Growth Opportunities Act:
Strengthening the economic position of Germany

The Growth Opportunities Act aims to provide tax relief to companies, free them from bureaucratic obstacles, and improve conditions for investment and innovation. These measures are necessary to strengthen, adapt, and modernize Germany as a location for the future.

In total, the relief volume of the law amounts to 3.2 billion euros. Companies benefit from:

• Expansion of tax incentives for research,
• Improved depreciation options,
• Tax incentives for new residential construction,
• Improvement of tax loss deduction, and
• Introduction of e-invoicing.

Originally, the government draft of the Growth Opportunities Act included about 50 individual measures with a relief volume totaling 6.3 billion euros. This draft did not receive a majority in the parliamentary process and was therefore adjusted during the mediation procedure. The relief volume was significantly reduced, and, among other changes, the proposed climate protection investment bonus was scrapped. In this revised version, both the Bundestag and the Bundesrat have now passed the law.

The R&D tax incentive law is significantly expanded to support companies in their research and development activities.

• Self-performed research and development projects will now be subsidized at a rate of 70 EUR per working hour (previously 40 EUR), but still limited to a maximum of 40 hours per week.
• From 2024, depreciable movable assets of fixed assets will also be considered for the funding.
• The inclusion of eligible costs for commissioned research work is increased from 60% to 70%.
• The maximum assessment base is increased from 2 million EUR to 10 million EUR.
• The R&D tax incentive generally amounts to 25% of the assessment base, with a new additional increase of 10 percentage points for small and medium-sized enterprises according to the SME definition.

These changes will come into effect from the day after their announcement.