Tax Support for Innovation and Growth
Targeted tax incentives stimulate innovation and accelerate investments by companies in Germany.
Aug 21, 2025
Germany's Research Allowance Act
Companies subject to taxation in Germany and engaged in R&D activities are eligible for a tax credit of up to EUR 2.5 million per year; 25% of eligible costs (35% for SMEs). Eligible expenditures—capped at EUR 10 million—include, for example, personnel costs for employees working on the project and depreciation of assets used in the R&D process.
Starting January 1, 2026, the R&D tax incentive will become even more attractive: the maximum eligible expenditure will increase to EUR 12 million annually, and additional cost categories will be added.
To benefit from the research allowance, companies must obtain a certificate from the official R&D certifying body confirming the project’s eligibility. The responsible tax office will then process both the certification and the financial aspects of the application, in coordination with the company’s financial statements. If no tax liability exists, the research allowance will be paid out as a cash benefit.
Immediate Tax Investment Program
Germany’s InvestBooster, adopted in July 2025, is an initiative of the federal government that aims to attract corporate investment and drive growth through fiscal incentives.
For investments made between July 1, 2025, and December 31, 2027, a declining-balance depreciation of up to 30% applies. This is complemented by a gradual reduction in corporate income tax rates starting in 2028.
The federal government's goal is to enable faster refinancing of investments and to enhance Germany’s international competitiveness as a business location.
