KPMG Germany Webpage
Click on the above link to visit the KPMG Germany webpage on the Mondaq website
For disclaimer and copyright see end of this article.

The German 1997 Annual Tax Act

The German 1997 Annual Tax Act (Jahressteuergesetz 1997) was enacted into law in December of 1996 and has since entered into force. Most, but not all, of its provisions take effect on 1 January 1997. Please note that this article is one of a 14-part set of articles describing the 1997 Annual Tax Act.


In its ruling of 22 June 1995, the Federal Constitutional Court held the net worth tax to be unconstitutional in its present form, but permitted continued collection of the tax without revisions until 31 December 1996. After considerable debate as to whether the net worth tax was, so to speak, worth fixing, the Government's first draft of the 1997 Annual Tax Act provided for its outright repeal. However, it proved impossible to obtain the necessary consent of the Federal Council (Bundesrat), and so this provision was removed from the draft legislation. While this means that, formally speaking, the net worth tax remains in force, it cannot be collected after 1 January 1997 because of its unconstitutionality. The Government has thus managed to repeal the net worth tax de facto, although it could not achieve this de jure.

Should net worth tax prepayments have been assessed for 1997 (payable quarterly starting on 10 February 1997), taxpayers should suspend such payments until further notice and in particular revoke any account debit authorisations given to the tax authorities to the extent these relate to net worth tax prepayments. According to our information, press releases on this subject will soon be issued by the offices in charge.

This article is one of a 14-part set of articles entitled "The German 1997 Annual Tax Act" in which we have endeavoured to provide a useful overview of what we consider to be the major changes made in the German laws by the 1997 Annual Tax Act and, more selectively, by other recent legislation. To access the other articles in the set please enter 'The German 1997 Annual Tax Act', 'KPMG Tax Advisers' and 'Business Monitor'. We are of course at your disposal to discuss in depth the ramifications of new provisions which are of particular interest to you.

Disclaimer and Copyright
This article treats the subjects covered in condensed form. It is intended to provide a general guide to the subject matter and should not be relied on as a basis for business decisions. Specialist advice must be sought with respect to your individual circumstances. We in particular insist that the tax law and other sources on which the article is based be consulted in the original, whether or not such sources are named in the article. Please note as well that later versions of this article or other articles on related topics may have since appeared on this database or elsewhere and should also be searched for and consulted. While our articles are carefully reviewed, we can accept no responsibility in the event of any inaccuracy or omission. Please note the date of each article and that subsequent related developments are not necessarily reported on in later articles. Any claims nevertheless raised on the basis of this article are subject to German substantive law and, to the extent permissible thereunder, to the exclusive jurisdiction of the courts in Frankfurt am Main, Germany. This article is the intellectual property of KPMG Deutsche Treuhand-Gesellschaft AG (KPMG Germany). Distribution to third persons is prohibited without our express written consent in advance.