Typically German because we need a bureaucracy relief law? The current status of the economy and renewable energies such as PV

🏛️📜 The Fourth Bureaucracy Relief Act (BEG IV) is a legislative initiative of the German Federal Government, passed by the Bundestag on September 26, 2024. The aim of the law is to relieve the German economy of approximately €944 million annually by reducing bureaucratic hurdles.

🌟 Main objectives and measures of the Fourth Bureaucracy Relief Act

Reduction of retention periods

The retention period for tax documents is reduced from ten to eight years.

Digitalization of administration

Tax assessments and other administrative acts will be provided digitally in the future. The previously required consent of the recipient will be eliminated in favor of an opt-out system.

Relief in labor law

The formal requirements in the employment law's proof of employment are being relaxed to make it easier for companies to digitize their HR management processes. This includes, among other things, the option of concluding employment contracts digitally.

Abolition of the hotel registration requirement

German citizens no longer need to fill out a registration form when staying in hotels.

Simplifications in stock corporation law

Companies can publish documents relating to remuneration-related decisions on their website without the need for a separate announcement.

🚫 Criticism

Despite its positive aspects, the BEG IV (Federal Restructuring Act IV) is considered insufficient by some. Critics argue that the law does not go far enough to achieve the comprehensive reduction of bureaucracy necessary for significant economic relief. Of the more than 400 proposals from the business sector, only a few were incorporated into the law. Furthermore, Germany lags behind other European countries in digitalization, necessitating further efforts.

The adoption of the BEG IV (Federal Act on the Reduction of Bureaucracy) is a step towards reducing bureaucracy, but it is considered a small step, as many challenges remain. Further measures and laws to reduce bureaucracy are planned or under review.

➡️ IW – Institute of the German Economy – New Bureaucracy Relief Act: Just a small step

➡️ BDEW – German Association of Energy and Water Industries calls for a separate law to reduce bureaucracy for the energy industry.

📜💼📉 The new Bureaucracy Relief Act: A small step forward with big challenges

After lengthy negotiations, the German government has passed the fourth Bureaucracy Relief Act (BEG IV). The aim of this law is to reduce the bureaucratic costs for German businesses by almost one billion euros annually. However, although this is an important step, it falls far short of ushering in a comprehensive transformation for the German economy.

📋🛑 The bureaucracy problem in Germany

Germany has been grappling with a massive bureaucracy problem for years, burdening both businesses and citizens. Construction project approvals often drag on for months, sometimes even years, and companies are repeatedly required to submit the same information to various authorities – often still in paper form. Even when moving house, citizens still have to appear in person at government offices. These cumbersome processes not only cost time and cause frustration, but also considerable financial resources. The result: Germany becomes unnecessarily expensive as a business location, and bureaucratic hurdles diminish its international competitiveness.

A current example is the planning and approval process in the construction industry. While in other European countries such as the Netherlands or Denmark, construction projects are quickly approved digitally, many processes in Germany are still characterized by inefficient analog structures. This leads to delays that not only harm the building owners but also hinder the modernization and expansion of important infrastructure such as roads, railways, and broadband networks.

🛤️📈 First steps in the right direction

German politicians have now recognized the problem. Federal Justice Minister Marco Buschmann praises the new Bureaucracy Relief Act IV as a "stimulus package at no cost" and a crucial contribution to boosting the economy. But the reality is different. Despite some progress, especially in the digitalization of administrative processes, the measures adopted represent only small steps.

Of the more than 400 proposals from the business sector aimed at reducing bureaucracy, only eleven made it into the law. This illustrates that the implementation of many necessary reforms is still progressing slowly. Many of these proposals came from companies that are burdened enormously by unnecessary bureaucracy, particularly in the areas of tax law, labor law, and environmental protection.

📄⏳ Shortened retention periods as an example

One of the few "major" measures in the new law concerns the reduction of the retention period for tax documents from ten to eight years. This change will represent a noticeable relief, especially for small and medium-sized enterprises (SMEs). The previously long retention periods often led to unnecessary costs for archiving documents, without any discernible practical benefit for the companies or the tax authorities.

The option to conclude or terminate employment and rental agreements digitally is also a sensible innovation. These steps are particularly relevant in times of working from home and the increasing digitalization of workplaces. Nevertheless, key objectives, such as the fully digital incorporation of companies, remain unfulfilled. While this has long been standard practice in countries like Austria and Denmark, Germany remains at the vague level of "striving" for it.

