Merz government launches relief for German companies

Approximately EUR 46 billion between 2025 and 2029 in relief for German companies: one month after taking office, the government led by Friedrich Merz has launched the first package of measures to support the economy, thus beginning to implement the coalition contract, signed by the conservatives of the Cdu-Csu and the Social Democrats (Spd).

The executive's green light came on Wednesday, 4 June. On Thursday the measure arrives at the Bundestag: if the examination is concluded quickly, as the chancellor and Finance Minister Lars Klingbeil (Spd) hope, approval could come before the summer recess of parliamentary work.

The most important of these first measures for companies is the super-amortisation on investments of 30%, for three years. When it runs out, the path of reduction of the federal tax on business profits will be set in motion: one percentage point per year, for five years, starting in 2028, until the rate is brought down to 10%. Today, the tax is 15%, but is flanked by a local business tax, which brings the levy to just under 30%.

To encourage e-mobility, companies will be offered 75 per cent depreciation in the first year of purchase for vehicles up to EUR 100,000 in price. Previously the ceiling was 75 thousand euro. Support for research will also be increased.

'After only four weeks in office, we are presenting the first important reforms to ensure new strength for the economy,' said Klingbeil. The new executive inherits a complex situation: the German GDP contracted in 2023 and 2024 and the forecasts for 2025 oscillate between zero growth and a new downturn. Actually, the first three months of the year went much better than forecast. GDP rose by 0.4 per cent compared to the previous quarter, according to Destatis. This has not happened since 2022.