By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
IndebtaIndebta
  • Home
  • News
  • Banking
  • Credit Cards
  • Loans
  • Mortgage
  • Investing
  • Markets
    • Stocks
    • Commodities
    • Crypto
    • Forex
  • Videos
  • More
    • Finance
    • Dept Management
    • Small Business
Notification Show More
Aa
IndebtaIndebta
Aa
  • Banking
  • Credit Cards
  • Loans
  • Dept Management
  • Mortgage
  • Markets
  • Investing
  • Small Business
  • Videos
  • Home
  • News
  • Banking
  • Credit Cards
  • Loans
  • Mortgage
  • Investing
  • Markets
    • Stocks
    • Commodities
    • Crypto
    • Forex
  • Videos
  • More
    • Finance
    • Dept Management
    • Small Business
Follow US
Indebta > News > Friedrich Merz plans €46bn corporate tax breaks to revive German economy
News

Friedrich Merz plans €46bn corporate tax breaks to revive German economy

News Room
Last updated: 2025/06/04 at 1:32 AM
By News Room
Share
4 Min Read
SHARE

Stay informed with free updates

Simply sign up to the German economy myFT Digest — delivered directly to your inbox.

Germany’s new government will seek to pass a €46bn package of corporate tax breaks over the summer in an effort to jolt the Eurozone’s largest economy out of stagnation.

Finance minister Lars Klingbeil, a Social Democrat, will outline the measures during a cabinet meeting on Wednesday. The tax incentives, which include deductions for new equipment and new electric vehicles, will cost about €46bn in total by 2029, when the coalition’s term expires, according to government estimates seen by the Financial Times.

“Following a period of economic stagnation, it is important to raise the potential of the German economy significantly,” reads the draft bill. The measures are meant to “send a strong signal for the short-term and long-term competitiveness of Germany as a business location.”

The initiatives come in addition to a massive debt-funded public spending plan of more than €1tn to modernise Germany’s armed forces and ageing infrastructure — the central plank of Chancellor Friedrich Merz’s efforts to revive the economy.

The leader of the Christian Democrats, who campaigned on a pro-business platform, has also vowed to subsidise electricity costs for the country’s struggling manufacturing industry. A ministry has been created to slash bureaucracy and speed up digitisation of the administration.

The planned tax breaks would be “good for Germany as a place to invest”, said Holger Schmieding, chief economist at Berenberg. “But this can only be the start. Easing the regulatory burden will be more difficult but also more important.”

From July 1, companies would be able to deduct 30 per cent of the cost of new machinery and other equipment from their tax bill annually between 2025 and 2027.

From 2028, the federal corporate tax rate of 15 per cent would then decrease by one point each year to 10 per cent. Companies will also be allowed to depreciate 75 per cent of the purchase price of new electric vehicles on year one, and thus reduce their taxable income. The government intends to introduce more advantageous tax incentives for R&D spending.

Robin Winkler, head of German macro at Deutsche Bank, said the proposals should provide a “welcome short-term stimulus for the manufacturing sector”.

Merz’s coalition with the Social Democrats expects the measures to be adopted by the two houses of parliament by the end of the summer.

Merz’s economic plan signals a policy shift for a country that, not long ago, stood as the EU’s standard-bearer for fiscal discipline.

The export-oriented nation — already struggling with Chinese competition and higher energy costs — has seen minimal growth over the past three years. Economists warn that renewed threats of 50 per cent US tariffs on European goods could push the economy into contraction this year.

In the third quarter of 2024, Germany’s corporate investments in plant, machinery and vehicles were 9 per cent below the pre-pandemic level, according to German development bank KFW.

They were 11.5 per cent higher in the US and 1 per cent higher in the EU as a whole in the same period.

Public and private R&D expenditures were also lower than in other countries: while Germany spent 11 per cent more in intellectual property than before the Covid-19 pandemic, the US spent 36 per cent more and France 27 per cent more in areas such as AI, according to KFW.

Read the full article here

News Room June 4, 2025 June 4, 2025
Share this Article
Facebook Twitter Copy Link Print
Leave a comment Leave a comment

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Finance Weekly Newsletter

Join now for the latest news, tips, and analysis about personal finance, credit cards, dept management, and many more from our experts.
Join Now
Time to give the euro a glow-up

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects…

Chinese phonemaker touts 200,000 electric SUV orders in 3 minutes

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects…

The eternal dilemma of how to tax the super-rich

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects…

China is trying to stimulate its economy as consumer confidence is ‘flat on its back,’ analyst says

Watch full video on YouTube

The Iran threat will haunt the Gulf for years

Unlock the White House Watch newsletter for freeYour guide to what Trump’s…

- Advertisement -
Ad imageAd image

You Might Also Like

News

Time to give the euro a glow-up

By News Room
News

Chinese phonemaker touts 200,000 electric SUV orders in 3 minutes

By News Room
News

The eternal dilemma of how to tax the super-rich

By News Room
News

The Iran threat will haunt the Gulf for years

By News Room
News

Carmaker Lotus plans to end production in the UK

By News Room
News

Donald Trump says he will only pick Fed chair who cuts interest rates

By News Room
News

Donald Trump says US would ‘absolutely’ bomb Iran again to stop enrichment

By News Room
News

Biggest US banks pass Federal Reserve stress tests

By News Room
Facebook Twitter Pinterest Youtube Instagram
Company
  • Privacy Policy
  • Terms & Conditions
  • Press Release
  • Contact
  • Advertisement
More Info
  • Newsletter
  • Market Data
  • Credit Cards
  • Videos

Sign Up For Free

Subscribe to our newsletter and don't miss out on our programs, webinars and trainings.

I have read and agree to the terms & conditions
Join Community

2023 © Indepta.com. All Rights Reserved.

Welcome Back!

Sign in to your account

Lost your password?