Making Germany strong again – that is the Federal Government’s goal. One of the building blocks to achieve this is the Federal Government’s immediate action programme. The first steps have already been taken through a special fund for investments worth 500 billion euros, for example in the form of the growth booster or the “Bauturbo” construction programme. 

The Location Promotion Act just passed by the Federal Cabinet is a further step towards a strong and competitive country. It is intended to provide clear impetus for increased private investment in Germany as a business location. The Federal Government wants to make it easier for young and innovative companies to invest and at the same time create incentives for this. Such an increase in investment raises the competitiveness of Germany as a business location.

The draft bill focuses on three main areas:

• Access to the capital market is to be made easier for small companies and start-ups. The fund market is to be promoted.
• The tax framework is to be improved. These changes will create incentives to invest in infrastructure and renewable energies, for example.
• Superfluous bureaucracy is to be abolished. For example, inspection, reporting and notification obligations are to be streamlined or cancelled altogether. 

Incentives for private investment

Small, young and innovative companies, in particular, should benefit from the new law and the improvement in financing conditions. Specifically, the framework for private investment, particularly in infrastructure and renewable energies as well as in venture and growth capital, will be improved. For example, adjustments are being made to the taxation of investments in commercial partnerships by funds that fall under the Investment Tax Act. 

The proposed new regulations in the Investment Tax Act and the Investment Code are intended to ensure that a legally secure framework is created for the removal of these investment obstacles. 

“We are creating incentives for more private investment, especially in infrastructure and renewable energies”, said Federal Minister of Finance Lars Klingbeil about the draft law. “Money invested in funds should be channelled even more effectively to where we need it: for investments in Germany as a business location.”

Simplification of processes

In addition to providing incentives for investments, the draft bill also aims to reduce bureaucracy in the financial market sector. This includes the cancellation of a large number of inspection, reporting and notification obligations, the discontinuation of the reporting system for loans over a million euros, and simplifications with respect to opening accounts for minors. 

Further information on the Location Promotion Act can be found at the Federal Ministry of Finance.