(de-news.net) – In an effort to stimulate economic expansion, the German Bundestag has enacted a comprehensive fiscal reform package aimed at substantially reducing the tax burden on enterprises. Central to the legislation is the introduction of enhanced depreciation allowances, enabling companies to deduct up to 30% of expenditures on machinery, equipment, and electric vehicles through degressive depreciation beginning 1 July, applicable to the current and subsequent fiscal years. Complementing these immediate incentives, the reform stipulates a gradual reduction of the corporate tax rate from its current level of 15% to 10% by the year 2032.

To mitigate anticipated revenue shortfalls at the sub-national level, the federal government has committed to providing compensatory transfers to the Länder and municipalities amounting to several billion euros. Federal Minister of Finance Lars Klingbeil (SPD) characterized the initiative as a resolute and forward-looking measure intended to bolster economic resilience, enhance growth trajectories, and safeguard employment. He notably described the reform as an “investment booster.”

With the Bundesrat scheduled to deliberate on the matter on 11 July, indications suggest a favorable reception of the proposal. The Green Party voiced opposition, citing concerns over the diversion of climate-related funding toward gas price subsidies, while the AfD abstained from the vote. Economist Veronika Grimm, a member of the Council of Economic Experts, advocated for comprehensive structural reforms—particularly in the domains of ancillary labor costs and social security systems—as prerequisites for enhancing Germany’s long-term attractiveness to investors.