Reforms corporate taxes and incentives to boost investment and growth
11 Jul 2025
On 26 June 2025, the Bundestag passed a tax package intended to boost job creation, competitiveness, investment and growth. The Bundesrat passed the measure on 11 July 2025. The law introduces accelerated depreciation options for movable fixed assets of up to 30 per cent for investments made between 30 June 2025 and 1 January 2028. This applies to all investments.
Further, the corporate tax rate will decrease by one percentage point per year from 15 per cent in 2028 until it reaches 10 per cent in 2032. This will reduce the total tax burden on companies from 30 per cent to 25 per cent. Additionally, the tax on retained profits of unincorporated enterprises will gradually be reduced to 25 per cent from 2028 onwards.
Also, electric company vehicles acquired between 30 June 2025 and 1 January 2028 are eligible for an accelerated depreciation option of 75 per cent. The gross list price limit will be increased from €70,000 to €100,000 for electric company vehicles.
Finally, in order to boost research and development, the threshold of eligible expenditures for calculating the tax allowance for research will be lifted from €10 million to €12 million per year. The definition of eligible expenses is expanded to include overheads and operating costs, and the hourly rate of eligible expenses will increase from €70 to €100.
Nature of measure:
Type:
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Treatment and operation (Other)
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Promotion and facilitation (Investment incentives)
Industry:
Inward FDI:
Yes
Outward FDI:
No
Sources:
