On 11 July 2025 the Bundesrat approved the act on an immediate tax investment programme to strengthen Germany as a business location. That settles a comprehensive package of tax relief for companies, aimed above all at fast investment incentives, sustainable growth and better conditions for doing business here. At its centre are targeted depreciation concessions, rate cuts and wider support for research and electric mobility.
The measures adopted are intended to take effect not only nationally but in the German-French context as well — particularly for companies operating across borders that invest, carry out research or pursue electric mobility strategies in both countries.
The measures in detail
Declining-balance depreciation for movable assets (§ 7 Abs. 2 EStG)
As a cyclical “investment booster”, declining-balance depreciation is reintroduced for investments from 1 July 2025 to the end of 2027. Companies may claim up to 30% of the acquisition cost per year. This applies to all movable fixed assets, whatever the purpose of the investment, and not only to equipment. The rule is deliberately temporary, in order to stimulate investment decisions in the short term.
Corporate income tax reduced in stages (§ 23 Abs. 1 KStG)
Corporate income tax · Germany
From 15 to 10 per cent
From 2028 the corporate income tax rate falls in six annual steps through to 2032.
Corporate income tax rate
§ 23 Abs. 1 KStG as amended by the immediate investment programme
A central signal to corporations: from 2028 the corporate income tax rate falls in six annual steps from the present 15% to 10% in 2032. The aim is to improve the tax burden on German companies significantly by international comparison, for instance against France (corporate income tax including surcharges currently around 25–26%). Accompanying adjustments to the rules on withholding tax on investment income are planned.
Reduced rate on retained profits (§ 34a EStG)
For sole traders and partners the rate on retained profits falls in stages to 25% from the 2032 assessment period. This is intended to bring partnerships and corporations closer together for tax purposes and to create incentives for reinvestment in the business.
New depreciation for electric vehicles (§ 7 Abs. 2a EStG)
For newly acquired pure electric vehicles an arithmetic-degressive depreciation is introduced — among other things 5% in each of the two following years.
These rules apply to acquisitions between July 2025 and December 2027. They are particularly relevant for companies with cross-border fleet structures and sustainability targets.
Higher gross list price limit for electric company cars (§ 6 EStG)
For the flat-rate taxation of company cars (the 1% rule) and for the logbook method, the price ceiling for qualifying electric vehicles rises from EUR 70,000 to EUR 100,000. That widens the range of vehicles that are attractive for tax purposes considerably, particularly in the upper end of electric mobility.
Wider tax support for research (§ 3 FZulG)
The maximum assessment base for the research allowance rises from 2026 from EUR 10 million to EUR 12 million a year. In addition, overheads and other operating costs will be taken into account at a flat rate of 20% of qualifying expenditure — including in contract research. For sole traders and partners the qualifying hourly rate rises from EUR 70 to EUR 100.
What it means for German-French structures
The tax reforms now adopted are to be understood not only as a national stimulus measure but also as a strategy for strengthening German competitiveness in the European single market. For German-French corporate structures — subsidiaries, permanent establishments or bilateral research partnerships — several advantages follow:
- Planning certainty for investment through clearly dated transitional rules and staged rates
- Germany’s tax attractiveness compared with France and other EU states, particularly through the corporate tax cut and support for electric mobility
- More room for innovation in cross-border R&D projects through the wider research allowance
- Support for sustainable mobility — electric company cars with favourable tax treatment can be registered and used in France as well
According to the Bundesrat and the federal government the tax reforms together amount to relief of around EUR 46 billion up to 2029 — a substantial economic policy measure that also creates relevant options for multinational companies with a German-French dimension.