Fourth Bureaucracy Reduction Act: An Overview of the Changes
The Fourth Bureaucracy Reduction Act, which was passed by the Bundestag on September 26, 2024, aims to reduce unnecessary bureaucracy and promote digitalization in public administration. The federal government’s draft bill is a response to the challenges arising from multiple crises, a stagnant economy, and strained budgetary conditions.
Urgency of Reducing Bureaucracy
The federal government emphasizes that eliminating unnecessary bureaucracy is particularly urgent in the current economic climate. The law is linked to other measures, such as the Growth Opportunities Act, which has already been passed; all of these aim to strengthen the competitiveness of the German economy and reduce the administrative burden on businesses and citizens.
Key provisions of the law
Shortening of retention periods
One of the key changes concerns the retention periods for accounting documents under commercial and tax law. These are being shortened from ten to eight years. This measure is intended to ease the burden on businesses by reducing the time and resources they must spend on document management.
Modernization of tax assessment notices
A key aspect is the digitization of the notification of tax assessments. In the future, tax authorities will be able to make these available for digital retrieval without requiring the recipient’s consent. This regulation could significantly reduce the burden on state tax administrations and save an estimated 116 million euros in mailing and printing costs.
Simplifications in stock corporation law
The changes to stock corporation law are intended to ease the burden on companies by making it sufficient to publish documents related to compensation-related resolutions online, without the need for a separate announcement. This significantly reduces the administrative burden and costs for companies.
Digitization in Human Resources Management
The law also provides for changes to the German Employment Evidence Act. The formal requirements will be adjusted so that companies can digitize their HR management without jeopardizing the protection of employee rights. Exceptions apply to certain sectors, such as construction and hospitality, where the requirement for written form remains in place.
Temporary Work and Staffing Agreements
In the area of temporary work, the text form will be sufficient for staffing agreements, meaning that these can also be concluded via email. This simplifies administrative processes for both staffing agencies and client companies.
Changes to Retention Periods
Another important change concerns the modified retention periods, particularly in connection with ongoing Cum-Ex investigations. The shortened retention period is to apply to supervised persons and companies only after a one-year delay, so as not to interfere with the ongoing investigations.
Statement by the Bundesrat
The Federal Council generally welcomes the draft bill but sees a need for further action and calls on the federal government to swiftly implement decisions already made, such as those in the Pact for Accelerating Planning, Approval, and Implementation.
Conclusion
The Fourth Bureaucracy Reduction Act offers promising approaches to modernizing and simplifying administrative procedures, particularly through the increased use of digital processes. Businesses and citizens could benefit from a reduction in bureaucratic burdens and faster processing, which appears urgently necessary given the current economic challenges.
Yet despite these potential advantages, the question remains whether the proposed measures are truly far-reaching enough to drive down bureaucracy in a sustainable manner. Critics argue that the law does not go far enough in some areas, particularly regarding the elimination of further written-form requirements and the urgently needed acceleration of planning and approval procedures. It also remains to be seen whether the digitization projects can be implemented without major implementation problems, especially since data protection concerns have already led to the first withdrawals of planned regulations.
Tax Advisors Düsseldorf & Oberhausen
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