What the German coalition agreement says for private investors

The coalition agreement that CDU, CSU and SPD signed on 5 May 2025 contains four things a private investor in Germany should know: corporate income tax is to fall by one percentage point a year from 1 January 2028, equipment can be written off at 30 per cent a year from 2025 to 2027, the state's venture and growth capital programmes are to be enlarged, and every school-age child is to get a pension depot from 2026. It contains nothing on the flat tax on capital income, on the taxation of property sales or on inheritance tax. And line 1627 of the text puts every measure in it under the reservation that it can be financed.

Friedrich Merz was elected chancellor on Tuesday, 6 May, in the second ballot with 325 votes, after receiving 310 in the first, six short of the 316 required. The government has been in office for two days. None of what follows is law.

How firm is each sentence?

A coalition agreement is a statement of intent between parties, and its verbs carry the degree of commitment. "Wir werden" (we will) is a promise. "Wir wollen" (we want to) is a goal. "Wir prüfen" (we will examine) is neither. We read the passages relevant to investors with that in mind, and it sorts them quite cleanly.

Corporate tax and depreciation: what changes for a holding company

The text says: an "investment booster" in the form of declining-balance depreciation of 30 per cent on equipment in 2025, 2026 and 2027, and a cut in corporate income tax "in five steps of one percentage point each, beginning on 1 January 2028". Both are "wir werden", and both are to be passed in one legislative procedure. The rate today is 15 per cent, so the end point would be 10 per cent in 2032.

For a business angel who holds stakes through a GmbH, this matters less than the headline suggests. Under section 8b of the Corporate Income Tax Act, a corporation's gain from selling shares in another corporation is left out of income, and 5 per cent of the gain is treated as a non-deductible expense. In effect 5 per cent of an exit is taxed. Five points off the corporate tax rate on 5 per cent of a gain is a quarter of a percentage point of the gain. The cut is worth more to a GmbH that earns interest, rent or operating profit and keeps it.

One sentence further down deserves more attention from the same reader: the minimum trade tax multiplier is to rise from 200 to 280 per cent. Trade tax is 3.5 per cent of profit times the municipality's multiplier, so the floor rises from 7 to 9.8 per cent. Holding companies registered in low-multiplier municipalities would lose a good part of that advantage.

The agreement also promises to improve "substantially" the option model of section 1a KStG and the retained-earnings relief of section 34a of the Income Tax Act, both of which concern partnerships. And it will "examine" whether newly founded companies can fall under corporate tax regardless of legal form from 2027. That last one is a "prüfen".

This is a description of the text and not tax advice. What a rate change means for a specific holding structure is a question for your tax adviser, once there is a bill.

Venture capital: more public money for later rounds

Three instruments are named, all with "wir werden". A Deutschlandfonds is to be set up as a fund of funds with at least EUR 10 billion of federal money in guarantees or financial transactions, levered with private capital to at least EUR 100 billion, to close gaps in growth and innovation capital "especially for Mittelstand and scale-ups". The existing Zukunftsfonds, which the finance ministry describes as EUR 10 billion for the venture market until the end of 2030, is to be made permanent beyond 2030. And the WIN initiative, in which companies and investors stated in September 2024 that they intend to invest around EUR 12 billion in young companies by 2030, is to "more than double" to over EUR 25 billion.

For an angel the effect is indirect. None of these programmes invests at the stage where a private individual writes a first cheque. They add capital for funds and for later rounds, which is where a seed investor's companies need to find their next investor. Whether more capital at that stage means better terms for early shareholders is not something the text can promise.

What the agreement says about founding is mostly intention. A company formation within 24 hours through a single digital platform is announced in two places, once as "wollen". Simpler notarial procedures: "wollen". A protected zone from bureaucracy for founders: "prüfen". Employee share ownership is to be "strengthened further" through tax and social security law, without a detail. The BAFA grant for angel investments does not appear in the text under its name, INVEST. Absence is not abolition; it means the coalition has agreed nothing about it.

Frühstart-Rente: ten euros a month per child

"On 1 January 2026 we want to introduce the Frühstart-Rente." For every child from the age of six to 18 who attends an educational institution in Germany, the state is to pay EUR 10 a month into an individual, funded, privately organised pension depot. From 18 the holder can add private contributions up to an annual cap. Returns are to be tax-free until retirement, and the capital is paid out only at the standard retirement age.

Twelve years at EUR 120 make EUR 1,440 of state contributions per child. The sum is small. The interesting parts are the tax-free accumulation and the cap for private top-ups, and the text gives no figure for the cap, names no provider and uses "wollen" for a start date eight months away. Parents planning a child's depot should not wait for it.

The Riester pension is to be turned into a new product without mandatory guarantees and with lower costs. That is a "werden", again without numbers.

Rental property: the brake is extended

For owners of rental flats the text is concrete. The Mietpreisbremse, which caps rents in new leases in designated tight markets and is currently limited to the end of 2025, "is extended" for four years. In the same markets, index-linked rents, furnished lettings and short-term lettings are to be regulated more tightly, and the modernisation levy is to be changed. An expert group is to prepare fines for breaches of the brake by the end of 2026. On the other side stands one sentence: whoever lets cheaply "is rewarded through tax", with no mechanism named. The current heating law is to be abolished and replaced.

What the agreement does not say

We searched the full text for the terms a private investor would look for first. The flat tax on capital income (Abgeltungsteuer) does not occur. Neither does the ten-year period after which private property sales are tax-free, inheritance tax or a wealth tax. The solidarity surcharge, which is levied on top of the flat tax, "remains unchanged". A financial transaction tax is supported "at European level", which is not a German decision to take.

Silence in a coalition agreement means the parties did not agree to change something. It does not bind a finance minister who needs revenue two years from now.

What to do with this now

Very little, and that is the point. The depreciation rule and the corporate tax path need a law, which has to pass the Bundestag and the Bundesrat. The funds need a structure and a budget. The Frühstart-Rente needs providers. Everything is subject to line 1627.

The useful step today is to note which of your own decisions depend on one of these sentences: a holding company's seat, a planned sale inside a GmbH, a lease due for renewal in a regulated market. Then wait for the bill and read that, not the summaries. The agreement itself has numbered lines, and the tax chapter starts at line 1426.