ecto

r-sp

ecifi

c re

gula

tion

at E

U le

vel.

The

Com

mis

sion

‘Com

petit

ion

Law

4.0

’ bel

ieve

s th

at:

• th

e pr

actic

al a

nd a

ctua

l pow

er o

f con

sum

ers

to d

ispo

se o

f the

ir ow

n da

ta

mus

t be

impr

oved

,

• cl

ear r

ules

of c

ondu

ct fo

r dom

inan

t pla

tfor

ms

mus

t be

intr

oduc

ed,

• le

gal c

erta

inty

for c

oope

ratio

n in

the

digi

tal s

ecto

r mus

t be

enha

nced

,

• an

d th

e in

stitu

tiona

l lin

kage

bet

wee

n co

mpe

titio

n la

w a

nd o

ther

dig

ital

regu

latio

n m

ust b

e st

reng

then

ed.

With

a v

iew

to a

ttai

ning

thes

e go

als,

the

Com

mis

sion

has

dra

wn

up 2

2 sp

ecifi

c re

com

men

datio

ns re

latin

g to

onl

ine

plat

form

s, da

ta a

cces

s an

d di

gita

l ec

osys

tem

s.

The

Fede

ral G

over

nmen

t is

curr

ently

stu

dyin

g th

e re

com

men

datio

ns in

det

ail

and

will

wor

k to

war

ds a

furt

her d

evel

opm

ent o

f com

petit

ion

law

at t

he

Euro

pean

leve

l. It

is a

lso

look

ing

at h

ow th

e re

com

men

datio

ns c

an b

e in

tegr

ated

in

to th

e up

com

ing

refo

rm o

f nat

iona

l com

petit

ion

law

. It i

s ex

pect

ed th

at a

n ov

erha

ul o

f the

com

petit

ion

fram

ewor

k w

ill m

ake

it ea

sier

to a

ttra

ct p

rivat

e in

vest

men

t.

The

Com

mis

sion

’s

reco

mm

enda

tions

w

ere

pres

ente

d on

9

Sept

embe

r 201

9.

Com

mis

sion

on

‘E

qual

Sta

ndar

ds o

f Li

ving

’

The

‘Equ

al S

tand

ards

of L

ivin

g’ C

omm

issi

on w

ill im

plem

ent a

num

ber o

f di

ffer

ent m

easu

res.

Thes

e in

clud

e:

• th

e pa

n-G

erm

an fu

ndin

g pr

ogra

mm

e fo

r str

uctu

rally

wea

k ar

eas:

this

pr

ogra

mm

e ex

tend

s fu

ndin

g pr

ogra

mm

es th

at w

ere

form

erly

rest

ricte

d to

ea

ster

n G

erm

any

to a

ll st

ruct

ural

ly w

eak

area

s, no

mat

ter w

heth

er th

ese

are

loca

ted

in th

e ea

ster

n or

wes

tern

par

t of t

he c

ount

ry; s

ever

al n

atio

nal

fund

ing

prog

ram

mes

will

be

adju

sted

to fo

cus

on p

rovi

ding

fund

ing

for

regi

ons

that

are

str

uctu

rally

wea

k,

Fede

ral C

abin

et

deci

sion

of

10 Ju

ly 2

019.

Impl

emen

tatio

n of

the

pan-

Ger

man

fund

ing

prog

ram

me

star

ts o

n

1 Ja

nuar

y 20

20.

Ta

ble

9:

cont

inua

tion

The

Coun

cil o

f the

Eur

opea

n U

nion

reco

mm

ends

that

G

erm

any

take

s ac

tion

in 2

019

an

d 20

20 to

:Re

com

men

dati

on 1

: In

vest

men

t, ta

xes

and

com

peti

tion

Titl

e of

the

mea

sure

D

escr

ipti

on a

nd e

xpec

ted

impa

ct o

f mea

sure

Stat

us a

nd ti

met

able

Act

on

tax

allo

wan

ces

for r

esea

rch

(For

schu

ngsz

ulag

en-

gese

tz)

DTh

e Fe

dera

l Gov

ernm

ent’s

dra

ft o

f an

Act

for p

rovi

ding

tax

cred

it fo

r res

earc

h an

d de

velo

pmen

t (A

ct o

n ta

x al

low

ance

s fo

r res

earc

h) p

rovi

des

for t

ax in

cent

ives

fo

r com

pani

es c

ondu

ctin

g re

sear

ch a

nd d

evel

opm

ent a

ctiv

ities

.

The

tax

ince

ntiv

es fo

cus

in p

artic

ular

on

the

dedu

ctib

ility

of R

&D

sta

ff c

osts

(g

ross

wag

e an

d sa

lary

plu

s so

cial

sec

urity

con

trib

utio

ns p

aid

by th

e em

ploy

er fo

r R&

D s

taff

).

All

com

pani

es c

ondu

ctin

g re

sear

ch a

ctiv

ities

and

pay

ing

tax

in G

erm

any

can

appl

y fo

r the

allo

wan

ce.

The

fund

ing

rate

is 2

5%; t

he m

axim

um e

ligib

le c

osts

are

€2

mill

ion.

The

obje

ctiv

e of

this

initi

ativ

e is

to e

ncou

rage

sm

all a

nd m

ediu

m-s

ized

en

terp

rises

to in

vest

mor

e in

rese

arch

and

dev

elop

men

t.

Fede

ral C

abin

et

deci

sion

of

18 S

epte

mbe

r 201

9.

The

legi

slat

ive

proc

ess

is to

be

com

plet

ed

befo

re th

e en

d of

this

ye

ar.

The

Act

on

tax

allo

wan

ces

for

rese

arch

will

ent

er in

to

forc

e on

1

Janu

ary

2020

.

Age

ncy

for

Brea

kthr

ough

In

nova

tions

The

Age

ncy

is to

pro

vide

fund

ing

for t

he d

evel

opm

ent o

f dis

rupt

ive

inno

vatio

ns

that

hav

e th

e po

tent

ial t

o tr

ansf

orm

the

mar

ket b

y ta

king

a u

niqu

e in

nova

tion

polic

y ap

proa

ch. I

t is

to fo

ster

hig

hly

prom

isin

g R&

D id

eas

that

hav

e th

e po

tent

ial

to c

reat

e ad

ded

valu

e an

d co

nsid

erab

le b

enefi

ts fo

r soc

iety

.

The

Age

ncy

for B

reak

thro

ugh

Inno

vatio

ns w

ill b

e op

erat

ed fo

r a m

inim

um o

f ten

ye

ars;

a to

tal o

f app

roxi

mat

ely

€1 b

illio

n in

fund

s ha

s be

en e

arm

arke

d fo

r thi

s pu

rpos

e.

Link

ing

up th

is A

genc

y w

ith th

e Eu

rope

an In

nova

tion

Coun

cil w

ill b

e a

key

issu

e.

The

Age

ncy

is s

et to

be

laun

ched

in a

utum

n 20

19.


ble

9:

cont

inua

tion

The

Coun

cil o

f the

Eur

opea

n U

nion

reco

mm

ends

that

G

erm

any

take

s ac

tion

in 2

019

an

d 20

20 to

:Re

com

men

dati

on 1

: In

vest

men

t, ta

xes

and

com

peti

tion

Titl

e of

the

mea

sure

D

escr

ipti

on a

nd e

xpec

ted

impa

ct o

f mea

sure

Stat

us a

nd ti

met

able

digi

tal-

mad

e-in

.de

; ‘Sh

apin

g th

e co

urse

of d

igiti

satio

n’

impl

emen

tatio

n st

rate

gy

Mea

sure

s un

dert

aken

in th

e co

ntex

t of t

he ‘S

hapi

ng th

e co

urse

of d

igiti

satio

n’

impl

emen

tatio

n st

rate

gy

• ‘M

ittel

stan

d 4.

