Germany Unveils Major Tax Relief to Bolster Business Investments

Germany's federal cabinet has approved a substantial tax relief package aimed at boosting business investments and economic growth. Spearheaded by Finance Minister Lars Klingbeil, this initiative is designed to provide significant financial relief starting July 2025. Central to the plan are special depreciation allowances, offering businesses a 30% super deduction on investments, particularly in machinery and electric vehicles.

The package also proposes a gradual reduction in the corporate tax rate, dropping from 15% to 10% by 2028. This move is expected to provide companies with greater financial flexibility and long-term planning security. Additionally, the package includes enhanced research subsidies to further stimulate innovation.

While the initiative is projected to inject nearly 46 billion euros into the economy from 2025 to 2029, it has sparked a debate over its financial impact on regional budgets. Critics argue that the tax breaks could lead to significant revenue shortfalls for states and municipalities. In particular, the state of Thuringia has expressed concerns about potential budget gaps, urging the federal government to compensate for lost revenues.

Despite these challenges, the investment booster aims to secure jobs and revitalize economic growth, making Germany more competitive on the global stage. As discussions continue, the plan underscores the government's commitment to fostering a business-friendly environment amid economic uncertainty.