The Financing for the Future Act will make it easier for start-ups and high-growth companies to mobilise private capital for investment and drive forward innovative development. They will be able  to go public more easily and will gain better access to equity capital: the minimum market capital for an IPO will be lowered from 1.24 million euros to 1 million euros, thereby opening up the capital market to smaller companies, too. 

The Federal Cabinet adopted the “Bill on the Financing of Investments to Safeguard the Future” for this purpose. It has been approved by both the Bundestag and the Bundesrat.

Improved support for capital accumulation

In order to improve Germany’s international standing as a location for start-ups, the tax-exempt maximum for employee share ownership will be increased from 1,440 euros to 2,000 euros per year.

The income limit on the employee savings allowance will be doubled for share ownership savings: it will be raised to 40,000 euros for single persons and 80,000 euros for jointly assessed couples. This extension will also apply to home loan savings.

The employee savings allowance in Germany is a cash allowance granted by the state to promote the accumulation of capital by employees. It is a state subsidy on capital-forming benefits, i.e. monetary benefits that the employer invests on behalf of the employee. Parts of an employee’s salary that are invested in order to create assets are also considered capital-forming benefits.

The employee savings allowance is as follows:
– In the case of shareholdings in productive capital: 20 percent of the capital-forming benefits invested in this way providing they do not exceed 400 euros per year
– In the case of home loan investments and for use in the housing sector: nine percent of the capital-forming benefits invested in this way providing they do not exceed 470 euros per year

e-Share to be introduced

The electronic share is to be introduced in order to simplify communication with the supervisory authorities. This will also involve the amendment of the confidentiality requirements set out in the financial supervisory laws. The aim here is to improve collaboration between the financial supervisory authorities and the tax authorities.

For further information on the Financing for the Future Act, see the website of the Federal Ministry of Finance.