What the German coalition agreement means for business
The coalition agreement between the CDU/CSU and SPD contains a few points that will help German companies – such as the planned reduction in the corporate tax rate from ...
Commerzbank Economic Research
04/09/2025
CDU/CSU and SPD today agreed on a coalition treaty. The way for a new German government is now paved. The Bundestag will probably elect Mr. Merz, the CDU party head, Chancellor in early May.
We assess the coalition agreement from a business point of view and ask whether there are improvements in problematic areas that, according to surveys, are particularly pressing for companies and that are responsible for the erosion of German competitiveness over the last ten years.
Corporate taxes: Improvements likely, but not immediate
The fact that the business environment has deteriorated so much in recent years is also due to corporate taxes, which have fallen in many other countries, but not in Germany. In this respect, it is positive that the corporate tax rate is to be reduced in five steps of one percentage point each. However, the reduction is not scheduled to begin until 2028 and is subject to financing.
The solidarity surcharge, which many entrepreneurs also pay, is not to be reduced or abolished. The planned 30% depreciation on equipment investments for the years 2025, 2026 and 2027 will encourage short-term investment, but will not provide lasting relief for companies.
However, individual sectors will be subsidized. For example, the VAT on food in restaurants will be permanently reduced to 7%. The agricultural diesel reimbursement will be fully reintroduced.
Reducing bureaucracy: Some concrete steps, but more declarations of intent
Excessive bureaucracy is also a burden for many German companies. The coalition agreement commits to the goal of reducing red tape. In particular, the new government wants to abolish obligations to appoint company representatives and significantly reduce mandatory training and documentation, with small and medium-sized companies in mind. In addition, the national supply chain law will be abolished. This is a positive step, although it is not yet clear whether the German law implementing the European Supply Chain Directive will ultimately be truly ‘low-bureaucracy and enforcement-friendly’, as promised. Otherwise, the future coalition partners are committed to the goal of reducing the administrative burden on businesses by 25%, although it is not clear how this goal is to be achieved. Here, declarations of intent dominate.
For full text see attached PDF-Version.