0’ in

itiat

ive:

26

regi

onal

and

them

atic

cen

tres

of e

xcel

lenc

e th

at d

rive

forw

ard

digi

talis

atio

n in

SM

Es

• ‘G

o di

gita

l’ ad

viso

ry p

rogr

amm

e ta

rget

ed a

t SM

Es

• ‘D

igita

l inv

estm

ents

’ gra

nt p

rogr

amm

e to

be

laun

ched

at t

he b

egin

ning

of

2020

• IT

sec

urity

in th

e bu

sine

ss s

ecto

r: es

tabl

ishm

ent o

f an

IT s

ecur

ity c

onta

ct

poin

t for

SM

Es

• D

igita

l inn

ovat

ions

com

petit

ion

for b

usin

ess

star

t-up

s

• D

igita

l Hub

Initi

ativ

e: S

tren

gthe

ning

the

digi

tal e

cosy

stem

at 1

2 si

tes

acro

ss

Ger

man

y

The

stra

tegy

will

be

impl

emen

ted

by 2

021

and

cont

inuo

usly

en

hanc

ed.

AI S

trat

egy

In th

is S

trat

egy,

the

Fede

ral G

over

nmen

t set

s ou

t a fr

amew

ork

for t

akin

g a

holis

tic a

ppro

ach

to th

e fu

ture

dev

elop

men

t and

use

of A

I in

Ger

man

y.

A la

rge

num

ber o

f mea

sure

s se

t out

in th

e A

I Str

ateg

y ar

e al

read

y be

ing

impl

emen

ted.

Thi

s in

clud

es p

rovi

ding

fund

ing

for n

ew A

I pro

fess

orsh

ips,

esta

blis

hing

new

cen

tres

of e

xcel

lenc

e fo

r AI r

esea

rch,

fost

erin

g te

chno

logy

tr

ansf

er th

roug

h th

e fu

ndin

g of

app

lied

rese

arch

, usi

ng A

I coa

ches

in M

ittel

stan

d 4.

0 ce

ntre

s of

exc

elle

nce

and

laun

chin

g th

e fu

ndin

g pr

ogra

mm

e en

title

d ‘A

I fla

gshi

p pr

ojec

ts fo

r pre

serv

ing

the

envi

ronm

ent,

clim

ate,

nat

ure

and

reso

urce

s’.

The

fund

s fo

r the

firs

t tra

nche

for u

nder

pinn

ing

the

AI s

trat

egy

wer

e ea

rmar

ked

in th

e 20

19 F

eder

al B

udge

t (€5

00 m

illio

n). F

unds

for t

he s

econ

d tr

anch

e fo

r un

derp

inni

ng th

e A

I str

ateg

y (€

500

mill

ion)

hav

e be

en e

arm

arke

d in

the

draf

t fe

dera

l bud

get f

or 2

020.

Thi

s m

eans

that

the

Fede

ratio

n w

ill m

ake

avai

labl

e ap

prox

. €3

billi

on fo

r im

plem

entin

g th

e A

I str

ateg

y in

the

perio

d ru

nnin

g fr

om

2019

to 2

025.

The

stra

tegy

is

curr

ently

bei

ng

impl

emen

ted

and,

de

pend

ing

on th

e st

ate

of th

e de

bate

an

d th

e re

quire

men

ts,

will

be

enha

nced

at

the

begi

nnin

g of

202

0.

The

Coun

cil o

f the

Eur

opea

n U

nion

reco

mm

ends

that

G

erm

any

take

s ac

tion

in 2

019

an

d 20

20 to

:Re

com

men

dati

on 1

: In

vest

men

t, ta

xes

and

com

peti

tion

Titl

e of

the

mea

sure

D

escr

ipti

on a

nd e

xpec

ted

impa

ct o

f mea

sure

Stat

us a

nd ti

met

able

Act

on

tax

allo

wan

ces

for r

esea

rch

(For

schu

ngsz

ulag

en-

gese

tz)

DTh

e Fe

dera

l Gov

ernm

ent’s

dra

ft o

f an

Act

for p

rovi

ding

tax

cred

it fo

r res

earc

h an

d de

velo

pmen

t (A

ct o

n ta

x al

low

ance

s fo

r res

earc

h) p

rovi

des

for t

ax in

cent

ives

fo

r com

pani

es c

ondu

ctin

g re

sear

ch a

nd d

evel

opm

ent a

ctiv

ities

.

The

tax

ince

ntiv

es fo

cus

in p

artic

ular

on

the

dedu

ctib

ility

of R

&D

sta

ff c

osts

(g

ross

wag

e an

d sa

lary

plu

s so

cial

sec

urity

con

trib

utio

ns p

aid

by th

e em

ploy

er fo

r R&

D s

taff

).

All

com

pani

es c

ondu

ctin

g re

sear

ch a

ctiv

ities

and

pay

ing

tax

in G

erm

any

can

appl

y fo

r the

allo

wan

ce.

The

fund

ing

rate

is 2

5%; t

he m

axim

um e

ligib

le c

osts

are

€2

mill

ion.

The

obje

ctiv

e of

this

initi

ativ

e is

to e

ncou

rage

sm

all a

nd m

ediu

m-s

ized

en

terp

rises

to in

vest

mor

e in

rese

arch

and

dev

elop

men

t.

Fede

ral C

abin

et

deci

sion

of

18 S

epte

mbe

r 201

9.

The

legi

slat

ive

proc

ess

is to

be

com

plet

ed

befo

re th

e en

d of

this

ye

ar.

The

Act

on

tax

allo

wan

ces

for

rese

arch

will

ent

er in

to

forc

e on

1

Janu

ary

2020

.

Age

ncy

for

Brea

kthr

ough

In

nova

tions

The

Age

ncy

is to

pro

vide

fund

ing

for t

he d

evel

opm

ent o

f dis

rupt

ive

inno

vatio

ns

that

hav

e th

e po

tent

ial t

o tr

ansf

orm

the

mar

ket b

y ta

king

a u

niqu

e in

nova

tion

polic

y ap

proa

ch. I

t is

to fo

ster

hig

hly

prom

isin

g R&

D id

eas

that

hav

e th

e po

tent

ial

to c

reat

e ad

ded

valu

e an

d co

nsid

erab

le b

enefi

ts fo

r soc

iety

.

The

Age

ncy

for B

reak

thro

ugh

Inno

vatio

ns w

ill b

e op

erat

ed fo

r a m

inim

um o

f ten

ye

ars;

a to

tal o

f app

roxi

mat

ely

€1 b

illio

n in

fund

s ha

s be

en e

arm

arke

d fo

r thi

s pu

rpos

e.

Link

ing

up th

is A

genc

y w

ith th

e Eu

rope

an In

nova

tion

Coun

cil w

ill b

e a

key

issu

e.

The

Age

ncy

is s

et to

be

laun

ched

in a

utum

n 20

19.

