Germany's population falls for first time in a decade as Covid-19 hits immigration

The population of Germany fell for the first time in a decade after a sharp cut in immigration because of coronavirus.

The number of people in the country fell by 40,000 in the first six months of the year from a record 83.2 million last year, according to the Federal Statistical Office. The last decline was in the second half of 2010.

Preliminary figures showed net immigration of 74,000 in the first half of the year, compared with 167,000 a year earlier. Germany shut its borders during part of the period.

The statistics office said delayed registration of new arrivals and departures from office shutdowns may also play a part in the figures.

Europe’s largest economy has been trying to reverse the effects of a low birth rate and one of the world’s oldest populations for years, but that decline has been offset by large numbers of immigrants.

The change is a significant shift from 2015 when Germany accepted the bulk of more than a million people who arrived in the EU from the Middle East and Africa fleeing war and poverty. Since then, the number of arrivals from countries outside Europe has fallen.

The subsequent backlash against Chancellor Angela Merkel’s liberal immigration policies led to a surge in support for the far-right and the biggest challenge to her leadership since she took power in 2005.

But support for the far-right has fallen away during the Covid-19 pandemic with Germans supporting Mrs Merkel’s handling of the crisis.

She said on Wednesday that Germans need to contain a worsening second wave of the virus or tough new restrictions would be on the way.

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The flights

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The package

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Ten tax points to be aware of in 2026

1. Domestic VAT refund amendments: request your refund within five years

If a business does not apply for the refund on time, they lose their credit.

2. E-invoicing in the UAE

Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.

3. More tax audits

Tax authorities are increasingly using data already available across multiple filings to identify audit risks.

4. More beneficial VAT and excise tax penalty regime

Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.

5. Greater emphasis on statutory audit

There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.

6. Further transfer pricing enforcement

Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.

7. Limited time periods for audits

Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.

8. Pillar 2 implementation

Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.

9. Reduced compliance obligations for imported goods and services

Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.

10. Substance and CbC reporting focus

Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.

Contributed by Thomas Vanhee and Hend Rashwan, Aurifer