The Investment Booster:
30% depreciation now, 10% corporate tax from 2032.

With the Act for an Immediate Tax Investment Programme — in force since 19 July 2025 — the legislator has launched the largest corporate tax cut since 2008. The headline is the falling corporate income tax rate; for investment planning in 2026 and 2027, however, what matters most is the time window of the new declining-balance depreciation. Those who think both together are re-planning investments and distribution policy alike.

Building block 1: Declining-balance depreciation of up to 30 percent — the window is closing

For movable fixed assets that are acquired or manufactured after 30 June 2025 and before 1 January 2028 , declining-balance depreciation applies once again — up to three times the straight-line rate, capped at 30 percent of the respective remaining book value. A machine costing €500,000 thus carries up to €150,000 of depreciation in the first full year and €105,000 in the second. Combined with the investment deduction allowance and the 40 percent special depreciation , smaller businesses gain the strongest front-loading effect German tax law has ever offered. Critical for planning: the acquisition date is decisive — projects that slip into 2028 lose the booster.

Building block 2: The corporate tax roadmap

From the 2028 assessment period, the corporate income tax rate falls by one percentage point per year: from 15 percent to 10 percent in 2032. For a corporation with an average trade tax multiplier, the total burden thus drops from around 30 percent today to roughly 25 percent — moving Germany from the top end of the OECD scale into the midfield. In parallel, the retention tax rate for partnerships and sole proprietorships (§ 34a EStG) is being lowered in stages to preserve neutrality between legal forms.

Building block 3: Electric mobility

For company electric vehiclesnewly acquired between 1 July 2025 and 31 December 2027, an arithmetic declining-balance depreciation applies with 75 percent in the year of acquisition; the remainder is spread over five subsequent years. At the same time, the gross list price ceiling for the favourable 0.25 percent company car taxation was raised to €100,000 . For fleet decisions in 2026/2027, the electric vehicle is thus almost always the dominant option for tax purposes.

Building block 4: Research

The research allowance has been expanded — assessment base of €12 million, 20 percent overhead surcharge, higher hourly rates from 2026. The details and application route are covered in our article on the Research Allowance.

What to do now

1. Review your investment calendar: Where possible, bring acquisitions targeted for 2028 forward into the booster window; for orders with long lead times, delivery counts, not the order date.
2. Model your depreciation strategy: Declining-balance pays off above all with high initial profits; a later switch to straight-line depreciation is permitted and usually optimal.
3. Recalibrate your distribution policy: Retention becomes more valuable every year until 2032; profit appropriation resolutions should reflect the rate roadmap.
4. Adjust deferred taxes and planning models: The staggered rate is already changing balance sheet positions and company valuations today.

Frequently Asked Questions

Fatma Tabak

Tax advisor (Nordbaden Chamber of Tax Advisors) · Founder, TABAK Consulting

More than 20 years advising entrepreneurs, investors and family businesses. Reserved tax services are provided by our partner tax firm, TABAK Steuerberatung.

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