Ta

ble

9:

cont

inua

tion

The

Coun

cil o

f the

Eur

opea

n U

nion

reco

mm

ends

that

G

erm

any

take

s ac

tion

in 2

019

an

d 20

20 to

:Re

com

men

dati

on 1

: In

vest

men

t, ta

xes

and

com

peti

tion

Titl

e of

the

mea

sure

D

escr

ipti

on a

nd e

xpec

ted

impa

ct o

f mea

sure

Stat

us a

nd ti

met

able

5GG

erm

any

is to

bec

ome

a le

ad m

arke

t for

the

next

gen

erat

ion

of m

obile

co

mm

unic

atio

n –

5G –

by

2025

. The

auc

tions

for t

he 2

GH

z an

d 3.

6 G

Hz

mob

ile

spec

trum

, whi

ch w

ere

held

by

the

Bund

esne

tzag

entu

r, en

ded

on 1

2 Ju

ne 2

019.

Th

e le

gal r

equi

rem

ents

in te

rms

of fr

eque

ncy

allo

catio

n ha

ve th

eref

ore

been

met

.

Fund

ing

prog

ram

me

for 5

G p

ilot p

roje

cts

unde

r the

‘5x5

G S

trat

egy’.

Spec

trum

auc

tions

co

mpl

eted

.

Fede

ral G

over

nmen

t w

ill d

raft

a m

obile

co

mm

unic

atio

n st

rate

gy in

the

com

ing

wee

ks.

Broa

dban

d ex

pans

ion

Broa

dban

d fu

ndin

g pr

ogra

mm

e re

adju

sted

in A

ugus

t 201

8 to

focu

s on

the

expa

nsio

n of

the

giga

bit n

etw

ork:

firs

t of a

ll, a

reas

with

no

broa

dban

d co

vera

ge

(whi

te s

pots

) will

be

conn

ecte

d (a

t spe

eds

of u

p to

30

Mbi

t/s)

. In

Nov

embe

r 20

18, a

pro

gram

me

to c

onne

ct s

choo

ls, b

usin

ess

park

s an

d ho

spita

ls to

the

giga

bit n

etw

ork

was

laun

ched

. Fun

ding

dire

ctiv

e on

‘gre

y sp

ots’

(con

nect

ions

at

spe

eds

of m

ore

than

30

Mbi

t/s,

but n

ot g

igab

it-re

ady)

is c

urre

ntly

bei

ng

coor

dina

ted

with

the

Euro

pean

Com

mis

sion

.

The

fund

ing

prog

ram

mes

will

be

finan

ced

by th

e ‘D

igita

l Inf

rast

ruct

ure’

spe

cial

fu

nd, w

hich

is a

lso

used

to fi

nanc

e th

e D

igita

l Pac

t for

Sch

ools

(€5

billi

on),

and

into

whi

ch th

e re

venu

es fr

om th

e m

obile

com

mun

icat

ions

auc

tions

(a to

tal o

f €6

.55

billi

on u

p un

til 2

030)

are

fed.

The

prog

ram

me

is to

st

art a

t the

beg

inni

ng

of 2

020.

Bloc

kcha

in S

trat

egy

The

Fede

ral G

over

nmen

t has

ado

pted

the

Bloc

kcha

in S

trat

egy

in o

rder

to

mak

e us

e of

the

oppo

rtun

ities

off

ered

by

this

tech

nolo

gy a

nd to

har

ness

its

pote

ntia

l for

driv

ing

forw

ard

the

digi

tal t

rans

form

atio

n. T

he s

trat

egy

incl

udes

44

mea

sure

s ac

ross

five

fiel

ds o

f act

ion,

incl

udin

g a

fram

ewor

k fo

r inn

ovat

ion

usin

g bl

ockc

hain

tech

nolo

gy, b

lock

chai

n in

the

finan

cial

sec

tor a

nd d

igita

l pub

lic

serv

ices

.

Cabi

net d

ecis

ion

of

18 S

epte

mbe

r 201

9.


ble

9:

cont

inua

tion

The

Coun

cil o

f the

Eur

opea

n U

nion

reco

mm

ends

that

G

erm

any

take

s ac

tion

in 2

019

an

d 20

20 to

:Re

com

men

dati

on 1

: In

vest

men

t, ta

xes

and

com

peti

tion

Titl

e of

the

mea

sure

D

escr

ipti

on a

nd e

xpec

ted

impa

ct o

f mea

sure

Stat

us a

nd ti

met

able

Act

to a

ccel

erat

e th

e po

wer

grid

exp

ansi

on

(Net

zaus

baub

esch

leu-

nigu

ngsg

eset

z, N

ABE

G

revi

sion

2.0

)

As

part

of a

pac

kage

of m

easu

res

to o

ptim

ise

exis

ting

grid

s an

d to

acc

eler

ate

the

expa

nsio

n of

the

elec

tric

ity g

rids,

the

Grid

Exp

ansi

on A

ccel

erat

ion

Act

(NA

BEG

) fo

r the

tran

smis

sion

sys

tem

was

revi

sed

in li

ne w

ith th

e Co

aliti

on A

gree

men

t.

The

mai

n su

bsta

nce

of th

e ch

ange

s is

the

sim

plifi

catio

n an

d ac

cele

ratio

n of

pl

anni

ng a

nd a

ppro

val p

roce

dure

s to

opt

imis

e an

d up

grad

e ex

istin

g po

wer

grid

s an

d to

bui

ld n

ew g

rids

at th

e le

vel o

f the

ultr

a-hi

gh v

olta

ge tr

ansm

issi

on s

yste

m.

Her

e, a

key

pro

visi

on o

f the

Act

is th

e om

issi

on u

nder

cer

tain

circ

umst

ance

s of

Fe

dera

l Sec

tora

l Pla

nnin

g fo

r ene

rgy

grid

con

stru

ctio

n. F

urth

er to

this

, for

war

d-lo

okin

g pl

anni

ng is

mad

e po

ssib

le, w

ith, f

or e

xam

ple,

it b

eing

pos

sibl

e to

lay

empt

y co

ndui

ts fo

r fut

ure

lines

. The

env

ironm

enta

l im

pact

is fu

lly c

onsi

dere

d fr

om th

e ou

tset

. Ove

rall,

sub

stan

tive

envi

ronm

enta

l sta

ndar

ds a

re n

ot lo

wer

ed,

and

the

publ

ic c

ontin

ues

to b

e fu

lly in

volv

ed fr

om a

n ea

rly s

tage

.

In fo

rce

sinc

e

17 M

ay 2

019.

Forw

ard-

look

ing

inte

rnal

aud

iting

of

grid

exp

ansi

on

The

ener

gy m

inis

ters

of t

he L

ände

r and

the

Fede

ratio

n ha

ve a

gree

d w

ith th

e Bu

ndes

netz

agen

tur a

nd th

e di

rect

ors

of th

e tr

ansm

issi

on s

yste

m o

pera

tors

in

Ger

man

y on

spe

cific

tim

etab

les

for a

ll gr

id e

xpan

sion

pro

ject

s.

The

six

mile

ston

es m

ark

the

begi

nnin

g an

d en

d of

the

Fede

ral S

ecto

ral P

lann

ing

or s

patia

l pla

nnin

g pr

oced

ure

and

the

plan

ning

app

rova

l pro

cedu

re, a

s w

ell a

s th

e co

mm

ence

men

t of c

onst

ruct

ion

and

the

com

ing

on s

trea

m o

f the

grid

.

