Germany Approves Tax Investment Program to Boost Business Location
Germany's Federal Council has approved a tax law aimed at strengthening the country's economic standing. The new legislation includes updated rules for company car taxation, depreciation allowances, and profit retention tax rates.
Germany has enacted a new tax law designed to enhance its appeal as a business location. The Federal Council gave its final approval to the bill on July 11, 2025, following its passage by the Bundestag (parliament).
The legislation introduces several key changes. For electric company cars, the gross list price limit for preferential private use taxation has been raised from EUR 70,000 to EUR 100,000 for vehicles purchased after June 30, 2025. This aims to incentivize the adoption of electric vehicles within company fleets.
The "investment booster" for depreciation of movable fixed assets is reintroduced with updated conditions. Businesses can now apply declining balance depreciation for assets acquired or manufactured between June 30, 2025, and December 31, 2027. This allows for accelerated tax deductions on qualifying investments.
Furthermore, new arithmetic declining depreciation rules are being introduced for electric vehicles classified as fixed assets and acquired between June 30, 2025, and December 31, 2027. These rules permit substantial depreciation deductions, particularly in the year of acquisition.
Tax advisory firm BDO AG Wirtschaftsprüfungsgesellschaft noted that the staggered application of these depreciation methods and varying conditions will require careful documentation. The overall package is intended to encourage business investment and modernization within the German economy.