The German Federal Cabinet passed the government's legislative draft of the 2013 Annual Tax Act on May 23, 2012. The Federal Council's position statement is expected on July 6, 2012. The Federal Council's position statement is based on recommendations by its Committees issued on June 22, 2012. It is planned to introduce tax liability for income from hybrid financial instruments as well as tax liability for dividends and capital gains on profit sharing of widely held stock (<10%). Our Client Newsletter informs you of the details of these two new reforms prior to the Federal Council's resolution. In particular, the corresponding effective dates allow little room for maneuver.