Immediate Tax Investment Program to strengthen Germany as a business location

On July 11, 2025, the law for an immediate tax investment program to strengthen Germany as a business location has passed.

The Bavarian Industry Association welcomes the program as the right start on the way out of the crisis.

The law provides for the following regulations:

Declining depreciation of movable assets

The declining deduction for wear and tear (Depreciation, “Abschreibung für Abnutzung”) for movable assets is being revived. Depreciation may be carried out at three times the rate of straight-line depreciation, with a maximum of 30 percent. The measure only applies to purchases or production after June 30, 2025, and before January 1, 2028.

Falling level of corporate taxes

From January 1, 2028, corporate income tax rate will fall in five annual stages from the current 15 percent to ten percent, which will then take effect from 2032.

Promoting electric vehicles

Electric vehicles as fixed assets that are purchased after June 20, 2025, and before January 1, 2028, can be depreciated at 75 percent in the year of purchase and at 10, 5, 5, 3 and two percent in the five following years.

The tax relief for electric vehicles used as company cars, which has already been granted for purchases up to and including 2030, will be extended to vehicles with a gross list price of up to 100,000 euros. So far, this amount is 70,000 euros.

Research tax allowance

Eligible expenses now also include a flat-rate amount for additional expenses, overhead costs, and other operating costs linked to an research and development project. These costs can be taken into account with a flat rate of 20 percent of the eligible expenses in the financial year.

The cap, which limits the eligible costs, also increases by twenty percent from ten to twelve million euros.

The improvements apply to projects that start after December 31, 2025.