German firms will get three years to sell off unwanted property at reduced tax rates, according to corporate tax cut proposals due to be formally adopted by the government tomorrow.
The draft legislation confirms the government's plan to fund a cut in the basic corporate tax rate to 19 per cent from 25 per cent by closing a number of tax loopholes.
These include tax breaks offered on special-purpose film, renewable energy and shipbuilding investment funds, and further limiting a company's ability to offset any given year's taxable profits with past losses.
However, the draft law also opens the way for companies to sell unwanted property they have held for more than 10 years at half normal tax rates, the draft says.
The sale and leaseback of property used for a company's business will be excluded from the scope of the law, it adds. The future of the corporate tax cut remains uncertain.
Germany's main conservative opposition has said previously the government's plans would pay for a shallower cut in the basic corporate tax rate to 22 per cent. The opposition controls the Bundesrat upper house of parliament, giving it a de facto veto on the proposals.
However, in its proposal the government says its plans are fully funded assuming a lower corporate tax rate encourages German firms to pay more tax in the country rather than using creative accounting to move profits abroad.