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Germany: Legislation aimed at stimulating investment enacted

Measures include gradual reduction in corporate tax rate

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July 22, 2025

Following passage by the lower and upper houses of Parliament (Bundestag and Bundesrat, respectively), the "Act for an Immediate Tax Investment Program to Strengthen Germany's Business Location" was published in Federal Law Gazette on July 18, 2025, and became effective July 19, 2025.

The legislation includes the following measures, all of which were contained in the coalition agreement of the new federal government (read TaxNewsFlash):

  • Temporary reintroduction and increase of declining balance depreciation for investments in movable assets
  • Gradual reduction of the corporate tax rate and the retained earnings tax rate starting from 2028
  • Expansion of the research allowance

For more information, contact a KPMG tax professional:

Maximilian Hummel | mhummel1@kpmg.com

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