Germany to consider Corporate Tax Reform

Germany’s economy and finance ministers proposed changing the country’s corporate taxes on Sunday as one approach to relieve pressure on enterprises experiencing a variety of issues, including high energy costs.

Economy Minister Robert Habeck said that Germany’s corporation taxes is no longer competitive or beneficial to investment.

“This is precisely why we should consider how we can, for example, finance tax relief, tax incentives for investments in the future,” he went on to say.

Habeck stated that the government was bound by what he called “extremely tight financial leeway,” referring to savings pressures in Germany’s 2025 budget.

His comments follow Finance Minister Christian Lindner’s appeal for measures to improve the economy, including as increased labour market flexibility, reduced red tape, and tax breaks as part of corporate tax reform.

“I agree with Christian Lindner. We need to do more for growth and economic dynamics,” Habeck said, adding that he is collaborating with Lindner on a reform package.

Lindner told German network ARD on Sunday that there was widespread consensus that German companies were not competitive abroad, requiring immediate action to put together a relevant policy package.

“If we don’t do anything, Germany will get poorer,” Lindner stated, emphasising the importance of strengthening the country’s ailing economy to ensure prosperity.

While he ruled out a special budget for German corporations, he proposed exempting them from the so-called solidarity tax, which was imposed after reunification to help poorer states in eastern Germany.

Lindner, who said he was frequently in contact with Habeck, said the emphasis was on to show results now that the two ministers were in agreement.

“Now we have to deliver,” he remarked.