BERLIN (Reuters) – The German government is planning to raise the amount of tax relief it will give to companies in a new draft law that could go to cabinet as early as Wednesday, according to a document seen by Reuters.
Chancellor Olaf Scholz’s coalition has been preparing to roll out a series of measures to help firms and start-ups at a time when Europe’s largest economy is struggling to regain momentum after falling into recession.
The Growth Opportunities Act includes a package of tax policy measures primarily aimed at small and medium-sized enterprises. In an earlier draft last month, it had capped the total amount of tax relief at 6.3 billion euros ($6.9 billion)a year.
But the latest draft, dated last Friday and seen by Reuters, envisaged tax relief of 7.56, 9.38 and 6.5 billion euros respectively in the years 2025, 2026 and 2027. The finance ministry declined immediate comment.
The draft law also gives incentives to companies to invest in climate protection by offering tax benefits if they make climate friendly investments.
It also provides stronger tax incentives for research and would allow companies to offset more losses against profits from other financial years and make it possible to take write-offs for low-value assets more quickly.
Scholz’s government is also preparing a separate draft law, the Future of Financing Act, to make it easier for companies to access capital markets and also improve their ability to attract skilled workers.
According to an initial draft, it could increase the tax allowance for employee share ownership to 5,000 euros from 1,440 euros, as a way of helping start-ups attract talent when they are not able to offer high salaries.
If approved by cabinet, both laws need to be passed by the German parliament before coming into force.
The International Monetary Fund has predicted that the German economy will contract by 0.1% in 2023, contrasting to the 0.8% growth it forecast for the euro zone area as a whole.
($1 = 0.9147 euros)
(Reporting by Christian Kraemer and Holger Hansen; writing by Matthias Williams; editing by Alexandra Hudson)
