Boosting Businesses: Bundestag Clears the Way for Billion-Euro Investment relief
Billions in corporate layoffs given green light by German parliament
Germany is about to give its businesses a much-needed lift! The "Investment Booster" fleet is steaming towards reality, following the Bundestag's recent vote in favor. Only the Bundesrat's approval stands between this multi-billion euro tax relief package and official enactment.
The black-red coalition, comprised of CDU/CSU and SPD, is ready to revitalize Germany’s stagnant economy. The proposed package includes larger depreciation options for investments in equipment, electric vehicles, beefed-up research funds, and future tax cuts.
Federal Finance Minister Lars Klingbeil considers this move a clear signal that Germany will soon embark on an economic growth trajectory, backed by record government investments. The Bundestag factions of CDU/CSU and SPD have given their thumbs up – all while the AfD sat on the sidelines, and the Greens and the Left voiced their opposition.
On July 11, the Bundesrat is expected to follow suit. The states and municipalities, initially wary about the package's high initial tax losses at all government levels, now seem assured due to the federal government's promise to compensate municipalities and cover a significant portion for the states. Municipalities will see an increase in their share of VAT, while the states will receive eight billion euros for investments in education, kindergartens, science, and hospital renovations.
Ready, Set, Invest: Super-Deductions
The approved tax package introduces so-called super-deductions of 30 percent per year for three years on investments. This means that businesses will enjoy significant tax savings, as the taxable profit decreases dramatically.
Going forward, we can also anticipate the gradual reduction of the corporate tax rate by one percentage point each year for five years, starting in 2028. On top of that, there's an "Investment Booster" for electromobility, which increases the price cap for electric vehicles and grants a 75 percent depreciation option within the first year of purchase.
Companies will benefit from relief totaling nearly 46 billion euros between 2025 and 2029. As a result, the federal government, states, and municipalities can expect lower tax revenues approaching the same amount.
Source: ntv.de, rog/rts
- German Bundestag
- Investments
- Economic Recovery
- Economic Stimulus Package
Additional Insights:
The German economic stimulus package, dubbed the “Investment Booster,” is crafted to bolster Germany as a premier business hub. This comprehensive plan targets immediate investments and long-term tax reforms to foster growth and secure job prospects. Some key components include:
1. Accelerated Depreciation: Enables companies to write off newly acquired machinery, equipment, or vehicles more swiftly than the traditional straight-line depreciation method.
2. Stepping Stone Tax Cuts: The corporate tax rate will be reduced incrementally starting in 2028, precedented by annual one-percentage-point steps, culminating in a 10% tax rate by 2032. This adjustment will improve Germany's attractiveness as a business destination.
3. Expanded Research Allowance: The tax research allowance will increase from 10 million to 12 million euros between 2026 and 2030, and eligible uses will be expanded to simplify and reduce bureaucracy.
4. Electromobility Incentives: Companies purchasing new electric vehicles will be eligible for enhanced tax write-offs. From June 30, 2025, to 2027, companies can even claim up to 75% write-offs on new electric vehicles. This measure supports the shift towards clean and sustainable transport options for businesses.
This package is part of a broader strategy, including a 110 billion euro public investment for 2025 and a 500-billion-euro long-term spending program focusing on reviving the sluggish economy, safeguarding employment, and boosting growth. In essence, the German government intends to establish a reliable and growth-oriented economic climate through short-term incentives and long-term tax reforms.
- The German Bundestag's recent approval of the "Investment Booster" economic stimulus package includes provisions for increasing depreciation options for investments in equipment, electric vehicles, and research funds, as well as future tax cuts – all with the objective of revitalizing Germany's economy.
- Additionally, the package introduces super-deductions, which allow businesses to enjoy a 30% tax savings per year on investments for the next three years, as part of a broader strategy to establish Germany as a premier business hub and foster long-term growth.
