New Coalition Agreement - what's in store for us from the legal perspective

The CDU/CSU and SPD agreed on a new Coalition Agreement on 9 April 2025. You can read the full Coalition Agreement here.

A multitude of political projects are on its agenda. Our experts from the various sector groups have summarised the most important points from a legal perspective:

Overview 

Taxes

Employment law

Law and justice

Competition

Promotion of innovation

Real estate sector

Digitisation and data protection

Public procurement

ESG

Approval procedures

Company law

Taxes

In tax law, the coalition parties are planning the following significant changes for companies:

• Corporate tax law: A reduction of corporate income tax by a total of five percent is planned (i.e. to 10% in future). Starting on 1 January 2028, the corporate income tax rate is to be reduced by 1% each year over five years. In the meantime (i.e. for the years 2025-2027), the degressive depreciation of investments in equipment by 30% will be possible.

• At the same time, the minimum trade tax rate is to be raised from 200 to 280 percent to combat "trade tax havens". This will initially result in a de facto tax increase for companies currently benefitting from very low trade tax.

• A noteworthy change for partnerships is the possibility of an extensive alignment with corporate income taxation, witha planned improvement of the option model for corporate income tax and tax relief on retained earnings.

• The coalition parties are also examining the possibility of taxing newly founded companies with corporate income tax irrespective of theirlegal form as of 2027. This could mean that partnerships will also no longer be taxed at the level of the partners, but that corporate income tax may be incurred at the level of the partnership.

• The solidarity surcharge is not going to be abolished and will thus continue to be levied on companies.

• Suspension of global minimum tax: The implementation of the global minimum tax (Pillar II) has been a major concern for large international companies in the recent past. According to the Coalition Agreement, the new German government wishes to ensure at European level that German companies are not placed at a disadvantage in international competition as a result of minimum taxation.

• Tax benefits for employees: In future, companies will also have to implement the wage tax relief for employees provided for in the Coalition Agreement. This includes the planned tax exemption for overtime supplements and the tax incentives for voluntarily working longer.

• Non-profit law: Non-profit organisations will have to adapt to changes in non-profit law in the coming legislative period. Reforms are planned for the catalogue of charitable purposes and non-profit law is to be simplified in general. Relief with regard to non-profit requirements such as the timely use of funds and the harmfulness of commercial business operations is only to be available for small non-profit organisations.

• VAT: A reduction in VAT for food in the catering trade to the reduced VAT rate of 7% is planned. The reduction therefore explicitly does not apply to beverage sales. In addition, donations in kind to non-profit organisations are to be exempt from VAT as far as possible. The Coalition Agreement also contains an interesting formulation with regard to research expenses; here, a "sector exemption in the VAT Act" is planned.

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Employment law

Employment law topics in the Coalition Agreement include several not unfamiliar issues that had already been addressed, at least in a similar way, under the last coalition. Overall, there are some proposals that can be welcomed from the perspective of companies, but on the whole it is very employee-friendly.

• Working time & work time recording. A reform of the Working Hours Act [Arbeitszeitgesetz, ArbZG]is planned. As opposed to a daily maximum working time, a weekly maximum working time is to be introduced in accordance with the European Working Time Directive. This means that the average working time within a seven-day period may not exceed 48 hours. Regulations for the mandatory electronic recording of working hours are to be introduced, whereby trust-based working hours are to remain possible without time recording. Its implementation is to be unbureaucratic and appropriate transitional arrangements are to be created for small and medium-sized enterprises.
   
• The Pay Transparency Directive is to be transposed into national law with minimal bureaucracy. A commission to be formed will make proposals by the end of 2025.
   
• Status determination procedures concerning the deployment of freelancers are to be carried out more quickly, and with greater legal certainty and transparency in future. This is to be achieved through "imputed approval", among other things.
   
• New self-employed persons are also to be included in the statutory pension insurance scheme in a "founder-friendly" way, although alternative forms of pension provision are to remain possible.
   
• A statutory minimum wage of 15 euros is to be achieved from 2026. This will not be prescribed by law, but is to be achieved by the Minimum Wage Commission as part of the regular adjustments. In this respect, the orientation basis for the Commission shall be both the development of collective agreements in Germany and 60% of the median gross wage of full-time employees.
   
• Trade unions: As already contained in the previous coalition agreement, a digital access right is to be created for trade unions. Finally, tax incentives for trade union memberships are to be created. Contrary to widespread demand, no legal regulations on the right to strike are planned.
   
• Supplements for overtime: Paid supplements for overtime are to be exempt from income tax if they exceed the full-time working hours collectively agreed or oriented on collective agreements (34 hours/week collectively agreed, 40 hours/week non-collectively agreed), thus making overtime more attractive for employees. One critical aspect here is that a collectively agreed working time of 34 hours is assumed for full-time work.
   
