Introduction of Tax Reliefs
Federal Finance Minister Lars Klingbeil plans comprehensive tax reliefs for companies that could come into effect as early as July 2025. These measures are part of a “Law for a Fiscal Investment Immediate Program to Strengthen Germany’s Economic Location,” which the cabinet may approve as early as Wednesday. The planned tax reliefs include improved depreciation options, particularly for business-used electric cars, and are intended to strengthen the economy through investment incentives.
Details of the Tax Reliefs
- Time Frame: The special regulations for depreciation are expected to apply to purchases made between July 2025 and December 2027.
- Financial Impact: The tax reliefs will begin in 2025 with tax losses of approximately 630 million euros. This amount will increase to 4 billion euros in 2026 and eventually reach 17 billion euros by 2029. Overall, the reliefs will lead to a revenue shortfall of almost 46 billion euros in the federal budget by 2029.
Effects on Savers and Investors
The planned tax reliefs could have indirect effects on savers and investors, as they strengthen the investment capacity of companies and may lead to increased economic activity. This could positively affect the value of investments, especially in sectors that benefit from the tax reliefs. However, the decreased revenue in the federal budget could also lead to adjustments in fiscal policy, which could, in turn, impact government spending and investments.
Economic Objectives
The tax reliefs aim to strengthen Germany’s economic location and promote investments. By providing improved depreciation options, companies are encouraged to invest in new technologies and infrastructure, which could lead to growth and more employment in the long term.