Germany plans corporate tax breaks to boost investment

《International Business News》  –   German Finance Minister Lars Klingbeil is planning to roll out a number of tax breaks for companies aimed at spurring investment and helping the economy out of a long period of stagnation, according to dpa news agency.

The measures will make it more attractive for companies to buy electric cars because they can deduct 75% of the cost of the car from taxes in the year of purchase, dpa reported late Saturday, citing a draft law.

The bill, which has been circulated to other ministries and needs parliamentary approval, also includes previously announced plans to boost business investment through more generous depreciation deductions, the news agency said. When the measure expires, the corporate tax rate will be reduced to 10% from 15%, the bill added.

German Chancellor Friedrich Merz, who has been in office for less than a month, has promised to act quickly to stimulate growth. Economic output has fallen over the past two years, and economists predict that Germany will experience another year of stagnation before planned infrastructure and defense investments kick in and boost economic activity in 2026.

Klingeber’s plan reflects a growing recognition that weak growth is partly caused by long-term problems that have weakened Germany’s appeal as a business destination. Germany is also vulnerable to U.S. President Donald Trump’s trade war because of its heavy reliance on industrial exports.

Merz will travel to Washington this week for his first face-to-face meeting with Trump as German chancellor.