German cabinet backs tax credit plan to support recovery

According to a government source, the German cabinet authorized a tax cut package for employees and companies on Wednesday in order to mitigate the pandemic’s impact on Europe’s largest economy with additional stimulus.

In a package worth roughly €11 billion until 2025, the fourth Coronavirus Tax Relief Act contains a tax exemption on incentives for carers of up to €3,000, as well as a variety of tax relief measures for enterprises.

The German economy finished the year on a shaky note, dropping 0.7 percent in the fourth quarter, hindered by limitations imposed in the autumn to battle COVID-19’s fourth wave as well as supply chain disruptions.

The government wants the new package to support the recovery

The plan includes measures that would allow businesses to deduct some of their investments from their taxes more rapidly in 2022, as well as offset losses from prior earnings to a larger extent than previously, lowering their taxes in earlier years.