Federal Finance Minister Lars Klingbeil (SPD) plans comprehensive tax relief for companies, which is expected to grow to a total of 17 billion euros by the year 2029. These measures are part of a draft law titled “Tax Investment Immediate Program to Strengthen Germany as a Business Location”.
Key Components of the Proposed Tax Relief
- Investment Booster: Special depreciation of 30 percent for investments in the years 2025, 2026, and 2027. This depreciation applies to goods purchased between June 30, 2025, and January 1, 2028.
- Reduction of Corporate Tax: Starting in 2028, the corporate tax rate is to be reduced in five stages from the current rate of about 15 percent to just ten percent. This measure aims to permanently lower the tax burden.
- Depreciation for Electric Cars: Companies can claim depreciation of up to 75 percent in the purchase year for electric vehicles to promote sustainable mobility.
- Expansion of the Tax Research Allowance: The research allowance will be made more generous to better support innovations in companies.
Impact and Objectives
The relief measures are intended to serve as an investment incentive and should have long-term positive effects on corporate profits as well as overall market development. With lower taxes and improved depreciation options, it is expected that companies will be able to invest more, which in turn promotes growth.
Although the state will have to accept short-term revenue losses, these are engineered to be offset in the long run for a sustainable strengthening of Germany as a business location. Additionally, this initiative aligns with agreements from the coalition contract between SPD and Union.
Overall, this package represents a significant step to relieve German companies financially and improve their competitiveness in the long term.
Summary
| Measure | Period | Impact |
|---|---|---|
| Special Depreciations (Investment Booster) | July 2025 – January 2028 | Immediate tax relief on investments |
| Reduction of Corporate Tax | From January 2028 to end of 2032 | Reduction of tax rate from about 15% to 10% |
| Depreciation for Electric Cars | From Purchase Year | Up to 75% depreciation in the purchase year |
| Expanded Research Allowance | Ongoing | Promotion of innovations |
These comprehensive tax relief measures could have sustainably positive impacts on both corporate profits and the economic environment.