Germany

After the early general election for the federal parliament in February 2025 a new federal government was formed in May 2025. The coalition parties have since announced immediate legislative measures to stimulate economic growth including measures in the area of taxation (so called “Sofortprogramm Deutschland”). Some of these measures are already included in a recent draft bill the federal cabinet concluded on 4 June 2025 („Gesetz für ein steuerliches Investitionssofortprogramm zur Stärkung des Wirtschaftsstandorts Deutschland“), the first draft of which was adopted by the Bundestag on 26 June 2025. The draft bill foresees, inter alia, reducing 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, it is intended to reintroduce an option for a declining balance depreciation for movable fixed assets, to incentivise electric vehicles and expand the federal R&D allowances under the German Research Allowance Act (“Forschungszulagengesetz”). Further tax measures are envisaged but are not included in this draft bill.

Furthermore, the Federal Ministry of Finance published on 5 December, 2024 a discussion draft for a Minimum Tax Adjustment Act (“Mindeststeueranpassungsgesetz”). This law aims to adjust German Pillar Two Rules and to implement the 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.