The sluggish implementation of the Online Access Act (OZG) is yet another example of Germany's digital backwardness. Essential administrative services were supposed to be available online by the end of 2022. However, the current situation shows that only 156 services are offered digitally – just 51 more than the target date. The fact that these measures now fall under the Fourth Bureaucracy Relief Act could be seen as a "sham," as it actually only represents a delaying tactic for long-overdue reforms.

🪡🧩 Bureaucracy reduction as a patchwork solution?

While the new Bureaucracy Relief Act surpasses the first two acts (BEG I and II) in scope, it falls short of expectations, particularly compared to the third Bureaucracy Relief Act of 2020, which enabled savings of €1.2 billion in bureaucratic costs. At the same time, companies are facing new bureaucratic challenges, such as the EU Supply Chain Directive and the Taxonomy Regulation for the banking sector. Both regulations require extensive reporting and documentation obligations, which are not included in the German bureaucracy measurement system.

Another problem lies in the complicated state laws and the often cumbersome planning and approval procedures at the municipal level. These cause considerable delays and hinder not only construction projects but also other economically important projects. Economic expert Klaus-Heiner Röhl from the German Economic Institute (IW) aptly puts it: "The major breakthrough against the paralyzing bureaucracy is still pending." As long as it is not possible to fundamentally reform the bureaucratic structures and consistently advance the reduction of obstacles, relief for the economy will remain stalled.

🔄🔧 The path to a real turnaround

To achieve a genuine turnaround for the German economy, far more comprehensive reforms are needed. These include, above all, the consistent digitalization of administrative processes and a simplification of bureaucratic requirements for businesses. Countries like Estonia and Finland demonstrate that efficient and modern administration is indeed possible. In Estonia, for example, 99 percent of all government services are available online, saving citizens and businesses considerable time and money. In Finland, too, bureaucracy has been simplified to such an extent that new business start-ups can be completed within a few days.

German policymakers should take these countries as role models and initiate ambitious reforms that not only offer isolated relief but also bring about structural improvements. A key starting point is the comprehensive digitalization of public administration. This means not only making forms available online but also handling all administrative processes digitally, from application to approval. However, this requires significant investment in IT infrastructure and close cooperation between the federal government, states, and municipalities.

🌈⏫ Plenty of room for improvement

The fourth Bureaucracy Relief Act is a small step in the right direction, but it falls far short of providing lasting relief to the German economy. While some measures, such as shortening retention periods and enabling digital contract conclusion, are sensible and important, the law falls short of expectations in many areas. Germany continues to lag behind, particularly in the digitalization of public administration.

To prevent Germany from losing further ground in international competition, more far-reaching reforms are necessary. Policymakers must not only take small steps, but develop a comprehensive reform agenda that sustainably reduces bureaucracy and strengthens the competitiveness of the German economy. Only in this way can Germany be made fit for the future and remain an attractive business location.

🌟🚀⚡ The German Association of Energy and Water Industries (BDEW) is calling for a separate law to reduce bureaucracy for the energy sector.

The German Association of Energy and Water Industries (BDEW) recently issued a strong call for a dedicated law to reduce bureaucracy in the energy sector. This call was prompted by the fourth bureaucracy reduction law, recently passed by the Bundestag, which has drawn criticism from the energy industry. Kerstin Andreae, Chair of the BDEW's Executive Board, expressed dissatisfaction with the scope of the measures adopted. From the industry's perspective, this law offered a significant opportunity to decisively advance the energy transition through substantial simplifications. Unfortunately, the law falls far short and fails to adequately address many of the energy sector's proposals. The disappointment is considerable, as companies in the sector are working intensively to secure energy supplies while simultaneously accelerating the transition to a sustainable energy future.

🌟🛠️ The special challenge of the energy industry

The energy sector faces immense challenges. Besides ensuring energy security, the transition to renewable energies is one of the most pressing tasks of our time. Companies in the sector are confronted not only with technical and economic difficulties, but also with a particularly heavy bureaucratic burden. These obstacles stifle innovation and slow down the processes that actually need to be accelerated in order to achieve the ambitious goals of the energy transition.

According to the German Association of Energy and Water Industries (BDEW), the Energy Industry Act alone comprises 135 separate reporting obligations. This multitude of obligations illustrates the complexity of the regulatory environment in which companies must operate. And this is just one of over 15,000 laws and standards relevant to the industry. The BDEW sees an urgent need for action here, as the current bureaucracy is hindering the necessary transformation.

