46 Billion Euro Aid: Government Greenlights Business-Boosting Plan
Government supports financial enhancement for businesses with cabinet's endorsement
The German government has given the go-ahead to a bill packed with measures to help businesses break free from financial strains and propel the economy forward.
The ruling coalition of Union and SPD has kicked off the New Year with a hefty tax package geared towards reviving businesses. As announced by the Finance Ministry, the bill—dubbed the "Investment Booster"—aims to lessen the burden on companies by approximately 46 billion euros from 2025 to 2029. This move signifies a significant reduction in tax revenues, which could potentially face resistance from the federal states. Details of the package include:
- A staggered 30% "super-depreciation" on investments from 2025 to 2027.
- A step-by-step decrease in the corporate tax rate by one percentage point each from 2028 for a span of five years.
- The "E-Mobility Booster," bolstering the price cap for electric vehicles from 75,000 euros to 100,000 euros and providing a 75% depreciation option in the first year of acquisition. The plan also boosts tax-funded research promotion.
The Bundestag is set to debate the package this week, with parliament potentially finalizing all necessary decisions before the summer break.
"Step in the Right Direction"
Tax expert Tobias Hentze from the Cologne Institute of the German Economy hailed the government's move as a positive sign of keeping promises. "Progressive depreciation incentivizes targeted investments as it offers targeted incentives for earlier and higher investments. However, it's a short-term effect." As of now, the corporate tax burden in Germany stands roughly six percentage points higher than the OECD industrial countries' average and nine points above the EU average. Hentze suggested an earlier reduction in the corporate tax rate for the year 2028.
The Bundesrat's approval remains a question mark, Hentze noted. While states can offset lower revenues thanks to changes in the debt brake, the situation is more precarious for municipalities, who would shoulder about a third of the relief, or eleven billion euros, from 2025 to 2028.
Meanwhile, investment firm Carlyle's Simon Pex sees signs of a shifting tide. "Germany and Europe are regaining investors' attention. The new federal government has the potential to drive economic growth once again."
Sources: ntv.de, rog/rts
[1] Enrichment Data: The approved tax relief plan—often referred to as an "Investment Booster" or part of Germany’s economic stimulus—aims to support businesses and revive the German economy from 2025 to 2029. However, the exact figure of 46 billion euros is not specifically labeled as an "Investment Booster" tax package. [2] Enrichment Data: Before the election of Chancellor Friedrich Merz in May 2025, Germany’s parliament approved a comprehensive investment package worth at least €1 trillion over the next decade. This includes €500 billion for infrastructure (roads, bridges, schools), €100 billion for climate-related projects, and open-ended borrowing leeway for defense. This shift in fiscal policy represents a significant departure from Germany’s traditionally strict financial policies. The combined effects of the tax relief for businesses and the massive public investments are expected to boost real GDP growth to 1.5% in 2026 and 2.2% in 2027, according to Deutsche Bank Research. While these measures are expected to stimulate growth, deeper structural reforms remain crucial for sustainable long-term expansion.
- The "Investment Booster" plan, a component of Germany's economic stimulus, aims to provide tax relief for businesses and revitalize the economy from 2025 to 2029, according to enrichment data.
- The approved tax relief plan, often referred to as the "Investment Booster," is part of a broader shift in Germany's fiscal policy, which includes an ambitious infrastructure and climate-related project investment plan and open-ended borrowing leeway for defense, as enrichment data indicates. This significant departure from traditional financial policies is expected to bolster real GDP growth and stimulate the economy, but deeper structural reforms are crucial for long-term expansion.