German Federal Council Approves Tax Investment Program
Germany's Federal Council has passed legislation aimed at strengthening the nation's economy through tax incentives for investments. The "Tax Investment Immediate Program" includes changes to company car taxation and depreciation rules.
The German Federal Council has approved a new law designed to bolster the country's economy via a tax-driven "immediate investment program." The legislation, previously passed by the Bundestag and supplemented by the Finance Committee, introduces several measures intended to encourage business investment.
A significant change affects the taxation of electric company cars. The upper limit for the gross list price of an electric vehicle to qualify for favorable tax treatment of its private use has been raised from EUR 70,000 to EUR 100,000. This applies to vehicles acquired after June 30, 2025.
The program also reintroduces and enhances the use of accelerated depreciation (degressive AfA), termed an "investment booster," for mobile tangible assets. This accelerated depreciation can be applied to assets acquired or manufactured between June 30, 2025, and December 31, 2027. The depreciation rate can be up to three times the linear rate, capped at 30 percent.
Furthermore, a new arithmetic-degressive depreciation method is introduced for newly acquired electric vehicles classified as fixed assets. For these vehicles, purchased between June 30, 2025, and December 31, 2027, and not qualifying for other special depreciation, a 75% depreciation is allowed in the acquisition year, followed by declining percentages over the next five years.
These measures aim to stimulate corporate investment and fleet modernization, thereby enhancing Germany's economic competitiveness.