The Growth Opportunities Act means that it will be more tax efficient, streamlined and attractive to start or continue to operate as a business in Germany. The Act accelerates e-invoicing and financial digitalisation, as well as reducing the tax burden through new accounting rules to provide greater upfront liquidity.
Businesses that benefit from the Act are already undergoing change, but must consider how to protect their automated systems from new threats. Trustpair helps to secure supplier payments, prevent fraud and protect liquidity in this evolving regulatory environment.
The Growth Opportunities Act in Germany: Key Takeaways:
- The Growth Opportunities Act Germany was passed in 2024 in order to strengthen Germany and its economy by boosting business innovation and reducing upfront expenses
- The rules: mandatory e-invoicing, front-loaded asset depreciation, simplified accounting, payroll changes, increased R&D credits cap and less tax on e-vehicles
- Despite the progress, the act brings new challenges for large and small businesses in payment security and verification
What is the Growth Opportunities Act?
The Growth Opportunities Act is a modern German regulation designed to eliminate the burden of bureaucracy for businesses. Brought in by the German Federal Parliament, it aims to increase financial digitalisation through electronic invoicing, improve liquidity through several tax changes, and promote investment into climate-focused enterprises.
Also known as Wachstumschancengesetz, the Act is part of a wider plan to attract business investment into the region. After the German economy was the only major economy to contract in 2023, the Growth Opportunities Act was introduced in March 2024 alongside 9 other key measures.
One of the key reasons for this stagnation was the tax situation, and so trade tax relief schemes are heavily featured in the legislation to boost Germany within the competitive global tax landscape.
What is its goal?
The main aim of the Growth Opportunities Act is to boost the German economy in both the short and long term. The German government wanted to make it as attractive as possible to set up a business in Germany, grow one you’ve already started, and even lower acquisition costs.
Beyond its ability to strengthen growth opportunities, another goal is to modernise German procurement and invoicing infrastructure. The Growth Opportunities Act was introduced alongside e-invoicing mandates to create efficiency in the way businesses perform their accounting activities. And the measures adopted have been integrated into the tax system to provide efficiency and transparency.
Finally, the focus on sustainable investment also makes the act relevant for climate goals in the country.
What are the rules of the Growth Opportunities Act?
The Growth Opportunities Act will bring significantly fewer measures in bureaucracy, including:
- Mandatory e-invoicing
- New depreciation rules
- Changes for cash-based accounting and tax processes
- Payroll changes
- Extended R&D funding
- Electric vehicle support
Mandatory e-invoicing
Mandatory e-invoicing was brought in first by the EU in 2014, under Directive 2014/55/EU. But it was only implemented in the business-to-government (B2G) sector, so mainly applied to government contractors.
Germany’s new rules take this mandate one step further and targets all business-to-business (B2B) transactions for electronic invoicing, on top of the B2G mandate already in place.
This is one of the transitional regulations, meaning it’s implemented in stages. Since January 2025, all businesses (regardless of whether they work in the public sector or private) must have been able to receive e-invoices. And from 2027, large businesses with a turnover of €800,000 or more will be forced to send them, over the paper or PDF-style invoices we know today. By 2028, this e-invoicing rule extends to all businesses, including small and medium sized enterprises.
E-invoices for such transactions are sent through structured data which is machine-readable, and automatically validated as part of the system. In Germany, the two main choices for e-invoicing are XRechnung and ZUGFeRD. They’re also useful for tax purposes, and can integrate directly with German tax systems to help streamline business tax returns.
New depreciation rules
The new asset depreciation rules allow companies to effectively ‘front load’ their tax deductions. The rules state that a declining balance depreciation will be granted, amounting to a maximum of twice the straight-line depreciation (but no more than 20%). This special depreciation allowance applied to movable fixed assets acquired or produced after March 31st 2024, and before January 1st 2025.
The declining balance method is beneficial for movable assets because it provides better cash flow liquidity, reducing the tax bill today (with eligible expenses) so that more money is kept in the business for reinvestment.
