Germany

After the early general election for the federal parliament in February 2025, a new federal government was formed in May 2025. Since then, legislative measures to stimulate economic growth, including measures in the area of taxation have passed legislative procedures. Accordingly, the Act for a Tax-Based Immediate Investment Programme to Strengthen Germany as a Business Location (Gesetz für ein steuerliches Investitionssofortprogramm zur Stärkung des Wirtschaftsstandorts Deutschland) of 14 July 2025 reduces the corporation tax rate of currently 15% by one percentage point per year, starting in 2028 with 14% and ending in 2032 with 10%. In addition, an option for a declining balance depreciation for movable fixed assets has been reintroduced, rules to further incentivise electric vehicles extended and the federal research and development (R&D) allowances under the German Research Allowance Act (Forschungszulagengesetz) expanded. Further tax measures are envisaged.

Furthermore, on 5 December 2024, the Federal Ministry of Finance published a discussion draft for a Minimum Tax Adjustment Act (Mindeststeueranpassungsgesetz). This law aims to adjust German Pillar Two Rules and to implement the Organisation for Economic Co-operation and Development (OECD) Administrative Guidance of June 2024. The discussion draft also foresees changes in income taxation (e.g. the abolition of the royalty limitation rule). However, the legislative process has not yet commenced.