Germany Approves Tax Relief Plan

(MENAFN) On Wednesday, Germany’s federal Cabinet approved its initial tax reduction package worth EURO46 billion (about USD52.3 billion) aimed at alleviating pressures on the ailing economy.

This measure is designed to provide financial relief and stimulate economic growth during challenging times.

The plan is set to be rolled out over the 2025-2029 timeframe, focusing on assisting companies and revitalizing the struggling economic landscape, as stated by the German government.

The initiative prioritizes increasing investments by offering favorable conditions, including a “super depreciation” allowance of 30 percent annually for three years to reduce the tax load on businesses.

Additionally, a 1-point cut in corporate tax is scheduled for five years beginning in 2028.

The government also intends to boost tax incentives related to mobility and research and development (R&D) to further support innovation and progress.

Meanwhile, escalating tariff conflicts and remarks by United States Leader Donald Trump have raised alarms about the future of international trade.

Many experts regard Trump’s tariff approach as a “special risk” to Germany’s economic expansion.

Despite the global economic uncertainty amplified by Trump’s aggressive tariff strategies, Germany’s economy—largely dependent on manufacturing more than its regional peers—continues to face vulnerabilities due to ongoing production weaknesses.

In 2024, Germany’s economy shrank by 0.2 percent compared to the previous year, marking the second year in a row of economic contraction.

This downturn has been influenced by heightened competition from China and structural challenges limiting growth.

On April 24, the government revised its growth forecast for the current year, lowering it from an earlier estimate of 0.3 percent to zero, largely due to the adverse effects of global trade tensions triggered by Trump’s policies.

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