German “Immediate Investment Program 2025”: making targeted use of tax opportunities
By resolution of 26 June 2025, the German Parliament (“Bundestag”) adopted a comprehensive “Immediate Investment Program” aimed specifically at strengthening investment activity in Germany. The draft bill contains a series of tax reforms that are intended to create both short-term liquidity benefits and long-term planning security for companies. Approval by the Federal Council (“Bundesrat”) is still pending, but is expected on July 11, 2025.
Tax relief through declining balance depreciation
A key instrument is the planned reintroduction of declining balance depreciation. For movable assets that are purchased or manufactured in the period from July 1, 2025 to December 31, 2027, a declining balance depreciation of up to 30% per year can be claimed - up to a maximum of three times the straight-line depreciation. This measure accelerates the tax deduction of acquisition costs and leads to a significant reduction in the tax burden in the year of investment - a clear liquidity advantage for investing companies.
Special depreciation for electric company vehicles
For purely electrically powered vehicles that are capitalized as business assets during the aforementioned period, an additional arithmetic-degressive depreciation shall be introduced. This allows for greatly accelerated depreciation: 75% in the year of acquisition, followed by 10%, 5%, 3% and 2% in subsequent years. This regulation is accompanied by an increase in the list price limit from currently €60,000 to €100,000 for the application of the reduced taxation of the non-cash benefit for electric company cars (0.25% instead of 1.00% per month). Thus, companies wishing to electrify their vehicle fleets will benefit both ecologically and fiscally.
Corporation tax and retention: gradual relief
From 2028, the corporation tax rate shall be gradually reduced from the current 15% rate to 10% in 2032. At the same time, the specific tax rate for retained earnings of partnerships shall be reduced as well from current rate of 28.25% to 25% by 2032. These measures will strengthen the capacity of companies to reinvest their profits and improve international competitiveness, particularly for corporations.
Expansion of tax incentives for research and development
The research tax allowance shall be expanded: The maximum amount of funding increases to 12 million euros per company per year. In addition, a flat-rate surcharge of 20% is granted on the eligible expenses in order to additionally take into account indirect costs such as personnel or operating resources. This provides a further strong incentive for research and development - especially for technology-oriented SMEs.
Conclusion: Act strategically now
The Immediate Investment Program will offer companies a wide range of tax structuring options - limited in time, but with long-term effects in some cases. In order to make efficient use of these opportunities, structured tax planning is essential. In addition to selecting the appropriate method of depreciation, an assessment of the economic viability of the investment itself is also required - particularly with regard to subsequent tax years and the long-term capital investment.
