Statement on the Draft Law on the Modernisation of Conditions for Capital Investments


The industry association of the German biotechnology sector, the Biotechnology Industry Organisation of Germany (BIO Deutschland), recognises several positive approaches to the competitive disadvantages correctly analysed by the German Federal Government in the current Draft Law on the Modernisation of Conditions for Capital Investments. However, important concerns held by BIO Deutschland still have not been taken into account. The current draft law misses the target and as a result, Germany will fall further behind in the competition to provide attractive conditions for research and development. With the lack of venture capital in Germany, as well as its transference from the country, there is also a threat of a decline in technological performance ability and innovative strength.

BIO Deutschland appreciates the German Federal Government’s offer “to evaluate the law on the basis of its aims two years after it comes into effect”, which was made in the counterstatement to the statement by the Bundesrat. In the association’s opinion, there is thus the chance that the intentions of the law might gradually deflect the negative results of the Corporate Tax Reform, at least for some of the innovative small and medium-sized enterprises, especially if the following improvements can be made:

  • Innovative small and medium-sized enterprises must be allowed unlimited use of the deficits carried forward from research expenditure.
  • The minimum fragmentation limit must be abolished so that private investors can spread out their venture capital.
  • Capital gains from investments in small, innovative companies must remain exempt from taxation in spite of the Corporate Tax Reform.
  • The conditions for innovative small and medium-sized enterprises must continue to be systematically improved by targeted tax incentives for research in the private sector.

BIO Deutschland is not seeking the creation of further exceptions in these necessary amendments. This would be contrary to the further aim of a tax simplification. However, the completion or further development of the tax law is vital because it is of great significance to the strengthening of the Federal Republic of Germany as an internationally competitive location for research and development.

It is regrettable that none of the bills of this legislative period so far have provided the so urgently needed step towards targeted incentives for research and development.

The concerns of the Federal Ministry of Finance that tax revenue will decrease as a result of improved conditions for innovative small and medium-sized enterprises are not justified. Analyses from France show that the drop in tax revenue is more than compensated for in less than two years by increased revenue, investments and job creation.

Go back