The

timet

able

s fo

rm a

cor

e el

emen

t of a

n in

tern

al a

uditi

ng s

yste

m fo

r grid

ex

pans

ion

whi

ch h

as b

een

intr

oduc

ed jo

intly

by

the

Fede

ratio

n an

d th

e Lä

nder

. Th

ey p

rovi

de th

e pl

anne

d m

ilest

ones

aga

inst

whi

ch th

e sp

ecifi

c pr

ogre

ss o

f the

gr

id e

xpan

sion

is to

be

mon

itore

d. T

he F

eder

atio

n an

d th

e Lä

nder

regu

larly

brin

g th

e re

leva

nt s

take

hold

ers

toge

ther

in o

rder

to a

void

del

ays

agai

nst t

he p

lann

ed

sche

dule

.

Agr

eem

ent o

n

24 M

ay 2

019.

Ta

ble

9:

cont

inua

tion

The

Coun

cil o

f the

Eur

opea

n U

nion

reco

mm

ends

that

G

erm

any

take

s ac

tion

in 2

019

an

d 20

20 to

:Re

com

men

dati

on 1

: In

vest

men

t, ta

xes

and

com

peti

tion

Titl

e of

the

mea

sure

D

escr

ipti

on a

nd e

xpec

ted

impa

ct o

f mea

sure

Stat

us a

nd ti

met

able

Ord

inan

ce to

impr

ove

the

regu

lato

ry

fram

ewor

k fo

r the

co

nstr

uctio

n of

LN

G in

fras

truc

ture

in

Ger

man

y (L

NG

Ord

inan

ce,

Ver

ordn

ung

zur

Verb

esse

rung

der

Ra

hmen

bedi

ngun

gen

für d

en A

ufba

u de

r LN

G-I

nfra

stru

ktur

in

Deu

tsch

land

)

The

mai

n fo

cus

of th

is o

rdin

ance

is to

impr

ove

the

rule

s go

vern

ing

the

cons

truc

tion

of L

NG

infr

astr

uctu

re. A

n am

endm

ent t

o th

e G

as N

etw

ork

Acc

ess

Ord

inan

ce (G

asne

tzzu

gang

sver

ordn

ung)

obl

iges

the

gas T

SOs

to c

onst

ruct

the

nece

ssar

y gr

id b

etw

een

LNG

inst

alla

tions

and

the

gas

tran

smis

sion

sys

tem

and

to

conn

ect t

he L

NG

inst

alla

tions

to th

e tr

ansm

issi

on s

yste

m.

The

cost

s bo

rne

by th

e ga

s TSO

s du

e to

the

cons

truc

tion

of th

e co

nnec

tion

to

the

grid

are

cat

egor

ised

as

an in

vest

men

t mea

sure

pur

suan

t to

the

Ince

ntiv

e Re

gula

tion

Ord

inan

ce (A

nrei

zreg

ulie

rung

sver

ordn

ung)

. Thi

s m

eans

that

thes

e co

sts

can

be c

over

ed b

y th

e ga

s gr

id fe

es w

ithou

t del

ay a

nd p

asse

d on

to th

e us

ers

of th

e gr

id. I

n fu

ture

, the

inst

alla

tion

oper

ator

s w

ill o

nly

bear

10%

of t

he

conn

ectio

n co

sts

them

selv

es.

In fo

rce

sinc

e

20 Ju

ne 2

019.

Refo

rm o

f rea

l pr

oper

ty ta

xTh

e le

gisl

ativ

e pr

oced

ure

for t

he re

form

of t

he re

al p

rope

rty

tax

has

to

be c

ompl

eted

by

the

end

of th

e ye

ar, i

n lin

e w

ith a

rulin

g by

the

Fede

ral

Cons

titut

iona

l Cou

rt o

f 10

Apr

il 20

18. O

ther

wis

e, th

e ta

x ca

n no

long

er b

e le

vied

by

the

loca

l aut

horit

ies.

Ove

rall,

the

refo

rm is

to b

e re

venu

e-ne

utra

l. Th

e va

luat

ion

for t

he ta

x as

sess

men

t is

to b

e ba

sed

on th

e va

lue

of a

pie

ce o

f lan

d an

d/or

bui

ldin

g. A

dditi

onal

ly,

“rea

l pro

pert

y ta

x C”

is to

pro

vide

ince

ntiv

es to

dev

elop

land

whi

ch is

read

y fo

r co

nstr

uctio

n. A

n ex

empt

ion

clau

se b

ased

on

the

Basi

c La

w is

to g

ive

the

Länd

er

the

poss

ibili

ty to

ado

pt d

iffer

ent a

rran

gem

ents

at L

and

leve

l.

The

conc

lusi

on o

f le

gisl

ativ

e pr

oces

s is

sc

hedu

led

for b

efor

e th

e en

d of

201

9.


ble

9:

cont

inua

tion

The

Coun

cil o

f the

Eur

opea

n U

nion

reco

mm

ends

that

G

erm

any

take

s ac

tion

in 2

019

an

d 20

20 to

:Re

com

men

dati

on 1

: In

vest

men

t, ta

xes

and

com

peti

tion

Titl

e of

the

mea

sure

D

escr

ipti

on a

nd e

xpec

ted

impa

ct o

f mea

sure

Stat

us a

nd ti

met

able

Ord

inan

ce to

impr

ove

the

regu

lato

ry

fram

ewor

k fo

r the

co

nstr

uctio

n of

LN

G in

fras

truc

ture

in

Ger

man

y (L

NG

Ord

inan

ce,

Ver

ordn

ung

zur

Verb

esse

rung

der

Ra

hmen

bedi

ngun

gen

für d

en A

ufba

u de

r LN

G-I

nfra

stru

ktur

in

Deu

tsch

land

)

The

mai

n fo

cus

of th

is o

rdin

ance

is to

impr

ove

the

rule

s go

vern

ing

the

cons

truc

tion

of L

NG

infr

astr

uctu

re. A

n am

endm

ent t

o th

e G

as N

etw

ork

Acc

ess

Ord

inan

ce (G

asne

tzzu

gang

sver

ordn

ung)

obl

iges

the

gas T

SOs

to c

onst

ruct

the

nece

ssar

y gr

id b

etw

een

LNG

inst

alla

tions

and

the

gas

tran

smis

sion

sys

tem

and

to

conn

ect t

he L

NG

inst

alla

tions

to th

e tr

ansm

issi

on s

yste

m.

The

cost

s bo

rne

by th

e ga

s TSO

s du

e to

the

cons

truc

tion

of th

e co

nnec

tion

to

the

grid

are

cat

egor

ised

as

an in

vest

men

t mea

sure

pur

suan

t to

the

Ince

ntiv

e Re

gula

tion

Ord

inan

ce (A

nrei

zreg

ulie

rung

sver

ordn

ung)

. Thi

s m

eans

that

thes

e co

sts

can

be c

over

ed b

y th

e ga

s gr

id fe

es w

ithou

t del

ay a

nd p

asse

d on

to th

e us

ers

of th

e gr

id. I

n fu

ture

, the

inst

alla

tion

oper

ator

s w

ill o

nly

bear

10%

of t

he

conn

ectio

n co

sts

them

selv

es.

In fo

rce

sinc

e

20 Ju

ne 2

019.

Refo

rm o

f rea

l pr

oper

ty ta

xTh

e le

gisl

ativ

e pr

oced

ure

for t

he re

form

of t

he re

al p

rope

rty

tax

has

to

be c

ompl

eted

by

the

end

of th

e ye

ar, i

n lin

e w

ith a

rulin

g by

the

Fede

ral

Cons

titut

iona

l Cou

rt o

f 10

Apr

il 20

18. O

ther

wis

e, th

e ta

x ca

n no

long

er b

e le

vied

by

the

loca

l aut

horit

ies.

