The German government’s “growth booster” has been given the green light. The legislation to implement an immediate tax-based investment programme was passed by the Bundestag on 26 June 2025 and by the Bundesrat on 11 July 2025.

The reform package contains key tax measures that will put Germany back on track for growth. The reforms will increase Germany’s competitiveness. An improved policy framework will create powerful incentives and planning certainty for investment decisions.

“We are stimulating the economy with our new growth booster. In this way, we are safeguarding jobs and putting Germany back on track for growth. We are giving businesses the planning certainty that they urgently need, and we are creating powerful investment incentives. We will make Germany more competitive internationally as a place to do business.” German Finance Minister and Vice-Chancellor Lars Klingbeil

The law contains the following improvements:

1. Investment booster using accelerated depreciation options of up to 30%

• Accelerated depreciation options for movable fixed assets of up to 30%
• Applies to investments that are made after 30 June 2025 and before 1 January 2028

The reintroduction and expansion of accelerated depreciation options will facilitate faster refinancing of investments. It has the following advantages: a) it benefits all companies to the same extent, b) it is straightforward to implement, and c) it provides across-the-board incentives.

2. Gradual reduction of the tax burden on companies

• Reduction of the corporation tax rate as of 2028 by one percentage point per year, from the current rate of 15% to 10%
• The total tax burden on companies will then amount to just under 25% as of 2032, instead of the current rate of just under 30%.
• Gradual reduction of the tax rate for unincorporated enterprises (sole traders or partnerships) on profits that are not withdrawn to 25% from 2028 onwards

These tax reductions will make Germany a more attractive destination for international investment. They show that Germany is a great place to do business.

3. Investment booster for e-mobility at companies

• Accelerated depreciation option for electric company vehicles acquired after 30 June 2025 and before 1 January 2028
• Depreciation rate in the year of acquisition: 75%
• Depreciation period: 6 years
• Taxation of company cars: The gross list price limit for electric vehicles will be increased from €70,000 to €100,000

In this way, the general investment booster will be supplemented by an investment booster for e-mobility. This will benefit all companies, particularly small and medium-sized enterprises.

4. Investment booster for R&D

• Increase in the maximum amount that can be used as the basis for calculating the tax allowance for research, from €10m to €12m per year
• Extension of eligible expenses to include overheads and operating costs, in the form of a flat rate
• Increase in eligible expenses for own work and work performed by co-entrepreneurs from €70 to €100 (hourly rate)

This will increase support for investments in R&D and expand it in an unbureaucratic way.