Germany´s Growth Booster Act 2025: A strategic invitation to international investors
Dr Benjamin S. Cortez & Ilka Sussek
by Dr Benjamin S. Cortez and Ilka Sussek
Germany repositions itself in global competition
With the Growth Booster Act 2025, passed on 11 July 2025, Germany has launched a major investment stimulus with a clear message – foreign capital is welcome. In an era of global uncertainty, Germany aims to offer a stable, innovation-driven, and tax-efficient investment environment. The new rules are especially attractive to international investors in advanced manufacturing, sustainable mobility, and research and development (R&D).
1) Investment booster: accelerated depreciation improves return on investment (ROI)
What changed?
Movable assets acquired or manufactured between 01 July 2025, and 31 December 2027 are now eligible for declining balance depreciation of up to 30% annually, capped at three times the straight-line depreciation.
Investor example
A multinational company establishes a German subsidiary with EUR 100,000 in machinery investment (5-year useful life). Under the new rule, EUR 30,000 can be depreciated in year one instead of EUR 20,000 – an immediate EUR 10,000 tax saving and improved internal rate of return.
Why it matters
For international investors, particularly in capital-intensive sectors, this measure enhancescash flow in the ramp-up phase, and supports fast amortisation of German investments.
2) Corporate tax rate reduction
Key change
Starting in 2028, Germany will reduce its corporate income tax rate from 15% to 10% by 2032, decreasing one percentage point annually. The reduction will significantly reduce the corporate tax burden.
Foreign investor relevance
This creates predictable and internationally competitive taxation. Germany is moving closer to jurisdictions like Ireland (12.5%), and well below France or Italy.
The German CIT is only one part of the overall corporate tax burden. In addition, municipal trade tax applies, with average rates of around 14%, depending on the municipality. This means the combined corporate tax rate in Germany currently stands at approximately 30%. Even after the full reduction of CIT to 10% by 2032, the effective tax burden – assuming unchanged trade tax – will still be around 25%. For international investors, this remains a key factor when comparing global locations, especially when contrasted with countries that apply a single flat tax rate.
Example effect
A holding structure with an annual profit of EUR 2 million will save EUR 100,000 in tax per year once the full rate cut is in place. This is a powerful long-term advantage for capital-intensive operations.
3) Incentives for electric vehicles: accelerated write-offs and higher thresholds
New benefits
Purely electric commercial vehicles acquired from 01 July 2025 to 31 December 2027 qualify for an extra-fast declining balance depreciation scheme:
Year 1
75%
Year 2
10%
Year 3 and 4
5%
Year 5
3%
Year 6
2%
Additionally, the list price threshold for applying the 1% company car rule increases from EUR 70,000 to EUR 100,000.
An international tech firm transitions its German subsidiary's fleet to 20 electric vehicles (EUR 60,000 each). Under the new rule, each vehicle qualifies for EUR 45,000 depreciation in the first year. This not only reduces taxable profits but also incentivises green fleet strategies.
4) R&D tax credit: now more flexible and lucrative
Enhancements
The maximum eligible base for R&D tax credits increases from EUR 10 million to EUR 12 million, and a 20% flat-rate surcharge for overhead costs is introduced.
Practical case
A foreign-owned German R&D centre incurs EUR 5 million in qualifying expenses. Under the new regime, this becomes EUR 6 million with the overhead flat-rate. The tax credit increases from EUR 1.25 million to EUR 1.5 million – a 20% gain.
Why it’s important
This improvement directly benefits foreign investors in biotech, cleantech, AI, or mobility innovation, encouraging them to locate innovation hubs in Germany.
5) Legal certainty and transparent timeframes
The Growth Booster Act sets clear investment windows (e.g. until 2027 for accelerated depreciation; from 2028 for tax reductions), and offers stable, transparent rules. Germany’s legislative clarity stands out in comparison to other European markets with frequent regulatory changes.
Strategic takeaway
Investors can plan with confidence, knowing that tax outcomes are predictable and designed to reward long-term commitment.
Conclusion
The Growth Booster Act 2025 turns Germany into a strategically attractive destination for international capital. Whether through immediate tax benefits on investments, predictable tax relief, or targeted innovation subsidies, this law provides tangible, measurable tax advantages.
With this legislation, Germany strengthens its position as an attractive, reliable, and future-ready investment location. Early movers will gain competitive tax advantages in one of Europe’s core economies.
Schlecht und Partner bundles different specialisations and forms a powerful team in complex consulting assignments. They advise entrepreneurs, companies and individuals in all business and tax matters and conduct audits for medium-sized companies. Based on their broad technical and industry expertise, they have a vast experience in SME consulting.
XLNC member firm Schlecht und PartnerStuttgart, GermanyT: +49 711 40 05 40 30Auditing & Accounting, Tax
Dr Benjamin S. Cortez is a tax advisor and a partner at Schlecht & Partner in Stuttgart, Germany, specialising in transfer pricing and international tax advisory. He worked at a Big 4 company in Germany. Contact Benjamin.
Ilka Sussek is a tax manager at Schlecht & Partner in Stuttgart, Germany, specialising in international tax advisory and startup company development. She worked at a Big 4 company in Germany. Contact Ilka.
