Boosting the economy, securing jobs and creating permanently higher economic growth: this is a high-priority goal for the Federal Government. This makes targeted investment incentives all the more important in order to strengthen and modernise Germany as a business location in the short and long term. In order to accomplish this, the Federal Cabinet has adopted the “draft law for an immediate tax investment programme to strengthen Germany as a business location”. 

This serves to provide a quick boost for growth-generating investments – and is also linked to long-term relief to give the economy planning security in the long term. Federal Minister of Finance Lars Klingbeil emphasised: “This initiative will secure jobs and put Germany back on track for growth”. He went on to say that the Federal Government is thus giving the economy the planning security it urgently needs and creating strong investment incentives. 

Specifically, the draft law includes the following points: 

• Investment booster: 
  This booster for depreciation of 30 percent per year for equipment investments benefits all companies – and is easy to implement. This ensures that the incentives take effect quickly and across the board. The accelerated depreciation option applies to investments from 1 July of this year through to 31 December 2027. 

Companies usually depreciate newly acquired machinery, equipment or vehicles on a straight-line basis over the years of use. A declining balance depreciation of 30 percent is now envisaged. This means that companies can offset 30 percent of the acquisition costs against their profits in the year in which they acquire an asset. In the second and third year, a further 30 percent of the remaining value can be applied. 

• Reduction in corporation tax:
  The gradual reduction in corporation tax from 2028 will significantly reduce the corporate tax burden. The plan is to reduce corporation tax by one percent each year in five stages, from 15 to 10 percent. From 2032, the total tax burden will be just under 25 percent instead of the current 30 percent. This is an important international signal for Germany as a business location and for the competitiveness of our country. 
   
• Corporate e-mobility: 
  An investment booster for e-mobility at companies promotes the use of electric vehicles for business purposes. Accelerated depreciation of 75 percent of the acquisition costs for electric vehicles in the year of investment is planned. 
  The regulation will apply to e-cars that are newly purchased between 30 June of this year and 31 December 2027. There are also plans to increase the gross price limit for the special tax incentive for electric company cars from the current 70,000 euros to 100,000 euros.
   
• Expansion of the research allowance:
  The research allowance is being expanded to encourage investment in research. From 2026 to 2030, the upper limit for the assessment of the tax research allowance is set to rise from 10 to 12 million euros. There are also plans to expand eligible uses. Flat-rate deductions are intended to make processes simpler and less bureaucratic.

This package is designed to strengthen the attractiveness and competitiveness of Germany as a business location – both in the short and long term.