Overview of Planned Tax Reliefs
Federal Finance Minister Lars Klingbeil is planning comprehensive tax reliefs for companies that could have significant impacts on the economy and private investors. The measures are set to be presented in the Cabinet on Wednesday, June 4, 2025.
1. Investment Booster and Special Depreciations
- Companies will be able to benefit from special depreciation of 30 percent between June 30, 2025 and January 1, 2028.
- This depreciation rule specifically applies to investments in goods such as electric cars in order to favor their purchase from a tax perspective and thus promote the transition to sustainable technologies.
- The aim is to create a strong incentive for short-term investments through this immediate depreciation.
2. Corporate Tax Reduction from 2028
- From 2028, the corporate tax rate is to be gradually reduced from currently about 15 percent to ten percent by 2032.
- This is intended 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 innovations.
Financial Dimension and Impact
- The tax reliefs will amount to around 17 billion euros annually in lower revenues for the state by 2029. Over the five-year period (2025–2029), there will even be cumulative lower revenues of about 48 billion euros.
- These reliefs are part of a “tax investment immediate program to strengthen the economic location of Germany,” as agreed in the coalition contract between SPD and Union.
Significance for the Economy and Private Investors
The planned measures aim to:
- Set investment incentives, particularly through faster depreciation options, which motivate companies to bring forward or expand their capital expenditures.
- Promote sustainable technologies, especially electric cars as part of the energy transition through targeted tax benefits when purchasing such vehicles.
- Lower corporate taxes in the long term, increasing Germany’s attractiveness as a location for both national and international companies.
For private investors, this potentially means an improved income situation from corporate holdings as well as increased innovation potential of German companies – factors that can provide positive impulses for investment decisions.
In summary, Federal Finance Minister Lars Klingbeil is planning a comprehensive package of immediate depreciation incentives, a gradual reduction in corporate tax, and improved research funding with a volume of up to several billion euros annually from mid this year until the end of the decade – with a clear aim of strengthening the economic location of Germany and promoting both private and corporate investments.