Habeck wants more investments through tax breaks

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The federal government wants to see more investments in the transformation of the economy.

(Photo: dpa)

Berlin In international comparison, German companies invest little in new technologies, machines or vehicles. The need for investments is high in view of the climate-neutral transformation and the digitization of the economy.

The Federal Ministry of Economics is now proposing several measures with which it wants to make investments more palatable for companies. They can be found in the draft of the annual economic report that Robert Habeck’s house (Greens) is currently coordinating with the other departments of the federal government. An overview of what Habeck’s officials propose for more investments in the document available to the Handelsblatt:

1. Extension of the degressive depreciation

During the corona pandemic, the federal government introduced the option of “declining balance depreciation of movable assets”. The regulation not only covers portable or mobile things, but the majority of all investments – such as machines or operating and office equipment.

With the degressive method, the annual depreciation amount is significantly higher at the beginning than with the usual straight-line depreciation. The advantage for the entrepreneur: he or she can deduct more from the tax, which ultimately makes the investment cheaper. According to the Federal Ministry of Finance, this possibility is said to have brought a total of ten billion euros in relief.

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The declining balance method of depreciation was still permitted until last year, but it has now expired – for now. The Greens around Habeck have actually alienated with the degressive depreciation. Their problem: The method stimulates investments in all goods equally, including those that are not good for the climate.

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So far, the Greens have preferred the “super write-offs” agreed in the coalition agreement. These are specifically intended for climate protection and digital investments and should have started in 2022. But due to various difficulties, Finance Minister Christian Lindner (FDP) postponed the project. When exactly it will start is still unclear.

And so it is that Habeck’s officials, of all people, propose to consider extending the degressive depreciation again. The draft of the annual economic report speaks of a “bridging solution”.

2. Promoting reserves

In addition, the ministers are bringing “tax incentives for the creation of reserves” into play in order to create incentives to make provisions for future crises. The federal government should review the existing tax regulations on the formation of reserves for possible adjustments.

The reserves are primarily about building up an equity buffer in order to be prepared for sudden business collapses, such as at the beginning of the corona pandemic. One possibility would be to extend the tax exemption for certain reserves.

3. Loss offset improvements

Loss offsetting allows companies to offset accrued profits against earlier or later losses in order to reduce the tax burden. As with depreciation, the federal government had expanded the options for this as a result of the corona pandemic. This gives companies relief, in particular, because they can claim losses from the peak of the pandemic more easily and for longer.

The draft of the annual economic report now contains the proposal to extend the simplification for this so-called loss carryback again. So far, it has been possible until the end of 2023 to claim the carryback for not just one, but for two years. It was also expanded from one million to ten million euros. According to the report, the loss carryforward could also be made more attractive by temporarily raising the limit. In this way, companies can offset losses later.

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