Investment Program of the Federal Government: A Comprehensive Analysis
The Federal Government presented a bill for a tax investment immediate program in June 2025, aimed at strengthening the economic location of Germany and improving the economic situation through tax relief. This program will be examined for the first time and could have significant impacts on savers and investors, as it may influence economic stability and future investments.
Objectives of the Investment Program
The main goal of the program is to encourage companies to invest in Germany rather than wait. It is intended to serve as a first step towards more comprehensive tax reforms, particularly supporting small and medium-sized enterprises (SMEs) by providing more liquidity, better depreciation options, and tax planning security.
Measures of the Investment Program
- Investment Booster: Degressive Depreciation
The reintroduction and increase of degressive depreciation options to 30 percent for movable assets is intended to encourage companies to invest in new technologies and facilities. - Reduction of Corporate Tax
The corporate tax rate is to be gradually reduced from 15 percent to 10 percent by 2032, starting January 1, 2028. This is meant to increase the attractiveness for corporations. - Relief for Partnerships
The tax rate on retained earnings is to be reduced in three steps from the current 28.25 percent to 25 percent by 2032. - Support for Electric Vehicles
A stronger tax incentive for electric vehicles is planned, including an increase in the maximum price limit for tax-privileged e-company cars. - Research Grant
The tax research grant is to be expanded to promote investments in research and development (R&D).
Financing and Impacts
The program provides for a relief volume of 2.5 billion euros for the current year, which is expected to rise to 8.1 billion euros in 2026, 11.8 billion euros in 2027, twelve billion euros in 2028, and 11.3 billion euros in 2029. The tax shortfalls are expected to gradually increase to around 17 billion euros annually from 2029, distributed among the federal, state, and municipal levels.
Impact on Savers and Investors
The measures could impact economic stability and future investments by encouraging companies to invest in Germany. This could lead to increased economic activity, which in turn could have positive effects on the labor market and economic growth. For savers and investors, this could mean that investments in German companies become more attractive, as they could benefit from the tax relief and investment incentives.
Criticism and Challenges
Critics argue that the real investment obstacle in Germany is the yet-to-be-approved federal budget for 2025. Moreover, the financing of the program through tax shortfalls could present long-term challenges for public finances. Therefore, the implementation and actual impacts of the program will be closely monitored.