German Government’s Economic Boost Package Sent to Parliament for Approval
In a move aimed at stimulating private investments and providing planning certainty, the German federal cabinet has approved a comprehensive economic package, commonly referred to as the “Wachstumsbooster.” The package, announced by the Federal Ministry of Finance, is designed to create incentives for private investments and offer a sense of security for businesses.
Key features of the package include the introduction of a 30% degressive depreciation for movable business assets, effective from July 1, 2025, to January 1, 2028. Additionally, the corporate tax rate is set to be gradually reduced to 10% by 2028, with the aim of reducing the tax burden on companies.
The package also places a strong emphasis on promoting electric mobility and research. New electric vehicles are to be eligible for a 75% degressive depreciation and the basis for the research grant will be increased from €10 million to €12 million to encourage investments in research.
“Bundesfinanzminister Lars Klingbeil (SPD) stated, ‘We are now giving the economy a boost with our Wachstumsbooster, providing the urgently needed planning certainty and creating strong investment incentives.'”
The plans will now need to be passed by the Bundestag and the Bundesrat before coming into effect. However, resistance is already being voiced at the state level, as not only the federal government but also the states face significant tax revenue losses.