Revolutionary tax reform: 15% less corporate tax by 2032!

Revolutionary tax reform: 15% less corporate tax by 2032!

The planned corporate tax reform in Germany will come into force in 2025 and aims to strengthen the country's competitiveness and promote investments in innovative technologies. Federal Finance Minister Lars Klingbeil (SPD) is planning comprehensive tax cuts for companies, which are expected to grow to a total of 17 billion euros by 2029 in order to stimulate the ailing economy. This information is summarized in a draft law that has already been sent to the departments for a vote and requires the approval of the Bundestag and Bundesrat in order to come into force. However, the implementation of the reform in the proposed form is still uncertain as some federal states have expressed concerns.

A central element of the reform is the gradual reduction in corporate tax from the current 15 percent to 10 percent by 2032. This measure is intended to provide companies with financial relief and encourage them to invest more in research and development. In particular, companies that invest in electric vehicles benefit from generous depreciation, which can be up to 75 percent in the first year. This depreciation applies to vehicles purchased between July 2025 and December 2027.

Investment boosters and tax adjustments

The reform also includes a so-called investment booster, which provides for special depreciation of 30 percent for companies in 2025, 2026 and 2027. This aims to offer companies additional incentives to invest in future-proof technologies and thus further stimulate the market for electric cars. A tax allowance for research is planned, which will be made more generous in order to further promote the innovative strength of German companies.

For the gradual reduction in corporate tax, the new rate is to be achieved in five steps from January 1, 2028. The federal government expects that tax revenues will increase as the economy recovers. Despite initial tax losses, which will grow to around 630 million euros in 2025 and subsequently to a total of 17 billion euros by 2029, the goal is to sustainably increase economic growth.

Financing and public budgets

The reform package will be financed from future tax revenues, which means that the losses for public budgets will only increase with a time lag. The burden of the reform will be borne by the federal, state and local governments, which requires coordinated coordination between the various levels. The approval of the Federal Council is therefore also necessary.

With these measures, the federal government wants to set the framework for higher, sustainable economic growth and at the same time support companies in Germany. However, full implementation and the reactions of the federal states remain to be seen.

More information on the details of the reform can be found at IT BoltWise and Daily Mirror.