On 4 June 2025 the federal cabinet adopted the “immediate tax investment programme” in order to encourage investment in Germany. The package forms part of the joint German-French strategy of strengthening economic competitiveness through tax incentives.
The programme is intended to give companies planning certainty through tax relief, to stimulate investment and so to support growth and new jobs over the long term. Across the funding period from 2025 to 2029 the tax concessions come to around EUR 46 billion (source: the federal government).
The core elements of the package
Investment booster (declining-balance depreciation)
From 1 July 2025 companies can depreciate capital assets on a declining-balance basis at 30% (maximum 30% per year), running until 31 December 2027. Faster tax relief in the year of acquisition is meant to ease the pressure on investment.
Lower corporate income tax
From 2028 the rate falls in stages from 15% to 10% by 2032 — bringing the overall burden to around 25%.
Preferential treatment of retained profits
Profits that are not distributed will in future be taxed at 25% instead of 28.25%, in three stages between 2028 and 2032.
Investment incentive for electric mobility
For newly acquired electric vehicles between 30 June 2025 and 31 December 2027 a depreciation rate of 75% applies in the first year, with reduced rates in stages thereafter. At the same time the gross list price limit for electric company cars rises to EUR 100,000.
Support for research
The research allowance increases, overheads and operating costs are supported at a flat rate of 20%, and the cap rises from EUR 10 million to EUR 12 million (2026–2030).
Where the legislation stands
- The Bundestag gave its approval on 26 June 2025.
- The final decision of the Bundesrat is scheduled for 11 July 2025.
Compensation for the Länder and municipalities: the federal states (North Rhine-Westphalia among them) are calling for compensation for lost revenue — the Bundesrat will take up the law on 11 July 2025; Baden-Württemberg, North Rhine-Westphalia and others are invoking the connexity principle.
What this means for German-French companies
- Tax attractiveness: improved depreciation options and lower corporate income tax rates make Germany more competitive for companies — including by comparison with France.
- Support for climate-friendly investment: the electric mobility boost strengthens sustainability in companies operating across borders.
- Support for research: the higher R&D allowances benefit binational projects as well.
- Legal certainty: a clearly defined programme with a start and an end date helps with strategic planning.
This immediate investment programme marks the first step in a series of planned measures to support growth and future viability — nationally as well as within German-French business networks. Monitoring and evaluation will show how strong the impulses turn out to be and how the Länder and municipalities are compensated where revenue is needed.