#BGBl. 2025 I Nr. 255Law Amending the Fiscal Equalization Act 2025
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This German federal law, enacted on 27 October 2025 and published on 29 October 2025 in the Federal Law Gazette (BGBl. 2025 I Nr. 255), amends the Finanzausgleichsgesetz (Fiscal Equalization Act). The legislation adjusts the financial relations and revenue-sharing mechanisms between the Federal Government and the 16 German states (Länder). It is managed by the Federal Ministry of Finance and falls under the policy area of fiscal equalization between Bund and Länder. The changes primarily concern the distribution of tax revenues and horizontal and vertical equalization payments to ensure more balanced public finances across the federation.
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Key Changes
- Amends the Finanzausgleichsgesetz (FAG) to update the formula and mechanisms for distributing tax revenues between the federal government and the Länder
- Adjusts horizontal and vertical fiscal equalization payments among the 16 German states
- Modifies the allocation keys and thresholds used in the revenue-sharing system effective from fiscal year 2025
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