Overview of Planned Tax Reliefs
Federal Finance Minister Lars Klingbeil is planning comprehensive tax reliefs for businesses that could have significant effects on the economy and private investors. The measures are to be presented in the Cabinet on Wednesday, June 4, 2025.
1. Investment Booster and Special Depreciations
- Companies are to benefit from special depreciations of 30 percent between June 30, 2025, and January 1, 2028.
- This depreciation rule particularly applies to investments in goods such as electric cars, to provide tax benefits for their purchase and thus promote the transition to sustainable technologies.
- The goal is to create a strong incentive for short-term investments through this immediate depreciation.
2. Reduction of Corporate Tax Starting in 2028
- Starting in 2028, the corporate tax rate is to be gradually reduced from the current rate of about 15 percent to ten percent by 2032.
- This aims to strengthen the long-term competitiveness of Germany as a business location.
3. Expanded Research Allowance
- The draft law also provides for a more generous design of the tax research allowance to further promote innovation.
Financial Dimension and Impact
- The tax reliefs will accumulate to about 17 billion euros per year in lost revenue for the state by 2029. Over the period of five years (2025–2029), cumulative losses will amount to about 48 billion euros.
- These reliefs are part of a “tax investment immediate program to strengthen the economic location of Germany,” which was agreed upon in the coalition agreement between the SPD and the Union.
Importance for the Economy and Private Investors
The planned measures aim to:
- Set investment incentives, especially through faster depreciation options, which motivate companies to bring forward or expand their capital expenditures.
- Promote sustainable technologies, particularly electric cars as part of the energy transition through targeted tax benefits for the purchase of such vehicles.
- Long-term lower corporate taxes, which increases Germany’s attractiveness as a location for both national and international companies.
For private investors, this potentially means an improved earnings situation in corporate investments as well as increased innovation capacity of German companies – factors that can provide positive impulses in investment decisions.
In summary, Federal Finance Minister Lars Klingbeil is planning a comprehensive package of immediate depreciation incentives, a gradual reduction of corporate tax, and improved research funding with a volume of several billion euros annually from mid-this year until the end of the decade – with a clear objective to strengthen Germany’s economic location and promote private as well as entrepreneurial investments.