Germany to boost company research & development with tax money | News | DW | 17.04.2019
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Germany to boost company research & development with tax money

As Germany cut its growth forecast again for 2019, the government is set to boost company research and development. Both big and small companies would be able to claim annual bonuses.

Amid a slowing economy, and to counter the slowdown, Finance Minister Olaf Scholz plans
to support corporate research and development with incentives worth €1.27 billion ($1.43 billion) annually from 2020, according to a draft of the plan seen by Reuters on Wednesday.

Companies doing basic research or industrial development would be able to claim up to €500,000 in bonuses each year, according to the draft law. Previous versions of the bill limited the funds to small and mid-sized companies, but the latest version has no such restrictions.

Only a week ago, the chancellor's spokesman Steffen Seibert denied the need for a package of measures to boost growth. 

German businesses have long called for tax incentives to aid private research and development. The upcoming measures, spearheaded by Germany's Finance Minister Olaf Scholz, follow the government's latest revision of its growth forecast, downwards for 2019 from a 2.1% projection a year ago.

Germany's economic growth forecast was first revised down to 1.8% but cut again to 1.0% in January. On Wednesday, the cabinet scaled down its projections once more, bringing the expected growth to 0.5%.

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'The best times for the economy are over'

Economy Minister Peter Altmeier described the new figures as a "wake-up call" for the EU's biggest economy. He said the slowing world economy, trade disputes and Brexit uncertainty were weighing on the German economy.

Altmeier has repeatedly called for Germany to cut its corporate tax rate, but his plan did not meet with approval from the whole of the ruling coalition.

On Wednesday, the BDI industry association also urged the government to provide more incentives for eco-friendly investment and to cut corporate taxes.

"The best times for the economy are over," BDI Managing Director Joachim Lang said. "The government must not lose any more time."

Finance Minister Scholz has objected to the idea, instead focusing on stimulating research and development to fight the slowdown. Germany's cabinet is expected to pass his measures in mid-May, with the law going into effect in January 2020.

Despite the gloomy outlook for 2019, the government predicts 1.5% growth for 2020.  

dj/jm (Reuters, dpa)

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