Ove

rall,

the

refo

rm is

to b

e re

venu

e-ne

utra

l. Th

e va

luat

ion

for t

he ta

x as

sess

men

t is

to b

e ba

sed

on th

e va

lue

of a

pie

ce o

f lan

d an

d/or

bui

ldin

g. A

dditi

onal

ly,

“rea

l pro

pert

y ta

x C”

is to

pro

vide

ince

ntiv

es to

dev

elop

land

whi

ch is

read

y fo

r co

nstr

uctio

n. A

n ex

empt

ion

clau

se b

ased

on

the

Basi

c La

w is

to g

ive

the

Länd

er

the

poss

ibili

ty to

ado

pt d

iffer

ent a

rran

gem

ents

at L

and

leve

l.

The

conc

lusi

on o

f le

gisl

ativ

e pr

oces

s is

sc

hedu

led

for b

efor

e th

e en

d of

201

9.

The

Coun

cil o

f the

Eur

opea

n U

nion

reco

mm

ends

that

G

erm

any

take

s ac

tion

in 2

019

an

d 20

20 to

:Re

com

men

dati

on 1

: In

vest

men

t, ta

xes

and

com

peti

tion

Titl

e of

the

mea

sure

D

escr

ipti

on a

nd e

xpec

ted

impa

ct o

f mea

sure

Stat

us a

nd ti

met

able

Hou

sing

and

rent

al

pack

age

The

rent

con

trol

mec

hani

sm is

to b

e ex

tend

ed u

ntil

the

end

of 2

025.

Whe

re

a co

mpl

aint

is u

phel

d, te

nant

s ar

e to

hav

e th

e po

ssib

ility

to c

laim

bac

k al

l the

ov

erpa

id re

nt w

ithin

30

mon

ths

of th

e co

mm

ence

men

t of t

he re

ntal

con

trac

t.

The

Fede

ral G

over

nmen

t wou

ld li

ke to

ext

end

the

refe

renc

e pe

riod

for t

he

dete

rmin

atio

n of

the

stan

dard

loca

l com

para

tive

rent

from

four

to s

ix y

ears

in

orde

r to

slow

the

rise

in re

nts.

Min

iste

rial d

raft

se

nt to

Län

der a

nd

asso

ciat

ions

: 10

Sep

tem

ber 2

019.

Ado

ptio

n of

the

gove

rnm

ent d

raft

: 18

Sep

tem

ber 2

019.

In fu

ture

, whe

n an

apa

rtm

ent o

r a s

ingl

e-fa

mily

hom

e is

pur

chas

ed, b

oth

selle

r and

buy

er a

re to

pay

hal

f of t

he e

stat

e ag

ent’s

com

mis

sion

if b

oth

have

co

mm

issi

oned

the

esta

te a

gent

. If t

he e

stat

e ag

ent i

s on

ly a

ctin

g fo

r one

par

ty,

the

part

y w

hich

has

not

com

mis

sion

ed th

e es

tate

age

nt c

an o

nly

be re

quire

d to

pa

y th

e co

mm

issi

on to

the

exte

nt th

at it

doe

s no

t pay

mor

e co

mm

issi

on th

an th

e pa

rty

whi

ch c

omm

issi

oned

the

esta

te a

gent

.

Min

iste

rial d

raft

sen

t to

Länd

er a

nd a

ssoc

iatio

ns

on 1

7 Se

ptem

ber 2

019.

The

2020

hou

sing

ben

efit

refo

rm is

to im

prov

e th

e re

ach

and

the

leve

l of h

ousi

ng

bene

fit. A

lso,

the

draf

t leg

isla

tion

prov

ides

for r

egul

ar in

crea

ses

in th

e le

vel o

f ho

usin

g be

nefit

, the

firs

t inc

reas

e be

ing

sche

dule

d fr

om 2

022.

The

Act

to S

tren

gthe

n H

ousi

ng B

enef

it (W

ohng

elds

tärk

ungs

ge-

setz

) ent

ers

into

forc

e on

1 Ja

nuar

y 20

20.

The

legi

slat

ion

on re

ntal

com

paris

ons

is to

be

refo

rmed

.D

raft

legi

slat

ion

to re

form

the

law

go

vern

ing

rent

al

com

paris

ons

is

envi

sage

d by

the

end

of

Dec

embe

r 201

9.

The

Fede

ral G

over

nmen

t wis

hes

to c

urta

il th

e po

ssib

ility

to tr

ansf

orm

rent

ed

apar

tmen

ts in

to o

wne

r-oc

cupi

ed a

part

men

ts, i

nvol

ving

the

Länd

er a

nd lo

cal

auth

oriti

es in

this

.

Dra

ft le

gisl

atio

n is

pl

anne

d fo

r bef

ore

the

end

of 2

019.

Ta

ble

9:

cont

inua

tion

The

Coun

cil o

f the

Eur

opea

n U

nion

reco

mm

ends

that

G

erm

any

take

s ac

tion

in 2

019

an

d 20

20 to

:Re

com

men

dati

on 1

: In

vest

men

t, ta

xes

and

com

peti

tion

Titl

e of

the

mea

sure

D

escr

ipti

on a

nd e

xpec

ted

impa

ct o

f mea

sure

Stat

us a

nd ti

met

able

Shift

taxe

s aw

ay fr

om la

bour

to

sou

rces

less

det

rim

enta

l to

incl

usiv

e an

d su

stai

nabl

e gr

owth

.

With

rega

rd to

redu

cing

the

burd

en o

n la

bour

, cf.

the

mea

sure

s to

redu

ce in

com

e ta

x an

d so

cial

sec

urity

con

trib

utio

ns a

lread

y ad

opte

d fo

r 201

9 an

d 20

20, a

s w

ell

as th

e m

easu

re u

nder

Rec

omm

enda

tion

2.

Stre

ngth

en c

ompe

titio

n in

bu

sine

ss s

ervi

ces

and

regu

late

d pr

ofes

sion

s.

Am

endm

ent o

f th

e A

ct re

gula

ting

Serv

ices

of E

ngin

eers

an

d A

rchi

tect

s (G

eset

z zu

r Reg

elun

g vo

n In

geni

eur-

und

Ar

chite

kten

leist

unge

n,

Arc

hLG

) and

of t

he

stat

utor

y fe

e sc

hedu

le

for a

rchi

tect

s an

d en

gine

ers

(HO

AI)

Aga

inst

the

back

grou

nd o

f the

ECJ

rulin

g on

the

HO

AI o

f 4 Ju

ly 2

019,

the

Fede

ral

Gov

ernm

ent i

s cu

rren

tly re

view

ing

how

the

HO

AI a

nd th

e ba

sis

for s

tatu

tory

au

thor

isat

ions

in th

e A

rchL

G o

n w

hich

it is

bas

ed c

an b

e ad

apte

d to

resp

ond

as w

ell a

s po

ssib

le to

the

ECJ r

ulin

g. T

he p

roce

dure

to a

men

d th

e ru

les

will

be

laun

ched

onc

e th

is re

view

has

bee

n co

mpl

eted

.

Intr

oduc

tion

of

proc

edur

e to

pro

duce

ac

t or o

rdin

ance

pr

obab

ly fr

om a

utum

n 20

19.

