The German听coalition agreement, published on April 9, 2025, includes plans for comprehensive tax reforms in various areas, such as:
- Investment incentives:听The coalition intends to introduce a new investment booster in the form of declining balance tax depreciation for equipment investments. Businesses would benefit from a 30% depreciation rate for the years 2025, 2026, and 2027.
- Reduction of corporate income tax rate: Starting on January 1, 2028, the corporate tax rate of 15% would be reduced incrementally by 1% annually over five years. Note that Germany levies trade tax alongside the corporate income tax. The trade tax rate is set at the municipal level and amounts on average to 14%, calculated on the taxable trade income. The coalition agreement intends to increase the minimum trade tax multiplier from 200% to 280%, raising the minimum trade tax rate from 7% to 9.8%.
- Solidarity surcharge:听The individual and corporate income tax solidarity surcharge of 5.5% would remain unchanged.
- Pillar Two:听The coalition reaffirms its commitment to the minimum tax for large corporations. It supports international efforts to permanently simplify the minimum tax framework and will monitor global developments to prevent competitive disadvantages for German companies.
- Financial transaction tax:听The government backs the implementation of a financial transaction tax at the EU level.
- Combatting tax havens:听Germany will advocate for the strict inclusion of non-cooperative tax jurisdictions on the EU's list of non-cooperative jurisdictions.
- Neutral taxation across legal forms:听The German government intends to refine the existing option for partnerships to be taxed like corporations under section 1a of the German Corporate Income Tax Act. This adjustment aims to reduce legal barriers that have previously hindered its widespread adoption. Additionally, enhancements are planned to the deferral of taxation on retained earnings, promoting equitable treatment across different business entities.
- Tax harmonization:听The coalition intends to act against unfair tax competition and supports the introduction of a common corporate tax base within the EU.
These measures are proposals within the coalition agreement and require government action for implementation during the legislative term.
Read an April 2025 report prepared by the 乐鱼（Leyu）体育官网鈥檚 EU Tax Centre