A proposed investment boost by the German government primarily benefits larger companies, according to the German Association of Tax Advisers (DStV). The reintroduction of the degressive depreciation for wear and tear (AfA) primarily benefits large and financially strong companies with experienced tax departments, said DStV President Torsten Lüth to the Spiegel. The effect is often less pronounced for smaller companies, which instead make use of the investment deduction or a 40% special depreciation.
Lüth criticized the repeated temporary introduction of the degressive AfA, arguing that companies need predictability and a permanent reintroduction of the depreciation. He also pointed out that new products often cannot be found in the AfA tables of the Federal Ministry of Finance, requiring a time-consuming search for similar categories.
The DStV President suggested that additional reforms should follow the so-called growth booster of the German government. “It cannot have been that yet” he said, referring to further economic aid agreed upon in the coalition contract.
The German Construction Industry Association, on the other hand, stated that the industry’s utilization rate of 70% is still too low for additional investments. “At this point, it does not make sense to buy new machines just to profit from possible depreciation” said the association’s managing director, Tim-Oliver Müller. Instead, the industry needs new orders to quickly ramp up capacity.
The German Association of Machine and Plant Builders, however, praised the new depreciation rules. “That’s already a booster” said Chief Economist Johannes Gernandt. “Companies have more liquidity and can buy machines faster.” This is important, as it may lead to a long-awaited upswing in Germany, during which companies would need to finance more pre-production and the risk of liquidity shortages is particularly high.