The energy industry has developed numerous practical proposals in recent years and made them available to policymakers. These proposals aim to simplify processes, avoid duplicate reporting, and eliminate unnecessary reporting requirements. However, many of these suggestions were not incorporated into the adopted Fourth Bureaucracy Relief Act. The lack of clear statements regarding the implementation of these proposals is incomprehensible to the industry and is causing frustration.

🌟📜 The need for a specific bureaucracy reduction law for the energy sector

While the Fourth Bureaucracy Relief Act is designed to be cross-sectoral, the German Association of Energy and Water Industries (BDEW) emphasizes that a general law does not meet the specific needs of the energy industry. Due to its complexity and the intense pressure for transformation it faces, the energy sector is one of the industries that suffers most from existing bureaucracy. Therefore, it is necessary to develop a specific bureaucracy relief law for the energy sector.

Such a law would have to address the greatest need for action: It would require cutting through and dismantling the thicket of reporting obligations and regulations. Only then can genuine relief be achieved, giving energy companies the necessary leeway to focus on the energy transition. "We need a dedicated initiative," demands Kerstin Andreae, "that consolidates the various approaches to create effective relief."

🌟💻 A central IT platform to simplify processes

In addition to a dedicated law to reduce bureaucracy for the energy sector, the German Association of Energy and Water Industries (BDEW) is calling for the introduction of a central IT platform. Such a platform could coordinate compliance with the numerous information and reporting obligations and significantly streamline processes. The introduction of a central platform would enable companies to fulfill their reporting obligations more efficiently, thereby freeing up valuable resources for the actual work of driving the energy transition.

Digitalization is a key factor in reducing bureaucracy. An IT platform that consolidates all relevant reporting processes could make significant progress in cutting red tape. It would not only relieve the burden on businesses but also facilitate the work of government agencies by optimizing access to the necessary data.

🌟🏃‍♂️ Bureaucracy reduction as a long-distance run

The German Association of Energy and Water Industries (BDEW) emphasizes that reducing bureaucracy is not a sprint, but a marathon. It is a continuous process that requires perseverance and determination. As part of its growth initiative, the German government plans to update the Bureaucracy Relief Act annually. The BDEW expressly welcomes this, as only through regular reviews and adjustments of existing regulations can long-term relief be achieved.

The energy industry places great hopes in this ongoing review, but also expects that the specific needs of the sector will be addressed in the coming years. For companies, it is crucial that the reduction of bureaucracy does not stop halfway, but is pursued consistently. Without a significant simplification of bureaucratic procedures, it will hardly be possible to achieve the German government's ambitious climate targets.

🌟🌍 The importance of the energy transition for Germany's future

The energy transition is one of the central projects of German politics. It aims to convert the country's energy supply to renewable energies while simultaneously drastically reducing greenhouse gas emissions. The success of the energy transition is crucial for Germany's future as an industrial location and for achieving international climate protection goals.

The energy sector plays a key role in this. Without its innovative strength and investments in new technologies, the energy transition will not be successful. However, companies in this sector depend on framework conditions that enable them to manage this task efficiently. Excessive bureaucracy is counterproductive in this regard.

It is therefore of great importance that policymakers take the concerns of the energy industry seriously and design the framework conditions in such a way that companies can concentrate on their core tasks: securing the energy supply and the transformation towards renewable energies.

🌟🔑 Reducing bureaucracy is a key factor for the success of the energy transition

The German Association of Energy and Water Industries (BDEW) is calling not only for a general law to reduce bureaucracy, but also for a specific law for the energy sector. This law should provide genuine relief to companies in the industry and simplify processes so that the energy transition can progress rapidly. A central IT platform could help coordinate compliance with reporting obligations and further reduce bureaucratic hurdles.

Only by decisively reducing existing bureaucracy will it be possible to achieve climate goals and put the energy sector on a sustainable path. Reducing bureaucracy is an ongoing process that requires perseverance and determination. But time is of the essence: to successfully implement the energy transition, the right course must be set now.

☑️ Industry expert, here with his own Xpert.Digital industry hub with over 2,500 specialist articles

Konrad Wolfenstein

I would be happy to serve as your personal advisor.

You can contact me by filling out the contact form below or simply call me on +49 89 89 674 804 (Munich) .

I'm looking forward to our joint project.

Xpert.Digital is a hub for industry with a focus on digitalization, mechanical engineering, logistics/intralogistics and photovoltaics.

With our 360° business development solution, we support well-known companies from new business to after sales.

Market intelligence, smarketing, marketing automation, content development, PR, mail campaigns, personalized social media and lead nurturing are part of our digital tools.

You can find out more at: www.xpert.digital - www.xpert.solar - www.xpert.plus