Refo

rm o

f Sec

tion

146

of th

e Fi

scal

Cod

e (A

bgab

enor

dnun

g)

The

Fede

ral G

over

nmen

t is

plan

ning

an

amen

dmen

t to

brin

g Se

ctio

n 14

6 su

bsec

tion

2a o

f the

Fis

cal C

ode

into

line

with

Eur

opea

n la

w. T

he a

im o

f the

re

form

is to

faci

litat

e th

e fr

ee m

ovem

ent o

f non

-per

sona

l dat

a in

the

EU a

nd

thus

to b

oost

com

petit

ion

in a

n im

port

ant f

ield

of t

he p

rovi

sion

of c

orpo

rate

se

rvic

es.

Nee

d to

refo

rm

Sect

ion

146

of th

e Fi

scal

Cod

e de

rives

fr

om th

e Fr

ee F

low

of

Dat

a Re

gula

tion

(Reg

ulat

ion

2018

/180

7).

Dis

cuss

ions

with

th

e Lä

nder

from

Se

ptem

ber 2

019.


ble

9:

cont

inua

tion

The

Coun

cil o

f the

Eur

opea

n U

nion

reco

mm

ends

that

G

erm

any

take

s ac

tion

in 2

019

an

d 20

20 to

:Re

com

men

dati

on 2

: Lab

our

part

icip

atio

n, p

ensi

on s

yste

m

and

labo

ur m

arke

tTi

tle

of th

e m

easu

re

Des

crip

tion

and

exp

ecte

d im

pact

of m

easu

reSt

atus

and

tim

etab

le

Redu

ce d

isin

cent

ives

to w

ork

mor

e ho

urs,

incl

udin

g th

e hi

gh

tax

wed

ge, i

n pa

rtic

ular

for l

ow-

wag

e an

d se

cond

ear

ners

.

Dra

ft a

ct to

redu

ce

the

1995

sol

idar

ity

surc

harg

e

From

1 Ja

nuar

y 20

21 a

full

redu

ctio

n of

the

solid

arity

sur

char

ge w

ill ta

ke p

lace

fo

r low

and

mid

dle

inco

mes

, i.e

. for

aro

und

90%

of a

ll pa

yers

of w

age

tax

and

inco

me

tax

affe

cted

by

the

solid

arity

sur

char

ge. T

his

serv

es to

boo

st in

cent

ives

to

wor

k, p

urch

asin

g po

wer

and

the

dom

estic

eco

nom

y.

The

mea

sure

s to

redu

ce ta

x in

201

9 to

202

1 (h

ighe

r bas

ic p

erso

nal a

llow

ance

, of

fset

ting

of fi

scal

dra

g, m

uch

bett

er fa

mily

ben

efits

, e.g

. hig

her c

hild

ben

efit,

redu

ctio

n in

sol

idar

ity s

urch

arge

) and

the

cuts

in s

ocia

l sec

urity

con

trib

utio

ns in

20

19 (e

qual

fina

ncin

g by

em

ploy

ers

and

empl

oyee

s of

con

trib

utio

ns to

sta

tuto

ry

heal

th in

sura

nce,

cut

in c

ontr

ibut

ion

rate

to u

nem

ploy

men

t ins

uran

ce, f

rom

July

20

19 ta

rget

ed e

xpan

sion

of m

idi-

jobs

for l

ow e

arne

rs) w

ill p

artic

ular

ly b

enefi

t fa

mili

es a

nd p

eopl

e on

low

and

mid

dle

inco

mes

. The

tax

relie

f in

2019

-202

1 al

one

will

, whe

n ef

fect

ive

for t

he w

hole

yea

r, am

ount

to m

uch

mor

e th

an €

25bn

. Th

ese

are

ther

efor

e th

e la

rges

t tax

cut

s in

mor

e th

an te

n ye

ars.

Cabi

net d

ecis

ion:

21

Aug

ust 2

019.

Plan

ned

entr

y in

to

forc

e: 1

Janu

ary

2021

.

Take

mea

sure

s to

saf

egua

rd th

e lo

ng-t

erm

sus

tain

abili

ty o

f the

pe

nsio

n sy

stem

, whi

le p

rese

rvin

g ad

equa

cy.

“Rel

iabl

e In

terg

ener

atio

nal

Cont

ract

” Co

mm

issi

on (P

ensi

on

Com

mis

sion

)

The

task

of t

he in

depe

nden

t com

mis

sion

is to

add

ress

the

chal

leng

es o

f gu

aran

teei

ng a

nd d

evel

opin

g th

e st

atut

ory

pens

ion

insu

ranc

e sy

stem

from

202

5 on

war

ds in

a s

usta

inab

le m

anne

r and

to p

rese

nt a

reco

mm

enda

tion

for a

relia

ble

inte

rgen

erat

iona

l con

trac

t.

The

com

mis

sion

w

ill p

rese

nt it

s fin

al

repo

rt to

the

Fede

ral

Gov

ernm

ent i

n M

arch

20

20.

Intr

oduc

tion

of a

ba

sic

pens

ion

Acc

ordi

ng to

the

Coal

ition

Agr

eem

ent o

f the

CD

U/C

SU a

nd S

PD fo

r the

19th

legi

slat

ive

perio

d, th

e in

trod

uctio

n of

a b

asic

pen

sion

is a

gree

d. P

reci

sely

, it i

s in

tend

ed th

at th

e lif

e ac

hiev

emen

t of p

eopl

e w

ho h

ave

wor

ked

for d

ecad

es, h

ave

rais

ed c

hild

ren

or h

ave

take

n ca

re o

f rel

ativ

es is

hon

oure

d by

gra

ntin

g a

regu

lar

retir

emen

t inc

ome

10%

abo

ve o

ld-a

ge b

asic

inco

me

supp

ort.

The

coor

dina

tion

with

in th

e Fe

dera

l Gov

ernm

ent r

egar

ding

the

conc

rete

des

ign

of th

e m

easu

re

has

not y

et b

een

conc

lude

d.

Curr

ently

bei

ng

coor

dina

ted.

Ta

ble

9:

cont

inua

tion

The

Coun

cil o

f the

Eur

opea

n U

nion

reco

mm

ends

that

G

erm

any

take

s ac

tion

in 2

019

an

d 20

20 to

:Re

com

men

dati

on 2

: Lab

our

part

icip

atio

n, p

ensi

on s

yste

m

and

labo

ur m

arke

tTi

tle

of th

e m

easu

re

Des

crip

tion

and

exp

ecte

d im

pact

of m

easu

reSt

atus

and

tim

etab

le

Stre

ngth

en th

e co

nditi

ons

that

su

ppor

t hig

her w

age

grow

th,

whi

le re

spec

ting

the

role

of t

he

soci

al p

artn

ers.

Gen

eral

min

imum

w

age

The

gene

ral m

inim

um w

age

is b

eing

rais

ed fr

om it

s cu

rren

t lev

el o

f €9.

19

per h

our t

o €9

.35

per h

our a

t the

beg

inni

ng o

f 202

0. T

he in

crea

se in

the

min

imum

wag

e he

lps

to p

rovi

de a

n ap

prop

riate

min

imum

leve

l of p

rote

ctio

n fo

r wor

kers

. As

the

incr

ease

in th

e m

inim

um w

age

prev

ents

bel

ow-a

vera

ge

wag

e de

velo

pmen

ts in

the

low

-wag

e se

ctor

, it a

lso

help

s to

boo

st th

e do

mes

tic

econ

omy.

