Germany

Following 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 tax measures, 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 gradually reduces the corporation tax rate of currently 15% by one percentage point per year, beginning in 2028 at 14% and reaching 10% in 2032. 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.  

The Tax Amendment Act 2025 (Steueränderungsgesetz 2025) German Federal Parliament and the Federal Council of December 2025 contains, inter alia, an increase in the mileage allowance for journeys between home and work and a permanent reduction of VAT rate on restaurant and catering services, with the exception of the sale of beverages, to seven per cent. 

Moreover, the legislative process for the Act on the Adaptation of the Minimum Tax Act and the Implementation of Further Measures (Mindeststeueranpassungsgesetz) was completed in December 2025. This Act aims to adjust the German Pillar Two Rules and implement the OECD Administrative Guidance published in December 2023, June 2024, and January 2025. The Act further provides changes in income taxation, including the abolition of the royalty limitation rule.  

Furthermore, the Act on the Promotion of Private Investment and the Financial Sector (Gesetz zur Förderung privater Investitionen und des Finanzstandorts), was recently adopted by the Federal Parliament. This Act aims to increase the maximum amount for the transfer of hidden reserves from the sale of shares in corporations to re-investment from currently EUR 500,000 to EUR 2,000,000 (so-called roll-over). The Act is still to be passed by the German Federal Council. 

Additionally, as of September 2025, a draft bill for an Act amending the Consent Act for the MLI aiming to modify further German DTTs has been published. However, even once the legislative process for this is finalised, the concrete adaptation of the DTTs will need to be included in further legislation, for which no draft is available yet.