Growth Opportunities Act: Introduction of a bonus to promote investments in climate protection
On August 30, 2023, the German government released a draft for the "Act to Strengthen Growth Opportunities, Investments, and Innovation as well as Tax Simplifications and Tax Fairness." The law is part of a "Ten-Point Plan for the Economic Location Germany," which the federal government has published. The objective of the law is to provide impulses for increased growth, innovation, and investments to enhance Germany's competitiveness. In addition to introducing an investment incentive for companies, which will be the focus of this article, the law envisions numerous changes in tax regulations.
What Companies Need to Know?
The plan is to introduce investment incentives for companies to promote the transformation of the economy, particularly towards increased climate protection. Both newly acquired and manufactured movable assets, as well as measures for the preservation of existing ones, can be eligible. For this, the asset must be included in an energy-saving concept, lead to an improvement in energy efficiency, and be used almost exclusively for business purposes in the current and subsequent fiscal years. The energy-saving concept must have been created with the assistance of an energy consultant from the "Federal Funding for Energy Consultation for Non-Residential Buildings, Facilities, and Systems" program. Additionally, it must meet the requirements of an energy audit.
Excluded from the funding are investments in combined heat and power (CHP), district heating or cooling, or energy systems operated with fossil fuels.
Eligible parties can apply for funding - the basis for the investment must be at least €10,000. The basis is derived from the sum of all eligible expenses. However, it must not exceed €200 million per eligible entity. A 15% subsidy of the basis is granted as an investment incentive.
The funding period is expected to begin on January 1, 2024, or, at the earliest, on the day after the announcement, and end on January 1, 2030. In general, the supported investments should start and conclude within this period. Investments completed after December 31, 2029, are only eligible if partial manufacturing costs have been incurred before January 1, 2030.
Conclusion
The law is currently before the Bundestag, with the intention of passing it in November. The government aims to secure the approval of the Bundesrat by December 15, 2023, at the latest, so that the law can come into effect at the beginning of 2024. However, several federal states are dissatisfied with the draft, fearing significant tax revenue losses. It remains to be seen whether the planned law will receive approval in the Bundesrat.
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