GER: Tax Law: Cabinet Approves Investment Program

Aug 29, 2025 Benn-Ibler Rechtsanwälte

The German Growth Opportunities Act has implemented tax incentives and increased planning certainty to strengthen the country's business environment. These prompt fiscal measures are intended to encourage investment, support economic expansion, and improve Germany’s competitiveness on the international stage.

The draft bill outlines the specific tax policy measures as follows:

Declining balance depreciation of 30% for movable assets

Declining balance depreciation for movable fixed assets will be available for a limited period. For items acquired or manufactured between July 1, 2025, and January 1, 2028, a 30% declining balance depreciation rate can be applied. This measure is being implemented to affect the transformation process in the German economy.

Gradual corporate income tax cuts start in 2028

Furthermore, in order to enhance international competitiveness, the corporate tax rate will be gradually decreased by one percentage point annually from 2028, lowering it from the current rate of 15% to 10% by 2032. As a result, the effective tax burden on corporate profits is expected to decline from just under 30% at present to approximately 25%.

Extended investment incentive for electric mobility

As part of the general investment program, a tax incentive will be introduced to support e-mobility. For electric vehicles purchased between July 1, 2025, and January 1, 2028, a declining depreciation allowance with an initial rate of 75% will apply. The calculation basis for the special depreciation allowance will cover vehicles with a gross list price up to EUR 100,000, increased from the previous limit of EUR 70,000. This measure is designed to enable small and medium-sized enterprises to expand their use of climate-friendly corporate mobility solutions.

Press release from the German Federal Ministry of Finance No. 05/2025 (4 June 2025)