Overview

• The Bundesrechnungshof report identifies annual revenue losses in the double-digit billions due to tax evasion, outdated tax administration, and ineffective subsidies.
• It recommends a comprehensive review of tax subsidies, with potential savings of up to 30 billion euros annually, including reforms to diesel tax benefits and handworker service deductions.
• The report calls for a reorientation of the reduced VAT rate, limiting it to basic necessities rather than luxury goods, impacting a 35 billion euro fiscal volume.
• It criticizes current coalition plans to expand tax benefits, such as increasing the commuter allowance, warning these measures could undermine fiscal consolidation and environmental goals.
• Upgrades to administrative and technical infrastructure, including a unified tax software system and stronger anti-fraud measures, are deemed critical to improving tax collection and closing revenue gaps.