The

Fede

ral

Gov

ernm

ent

has

adop

ted

a co

rres

pond

ing

ordi

nanc

e. T

he

min

imum

wag

e is

be

ing

rais

ed o

n

1 Ja

nuar

y 20

20.

Cove

rage

of s

ecto

ral

min

imum

wag

es b

y co

llect

ive

agre

emen

ts

The

incr

ease

hel

ps to

pro

tect

wor

kers

and

als

o st

reng

then

s th

e ba

sis

of th

e in

com

es o

f the

wor

kers

em

ploy

ed in

the

sect

or.

Broa

deni

ng o

f sco

pe/

incr

ease

ong

oing

in

refe

renc

e pe

riod.

Act

to Im

prov

e W

ages

of

Tho

se P

rovi

ding

Lo

ng-t

erm

Car

e (P

flege

löhn

ever

bess

e-ru

ngsg

eset

z)

The

Act

to Im

prov

e W

ages

of T

hose

Pro

vidi

ng L

ong-

term

Car

e ai

ms

to b

oost

the

capa

city

to a

ct o

f the

Lon

g-te

rm C

are

Com

mis

sion

and

to re

gula

te th

e se

ttin

g of

w

orki

ng c

ondi

tions

in th

e lo

ng-t

erm

car

e se

ctor

whi

ch a

re b

ased

on

colle

ctiv

e ag

reem

ents

, tak

ing

acco

unt o

f spe

cial

sec

tora

l fea

ture

s. Bo

th fa

cilit

ate

the

natio

n-w

ide

adop

tion

of h

ighe

r min

imum

wag

es.

The

Four

th C

omm

issi

on h

as n

ow b

een

conv

ened

on

sche

dule

, and

is to

re

com

men

d hi

gher

min

imum

wag

es in

par

ticul

ar fo

r the

per

iod

afte

r 1 M

ay 2

020.

Th

is re

com

men

datio

n ca

n th

en b

ecom

e pa

rt o

f a n

ew o

rdin

ance

.

If p

ossi

ble,

the

Act

is

to b

e ad

opte

d an

d to

ent

er in

to fo

rce

in

Nov

embe

r.

Impr

ove

educ

atio

nal o

utco

mes

an

d sk

ills

leve

ls o

f dis

adva

ntag

ed

grou

ps.

Act

to P

rom

ote

the

Trai

ning

and

Em

ploy

-m

ent o

f For

eign

ers

(Aus

länd

erbe

schä

fti-

gung

sför

deru

ngsg

e-se

tz)

The

Act

to P

rom

ote

the

Trai

ning

and

Em

ploy

men

t of F

orei

gner

s ha

s la

rgel

y di

scon

nect

ed th

e ac

cess

for f

orei

gner

s to

fund

ing

for t

rain

ing

from

resi

denc

e le

gisl

atio

n, a

nd h

as b

road

ened

and

sub

stan

tially

sim

plifi

ed th

is a

cces

s. Th

e ne

w ru

les

mea

n th

at fo

reig

ners

can

now

be

give

n be

tter

sup

port

from

the

time

whe

n th

ey b

egin

voc

atio

nal t

rain

ing

to w

hen

they

rece

ive

thei

r qua

lifica

tion.

A

voca

tiona

l qua

lifica

tion

grea

tly h

elps

peo

ple

to b

ecom

e su

stai

nabl

y an

d w

ell

inte

grat

ed in

to s

ocie

ty. F

urth

er to

this

, bet

ter u

se c

an b

e m

ade

of th

e po

tent

ial

of fo

reig

ners

will

ing

to re

ceiv

e vo

catio

nal t

rain

ing,

and

this

can

hel

p se

cure

the

supp

ly o

f ski

lled

labo

ur. A

lso,

the

Act

to P

rom

ote

the

Trai

ning

and

Em

ploy

men

t of

For

eign

ers

will

ena

ble

man

y re

fuge

es to

take

par

t in

inte

grat

ion

cour

ses

or

voca

tiona

l lan

guag

e co

urse

s fo

r the

firs

t tim

e.

The

Act

ent

ered

into

fo

rce

on 1

Aug

ust 2

019.


ble

9:

cont

inua

tion

The

Coun

cil o

f the

Eur

opea

n U

nion

reco

mm

ends

that

G

erm

any

take

s ac

tion

in 2

019

an

d 20

20 to

:Re

com

men

dati

on 2

: Lab

our

part

icip

atio

n, p

ensi

on s

yste

m

and

labo

ur m

arke

tTi

tle

of th

e m

easu

re

Des

crip

tion

and

exp

ecte

d im

pact

of m

easu

reSt

atus

and

tim

etab

le

Nat

iona

l str

ateg

y fo

r co

ntin

uing

trai

ning

Follo

win

g th

e A

ct o

n O

ppor

tuni

ties

to G

ain

Qua

lific

atio

ns

(Qua

lifiz

ieru

ngsc

hanc

enge

setz

), w

hich

has

alre

ady

been

ado

pted

, the

Nat

iona

l st

rate

gy fo

r con

tinui

ng tr

aini

ng re

pres

ents

a fu

rthe

r ste

p to

war

ds e

nabl

ing

peop

le in

Ger

man

y to

det

erm

ine

thei

r ow

n de

velo

pmen

t opp

ortu

nitie

s in

th

e co

ntex

t of t

he d

igita

l tra

nsfo

rmat

ion.

The

aim

is to

refo

rm, s

yste

mat

ise

and

stre

ngth

en a

con

tinui

ng tr

aini

ng p

olic

y w

hich

sup

port

s lif

e-lo

ng (f

urth

er)

educ

atio

n. T

he fo

cus

is to

be

on tr

aini

ng a

nd s

kills

dev

elop

men

t, as

wel

l as

the

sust

aina

ble

safe

guar

ding

of e

mpl

oyab

ility

. The

par

tner

s in

the

Nat

iona

l str

ateg

y fo

r con

tinui

ng tr

aini

ng a

im to

est

ablis

h a

new

cul

ture

of c

ontin

uing

trai

ning

in

Ger

man

y in

whi

ch c

ontin

uing

trai

ning

is a

nat

ural

par

t of l

ife.

Pres

enta

tion

of

stra

tegy

pap

er o

n

12 Ju

ne 2

019;

curr

ently

in

impl

emen

tatio

n pr

oces

s;

pres

enta

tion

of a

pa

per o

n th

e st

atus

of

impl

emen

tatio

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sp

ring

2021

.

Revi

sion

of t

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o-ca

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inin

g A

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(Ber

ufsb

ildun

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setz

)

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revi

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of t

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ocat

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inin

g A

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akes

dua

l voc

atio

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rain

ing

mor

e at

trac

tive.

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focu

s of

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revi

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n an

chor

ing

tran

spar

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urth

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trai

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with

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tible

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a ba

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age

for t

rain

ees,

expa

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pos

sibi

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r par

t-tim

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catio

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and

the

flexi

bilis

atio

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the

exam

inat

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. The

new

feat

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ar

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giv

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al v

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inin

g a

cont

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rary

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text

and

to m

ake

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ore

attr

activ

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par

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and

the

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aim

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it po

ssib

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and

thus

to im

prov

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skill

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se.