Plus, it better aligns with the actual economic wear and tear of the assets. We’re often told that ‘new cars lose one third of their value as soon as they’re driven off the lot’, but declining balance depreciation is a fairer representation of value.
Cash-based accounting and taxation changes
In Germany, minimum taxation rules usually prevent companies from wiping out their entire tax bill with old losses if they earn more than €1 million. But the Growth Opportunities Act temporarily changes this: for 2024–2027, you can offset 70% of your total income (above the first €1m) against old losses, rather than just 60%.
This offers the benefit of faster recovery: companies that suffered during the pandemic for example can now use tax loss carryforwards to shield more of their current profits from tax. It’s effectively a window of recovery through domestic tax arrangements.
There has also been a shift from double-entry bookkeeping to cash-based accounting for businesses with less than €80,000 profit or €800,000 turnover. Previously, preparing a full balance sheet and formal profit and loss statement required an expensive tax consultant and specialised software. Now, many businesses will save on this cost and work with a much simpler accounting system.
Payroll changes
The so called ‘one fifth method’ under the Income Tax Act states that employees who receive multiyear compensation, redundancy pay or other extraordinary income may benefit from reduced taxation. But income and corporation tax caused a headache on the employer side, because they were responsible for verifying whether an employee was eligible.
From 2025, employers simply tax the payment as a regular one-time bonus for the tax year in a form of tax simplification. They’re no longer obliged to judge whether extraordinary payments qualify for special taxation, removing the income tax work for payroll and HR teams.
Extended R&D funding
The Growth Opportunities Act brings a drastic jump in funding volume, from a cap of €4million to €10million for eligible research and development projects expenses. It’s designed to transform Germany as a business location into a more competitive innovation hub, lowering the entry for high-tech companies and contract research orgs.
It means that the maximum assessment basis for development projects jumps from €1 million to €2.5 million, effectively a tax-free allowance. And while large businesses follow this research funding model getting 25% of their costs back, small and medium enterprises get even more (35%).
Electric vehicle support
Finally, the Growth Opportunities Act provides dedicated support for electric vehicles in the form of a more attractive tax setup. If employees use electric cars for business and personal purposes, they will only be required to pay tax on 0.25% of its gross price. This was initially set for company cars valued at €70.000 or below, but assessment periods have been changed to €100.000.
These tax incentives make electric vehicles a more cost-effective choice, and aims to increase their uptake across Germany.
| Rule | Purpose |
| Mandatory e-invoicing | Invoices can integrate directly with German tax systems to help streamline business tax returns |
| New depreciation rules | Better cash flow liquidity, reducing the tax bill today so that more money is kept in the business for reinvestment |
| Cash-based accounting and taxation changes | Faster recovery for losses |
| Payroll changes | Less administrative work for employers when one-off payments are made |
| Extended R&D funding | Higher scale tax-efficient research and development innovation possible |
| Electric vehicle support | Electric vehicles become more cost-effective through lower value added tax |
Strengthen payment security amidst rising digitalisation
With increased automation comes new threats.
The Growth Opportunities Act brings welcome changes to the German economy, but organisations who benefit from these changes must also consider their payment and supply chain security. By mandating structured e-invoicing, for example, the Act essentially forces companies to rethink their risk management strategies.
And it only works if the data is perfect. If an e-invoice contains fraudulent bank details, for example, the automated system might process the payment instantly without a human ever double checking the IBAN.
Solutions like Trustpair exist to protect against this. Our platform acts like a real-time firewall to cross-reference bank details in the incoming database against verified global databases, before the payment ever leaves your account. Employ automated account ownership checks to ensure your third parties are a) who they say they are and b) the genuine account owner, and close the final loop in the new automated procure-to-pay cycle.
Reviewing the Growth Opportunities Act for German businesses
The Growth Opportunities Act is a German regulation designed to uplift the economy, attract new business and boost innovation. The rules include mandatory e-invoicing, tax reliefs and simplified accounting. But as the economy moves towards total automation, firms need extra verification measures in place, like Trustpair’s platform, to prevent emerging fraud threats.