Bureaucratic reduction in Germany: Companies skeptical despite the new law

Bureaucratic reduction in Germany: Companies skeptical despite the new law

The Federal Government Promits on a relief course! But the German economy remains skeptical!

Will the fourth bureaucracy relief law, BEG IV for short, really bring the hoped -for liberation for companies? According to the latest German Business Panel (GBP), the mood in German companies shows anything but euphoric. Only a small 10 percent believe in a remarkable relief from the new regulation, which the bureaucracy costs are supposed to push for almost one billion euros a year. The expectations remain dreary and sobering, especially in the processing of businesses, healthcare, in construction and trade.

Bundestag passes the law - but what does that mean for the companies?

On September 26, 2024, the Bundestag said goodbye to BEG IV. Significant relief is planned: the retention periods for booking documents are to be shortened from ten to eight years, tax notices are digitized and many reporting obligations are reduced. In addition, fewer formal requirements should ensure that companies can work paperlessly. But reality looks different! Sage and write 69 percent of the companies surveyed are of the opinion that these changes in the law will hardly have an impact on their bureaucratic stress!

So what does the supposed relief bring? As so often, the devil is in detail! It is clear to the companies: the actual problems are not in the laws, but in their implementation by authorities. More than 57 percent of the companies complain that the bureaucracy arises from interaction with the offices and is not just due to the legal framework itself. You draw grief, especially with repeating data inputs and the blatant deficit in digitization.

profits - bureaucracy eats profit prospects!

The frustration culminates: "A clear reduction in state bureaucracy can really boost the German economy!", warns Prof. Dr. Philipp Dörrenberg from the University of Mannheim. The figures speak for themselves: Average by average, companies avoid incredible 16.9 percent of potential profit due to superfluous bureaucratic requirements. Anyone who sees the stress of the authorities as the main cause of bureaucracy even suffers a loss of 19.6 percent. A huge setback for Germany's business location!

Not just that! In the jungle of taxes and social security contributions, 50.1 percent of the companies feel overwhelmed. In particular, trade tax and sales tax are on the list of bureaucracy causers. And the newly introduced reporting obligations in the area of ​​sustainability screw the administrative effort further - especially for small and medium -sized companies that are also short of the shortage!

The dark consequences of these bureaucratic loads are reflected in the investment decisions. Almost 56.4 percent of the companies have tipped over planned investments in the past two years due to these hurdles! And above all, these are the companies that have to struggle with the supply chain regulations - here it is even 65 percent!

The result? A total of 23.6 percent of the companies concerned have shifted their projects abroad. Is the German economy on the best way to a bureaucratic dead end?

The message is clear: the bureaucratic obstacles are a lasting problem that not only massively influences investments, but also personnel decisions. The survey shows an alarming trend: While 61.5 percent of companies hire more compliance staff, 46 percent do without the hiring of necessary specialists in the core business. And this pressure hits particularly larger companies!

The search for solutions is pressing! Without comprehensive reforms, the success of the reduction in bureaucracy will remain a pious wish for many companies in Germany.

The comprehensive "GBP monitor: corporate trends in October 2024" reveals frightening truths!

Here you can find the report: gbp-monitor

also follow the developments in research: The German Business Panel collects monthly data and analyzes the trends of the German corporate landscape.