In the super election year, there are always interesting tax projects of the different parties to observe. This year, the discourse is characterized, among other things, by planned tax increases in the income tax in the form of an extended wealth tax, a reintroduction of the wealth tax, but also tax reductions through the complete abolition of the solidarity surcharge or relief for various companies are among the proposals. Now there was another aspect, which is also often very well received, namely an increase in depreciation potential. In particular, there was talk of a super-depreciation of assets. What this may be, you will find out below.

Various parties compete in a federal election for their views and beliefs in the election campaign. Various topics are considered relevant. The focus is on aspects such as pensions, the economy, climate protection and energy, the minimum wage, internal security, finances and taxes, the European Union, defence, equality, rent, transport, agriculture, migration and education. This election campaign is characterized above all by extreme contradictions in tax policy. Because on the one hand, there are strong increases for mostly wealthy people under favor of business assets for choice or tax cuts. Nevertheless, first of all, companies are already taxed very high and there will be no serious increases. The individual parties are sometimes very divided on this.

In particular, however, the solidarity surcharge could be a sticking point, for example, because this has now been reduced for all persons who earn less than €109.000 and for persons who earn less than € 73.000 this is even completely eliminated. Exclusively for persons who are above the said allowance, this does not disappear. Nevertheless, there are parties that advocate a complete abolition and other parties that simply want to use the solidarity surcharge for other purposes. In addition, according to a study by the IDW, the abolition of the solidarity surcharge is considered a boom for revenues and jobs at companies.

There are also other proposals to reduce the tax burden on companies. This includes the proposal of FDP party chairman Christian Lindner, where he brings super write-offs for assets into play.

Among the aspects already mentioned, there are clear differences in the planned fiscal approaches of the possible government parties.

Super write-offs are still relatively disregarded in the current discussion. Nevertheless, due to the financial policy strongly ambitious FDP such a proposal could flow into the Parliament in the future. Furthermore, it is considered very unpredictable in which direction fiscal policy will develop in the next few years, as the SPD and the Greens and the left tend to increase taxes and the CDU and FDP rather tax relief for companies would result. Thus, it depends very much on the future government whether companies are relieved and to what extent. Nevertheless, improvements in loss offsetting, super-depreciation and environmental premiums and subsidies for climate-friendly innovations and business areas are likely.

First of all, it is necessary to consider the not yet decided super-depreciations for investment in fixed assets. Because this would probably be an innovation boost from companies, which hardly a party should be averse to. Nevertheless, the more center-left-oriented parties also have no great interest in gifts for companies, which are considered more climate-damaging so far. However, the change to climate-neutral industries and industries is not without financial support from companies.

Furthermore, a doubling of the environmental bonus for electric vehicles by the end of 2021 has already been decided by the Federal Ministry for Economic Affairs and Energy. This so-called innovation bonus was introduced in July 2020 and has accelerated the rise in electric vehicles. This introduction was accompanied by a new regulation, whereby e-vehicles are tax-free until 2030. In addition, a lower vehicle tax will apply in the future for more environmentally friendly vehicle models. This is intended to support the switch to alternative drive systems in the automotive industry through funding from the federal budget.

Finally, there is the CO2 pricing. However, this does not constitute a tax relief, but rather a pricing of climate-damaging behavior. This is because it aims to reduce emissions. It is also interesting to see to what extent the parties want to deal with it in the future, because in part a much faster increase than was previously agreed is aimed at. Currently, the CO2 price is € 25 per tonne of CO2, which is expected to rise gradually to € 55 – € 65 in 2025.

The super-depreciation model already exists in other countries. Italy, for example, provided for the purchase of assets at 130 % or, in the case of so-called hyper-depreciation, depreciation up to 270 % of the purchase value in order to provide an incentive to invest in them. This approach was changed in 2020 and further developed as a percentage of the acquisition value as a tax credit for the investing entrepreneurs. However, companies only get such tax advantages for investments in digitalization or Industry 4.0.

France also has special grants for companies that invest in technology and development in the context of Industry 4.0. Companies receive a 140% depreciation for the purchase of special machines. In Singapore, too, certain goods are subject to increased depreciation, up to a level of 250 %.

However, some terms such as special depreciation, mega-depreciation or hyper-depreciation are used here, but in Germany the special depreciation is usually already used in special regulations. Furthermore, in various European countries the term patent box or IP box is common in order to subject intangibles to a lower tax rate. There are already various tax design attempts, for example with the IP box in Luxembourg.

If the FDP party chairman Christian Lindner is to be believed, he stands for the introduction of a super write-off for companies. The federal government is to subsidize investments in climate protection and digitalization. In principle, this can be done in different ways, because companies can, for example, be relieved of taxes, they can apply for additional subsidies or simply receive subsidies for meeting certain conditions and conditions. In addition, higher depreciation on specific assets can provide an incentive to invest more in them.

In particular, this super-depreciation is intended to enable companies to invest in investments and to ensure a very fast financial compensation via a lower tax burden on the basis of the super-depreciation. A period of two years was mentioned for such depreciation on assets that contribute to digitalization and decarbonization. So far, the usual depreciation period of 10 years applies to such fixed assets.

In order to help accelerate climate protection and thus reduce CO2 emissions and put the Federal Republic of Germany back on a path of renewal and technology leadership, super-depreciation, subsidies and other subsidies are brought into play. This goal of reducing emissions has been very much in the foreground of the election campaign, especially since the floods in July 2021, as no politician wants to stand idle in such devastating climate damage.

Now it is considered very uncertain with which financial incentives technology and innovation should be promoted in the future, yet grants in the climate and digitalization sector are considered very secure. Only the question of the species finally arises. If you have any questions, you are welcome to contact us.