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of

15 M

ay 2

019;

plan

ned

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to

forc

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1

Janu

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2020

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mpa

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into

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an

d jo

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elco

me

guid

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aim

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with

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help

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me

guid

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(Will

kom

men

slot

sen)

to o

ffer

a n

atio

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ide,

low

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ld, i

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l sup

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inte

grat

e re

fuge

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to tr

aini

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nd jo

bs in

com

pani

es.

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new

bas

is fo

r the

su

ppor

t fro

m

1 Ja

nuar

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20 w

ill

be th

e G

uide

lines

to

supp

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into

trai

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and

jobs

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ides

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28 A

ugus

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9.

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take

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an

d 20

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and

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arke

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tle

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to th

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ruf”

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ts

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aim

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rt m

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refu

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as

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wor

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trai

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and

ski

lls d

evel

opm

ent.

Laun

ch o

n

1 Ja

nuar

y 20

19; t

o ru

n un

til 3

0 Ju

ne 2

022.

Empi

rical

edu

catio

n re

sear

ch fr

amew

ork

prog

ram

me

In th

e em

piric

al e

duca

tion

rese

arch

fram

ewor

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ogra

mm

e, re

sear

ch to

impr

ove

educ

atio

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airn

ess

is a

key

fiel

d. F

or e

xam

ple,

the

Fund

ing

Gui

delin

es o

n “R

educ

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barr

iers

to e

duca

tion:

lear

ning

env

ironm

ents

, edu

catio

nal s

ucce

ss a

nd

soci

al p

artic

ipat

ion”

rece

ntly

app

eare

d. T

he a

im o

f the

gui

delin

es is

to g

ener

ate

scie

ntifi

cally

gro

unde

d fin

ding

s fo

r the

sha

ping

of m

easu

res

to re

duce

soc

io-

stru

ctur

al e

duca

tiona

l dis

adva

ntag

es.

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guid

elin

es w

ere

anno

unce

d in

June

20

19. T

he p

lan

is

for t

he fi

rst p

roje

cts

fund

ed u

nder

th

ese

guid

elin

es to

co

mm

ence

in m

id-

2020

.

Tabl

e 9:

co

ntin

uatio

n


Table 10: Targets of the EU’s strategy for growth and jobs

National headline targets for 2020 List of actions* Description of the direct

relevance to the target

Employment rate among

persons aged 20–64: 77%**

Employment rate among older people aged between 55 and 64: 60%**

Employment rate among women: 73%**

No changes compared with the 2019 NRP.

R&D expenditure: 3.5% of GDP by 2025 (two-thirds from the private sector and one-third from the public sector)

The Federal Government’s “High-Tech Strategy 2025” is an interdepartmental research and innovation strategy intended to drive the transfer of basic research into the application phase. To this end, the High-Tech Strategy 2025 aims to establish an open culture of innovation that integrates new knowledge and new stakeholders into cutting-edge projects and that provides space for creative ideas. The progress report on the High-Tech Strategy was presented in September 2019.

By establishing an agency to promote breakthrough innovations, the Federal Government has implemented a unique, person-centred approach to driving innovation. Specifically, the agency will place a resolute focus on making the shift from R&D to application, providing innovators from the fields of science and business with the trust and independence to turn highly innovative ideas into application-ready products, processes and services. As a first step, three pilot innovation competitions in the areas of artificial intelligence, medicine and energy were advertised in 2019.

On 22 May 2019, the cabinet proposed a draft of an Act for providing tax credit for research and development (Forschungszulagengesetz), which is intended to provide small and medium-sized enterprises with incentives to invest in R&D activities.

Table 10: continuation



Reduce greenhouse gas emis-sions by at least 40% by 2020, by 80–95% by 2050, compared with 1990 levels, or achieve significant levels of greenhouse gas neutrality by 2050

Increase share of renewable energy to

18% of gross final energy consumption by 2020, to 60% by 2050 and to at least 80% in the electricity sector

National energy efficiency goals under the Federal Government’s energy strategy of 28 September 2010: Reduce primary energy consumption by 20% by 2020 and by 50% by 2050, compared with 2008 levels

Implementation of measures as set out in the key-issues paper on the Climate Action Programme 2030 of 25 September 2019

With the Climate Action Programme 2030, the Federal Government aims to reach the climate action targets determined by putting in place a diverse package of measures covering innovation, subsidies, legal standards and requirements, and greenhouse gas pricing.

From a macroeconomic point of view, a single cross-sectoral price on greenhouse gas emissions is the most cost-effective way of achieving climate targets. For this reason, the Federal Government will advocate, working closely with the European Commission, for the introduction of a Europe-wide emissions trading system (ETS) in emission allowances for all sectors. As a first step, a moderate Europe-wide minimum price will be added to the existing European emissions trading system (for energy and industry). This minimum price ensures that, even if demand declines, the price of emissions allowances remains above a certain threshold. This ensures there is planning certainty for climate investments in the ETS sectors.

In a second step, the Federal Government will join forces with other interested member states to work towards integrating non-ETS sectors into the ETS in the future.

In order to reach the climate targets for 2030, each country must take action quickly. Some of the measures will become effective as soon as 2020.

In this, the Federal Government considers that the key measures are those aiming at the expansion of renewable energies, the phase-out of coal-fired electricity generation and the improvement of energy efficiency.


* The 2019 NRP, which was sent to the European Commission in April 2019, includes a comprehensive overview of the state of playregarding the implementation of the Europe 2020 strategy in Germany, including a detailed table of actions (including description of action, anticipated impact, status and schedule), p. 54 et seqq. The overview in this table is limited to new actions (planned, adopted, in force), especially actions affecting public finances, which will take effect in 2020 and the following years.

** Target already met.

Table 10: continuation



Increase in the share of persons aged 30-34 who have completed tertiary education or equivalent-to 42%**

The revision of the Federal Education and Training Assistance Act (Bundesausbildungsförderungsgesetz), which entered into force in August 2019, earmarks an additional total of €1.3 billion for benefit increases in the budget years 2019–2021.

These substantial benefit increases aim to improve outreach to young people who are about to enter vocational training or higher education and to ensure equal opportunities in accessing qualifying vocational training.

Reduce the number of long-term unemployed persons by 20% by 2020 compared with 2008 levels**

No changes compared with the 2019 NRP.

Estimation technique

Relevant step of the budgetary process

Relevant features of the model/technique used

Assumptions

Macroeconomic forecast

Before each tax revenue estimate

Iterative-analytic approach: several partial models are used in the system of national accounts. Potential GDP is estimated on the basis of models developed and recommended by the Output Gaps Working Group of the European Union’s Economic Policy Committee (EPC).

Technical assumptions (for oil and commodity prices, exchange rates and interest)

Tax revenue estimate

Basis for drafting and finalising budget

Estimate based on macroeconomic forecast and time series analysis

Macroeconomic forecast, estimates on the fiscal impact of discretionary tax measures

Fiscal impact of discretionary tax measures

Basis for tax revenue estimate and for drafting and finalising budget

Microsimulation models based on tax statistics; calculations based on macroeconomic assumptions

Macroeconomic forecast

Table 11: Methodological aspects

Published byFederal Ministry of FinancePublic Relations DivisionWilhelmstr. 9710117 Berlin, Germany

Publication DateOctober 2019

Edited byReferat I A 4

Where to order this publication:Tel: +49 3018 272 2721Fax: +49 3018 10 272 2721email: [email protected]

Further information can be found online at:www.bundesfinanzministerium.dewww.ministere-federal-des-finances.dewww.federal-ministry-of-finance.de

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