Klingbeil’s investment booster”: risks and opportunities for companies!

Klingbeil’s investment booster”: risks and opportunities for companies!

On July 1, 2023, the new Federal Finance Minister Lars Klingbeil (SPD) brought the “Investment Booster,” a comprehensive law to promote corporate investments in Germany, into force. This law aims to provide tax relief for companies that invest in production facilities. From 2023 to the end of 2027, companies have the opportunity to reduce their tax burden by up to 30% through depreciation. From 2028, a gradual reduction in corporate tax from 15% to 10% is also planned.

The law contains further significant changes. Profits from capital investments are to fall in three stages from 28.5% to 25%. A special incentive is created for the purchase of electric cars, as companies can claim 75% of the purchase costs through depreciation in the first year. However, historically, similar tax policies, such as those in 2001, show that such massive tax relief does not necessarily lead to an economic recovery. At the time, the measure led to a budget deficit and increased government spending.

Risks of the “investment booster”

How freitag.de reported, there are also significant risks associated with the “investment booster”. On the one hand, profitable companies in particular benefit from the special depreciation, but many companies see themselves in the red due to the current crises. In addition, higher depreciation in the present could reduce tax benefits in the future. Another key problem is the lack of predictable demand and the extremely high energy prices, which are putting additional strain on the economy.

The tax losses could grow to up to 46 billion euros by 2029, which could explain the resistance from states and municipalities to this tax policy. Klingbeil is also planning an immediate program for public investments as well as special measures for the energy-intensive industry to counteract the current crisis situation.

Tax measures in the coalition agreement

The coalition agreement entitled “Responsibility for Germany”, which was agreed on April 9, 2025 by the Union and SPD parties, also contains other significant tax measures. In addition to the “investment booster”, a declining depreciation of 30% on equipment investments is planned for the years 2025 to 2027. A gradual reduction in corporate tax is also part of the plans, starting from January 1, 2028 in five stages.

Particular attention is also paid to partnerships. Improvements are planned, in particular through the option model according to Section 1a KStG and the retention benefit according to Section 34a EStG. From 2026, the sales tax on food in restaurants is to be permanently reduced to 7%. In addition, various tax incentives are being considered, including tax exemption for overtime pay and reducing the gap between child allowances and child benefit.

Older tax regulations will also be adjusted. The promotion of tax measures for non-profit organizations and the introduction of an “early start pension” for retirement provision are planned. These approaches are intended to help improve the financial situation of families, especially single parents, while at the same time creating tax incentives for investments.