The Federation of German Industries (BDI) has presented proposals for an immediate tax policy reform programme for the new federal government. The BDI says that the economy needs „strong momentum through a tax policy that strengthens Germany as a location“ in the new legislative period. The new government must finally implement bold reform steps in tax policy.

The industrial association focuses on five key points that the CDU and SPD should address right from the start: reducing corporate taxes to 25 %, stronger investment incentives, a simpler trade tax, suspending global minimum taxation, and a fundamental modernisation of German corporate tax law.

As an important signal to the economy, the BDI would also like to see the end of the solidarity surcharge, despite the recent ruling from the Federal Constitutional Court. „The abolition of the solidarity surcharge belongs in the coalition agreement of the new federal government“, BDI Chief Executive Tanja Gönner said in an interview with Börsen-Zeitung not long ago. „Just because the surcharge is constitutionally compliant does not mean it is economically sensible and must continue.“

The reduction of corporate taxes to 25 % is the highest priority for the BDI in its position paper. This is the only way to mobilize investments, strengthen the business location, and overcome growth weakness, Gönner emphasises. At 25 %, Germany would be on par with countries like France, Spain, the Benelux countries, or the UK. Currently, corporate taxes in Germany are around 30 %.

In addition to the abolition of the solidarity surcharge, the reduction should primarily be achieved through a gradual lowering of the corporate tax rate, taking into account extensive foreign tax credit offsets. Alternatively, a credit for trade tax against corporate tax could also be considered.

The trade tax is already a thorn in the BDI's side, as the association believes it leads to excessive bureaucratic burdens on businesses. Therefore, the association advocates for aligning the tax base of the trade tax with income and corporate tax and simplifying the administration of the tax – such as through the introduction of a „clearinghouse“ or „one-stop-shop.“

Stronger investment incentives could, in the BDI's view, be achieved through measures such as depreciation, and research subsidies. For example, declining balance depreciation (AfA) should be extended indefinitely beyond 2025, the lump-sum depreciation improved, and an investment premium introduced. Regarding the research subsidy, the association advocates for increasing the tax credit to at least 12 million euros, and increasing the subsidy rate to at least 30 % for all businesses.

The position paper notes that corporate taxes have not been fundamentally reformed since 2008. The BDI also outlines numerous reform proposals, such as better loss accounting and interest limitation regulations, modern group taxation, aligning trade and tax balance sheets, simplifying withholding tax procedures, and removing barriers to restructurings. A significant simplification and consistent reduction of bureaucracy in tax law, also with the help of digitalization and artificial intelligence, is key.

Even with an immediate tax reform programme at national level, the industrial association also points to the need for action on EU tax law. European reporting obligations must be harmonised and reduced. In particular, the parallel application of the minimum tax and the controlled foreign company (CFC) taxation must be abolished. The association also wants the anti-tax-haven law to be reviewed. According to the BDI, this could be done quickly, and independently of the EU, by German legislators.