• A collective bargaining compliance law is to be introduced that stipulates that public contracts over 50,000 euros may only be awarded to companies that pay their employees the wages and guarantee working conditions that are standard in a collective agreement for the respective sector. For start-ups with innovative services in the first four years after their foundation, this applies from 100,000 euros.
   
• Working at retirement age is to be made more attractive: Employees are to be able to additionally earn up to 2,000 euros per month tax-free after reaching the standard retirement age. It will also be easier for them to return to their previous employer after retirement by lifting the previous ban on prior employment in case of fixed-term employment relationships. The previous government's plans also provided for this.
   
• Company pension schemes are to be promoted in small and medium-sized companies and among low earners in particular. The concrete implementation plans are eagerly awaited.

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Law and justice

On the topic of law and justice, the Coalition Agreement envisages a whole series of detailed regulations on further modernisation, simplification and digitisation.

• Firstly, a particularly important point in our opinion is that the coalition partners intend to restrict the excessive application of what were originally consumer law provisions for general terms and conditions by the German judiciary to the b2b sector in such a way that at least larger companies - the Coalition Agreement refers to corporations within the meaning of Section 267 (3) of the German Commercial Code [Handelsgesetzbuch, HGB] - actually have the possibility of effectively agreeing among themselves what they really want without being subject to a legal review of the content of their general terms and conditions. How this is to be achieved has been the subject of extensive discussion in legal literature for some time now.
   
• Secondly, the government intends to reduce the burden placed on the judiciary by the handling of mass claims and thus make them more manageable, which is certainly also in the interests of the directly involved parties. It should be emphasised that, in this context in particular, extended flat-rate and/or estimation options are apparently being considered. The detailed determination of the individual damage incurred, which is necessary under current substantive law even in minor cases, is certainly one of the greatest obstacles to the effective and timely handling of mass damage events by the judiciary.

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Competition
 

• Central European competition regulations are to be actively supported. This includes supporting the effective enforcement of the Digital Market Act at European level and monitoring large digital groups more closely.
   
• In addition, international competitiveness, European sovereignty and security in European competition law, particularly in the area of merger control, are to be given greater consideration than before. In doing so, the German government is building on the new concept in the EU Commission's "Competition Compass", which is determined to close the competitive gap with the USA and China with a new merger policy. Over the next five years, the EU Commission plans to strengthen European industry by promoting innovation and reducing dependence on third countries. The aim is to make it easier for EU companies to expand into global markets through mergers in industrial sectors of strategical importance to the EU. In merger control proceedings, parties to a transaction could potentially be given more leeway to justify even mergers between large market players under antitrust law, with the argument that their merger could actually lead to more innovation as they would have more resources to compete on a global level. This new approach could provide the defence industry, among others, with the necessary impetus for consolidation and cooperation endeavours with competitors and suppliers.

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Promotion of innovation
 

• The Coalition Agreement does not directly contain very much concrete information on industrial property rights (IP, patents, copyrights, etc.) (beyond the typical digitisation topics) - with the exception of the passage on the strategic orientation and focus of R&D, i.e. the promotion of innovation: Besides its many general programme statements, it does name what the coalition partners consider to be (so-called) “key technologies” - artificial intelligence, quantum technology, microelectronics, biotechnology, nuclear fusion and climate-neutral energy generation as well as mobility. This is not surprising – nor the "strategic research fields" (such as personalised medicine with gene and cell therapies, marine, climate and sustainability research, or cybersecurity and infrastructure protection as well as aerospace, the latter actually with an explicit mention of the hyperloop!) - it does, however, reveal what is to be at the centre of the promotion and efforts.
   
• In addition to this ultimately not very surprising content stipulation, however, the coalition partners announce its further specification in a “national IP strategy” – furthermore, funding is to be distributed accordingly and leveraged with third parties, i.e. appropriate incentives are to be set and funding programmes launched. In addition, the start-up culture is to be promoted and “spin-offs in 24 hours” are to be made possible for faster and better commercialisation of research results. To this end, not only is bureaucracy to be streamlined, but “standardised spin-off contracts” are also to be introduced.

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Real estate sector
 

• In real estate law the Coalition Agreement focuses on promoting the creation of affordable rental housing and home ownership for families and accelerating the construction of housing by amending the German Building Code [Baugesetzbuch, BauGB].
   
• The rent cap in areas with a tight housing market is to be extended by a further four years. A group of experts made up of tenants' and landlords' organisations is to prepare a reform by 31 December 2026 to concretise the provision on exorbitant rent in the Economic Offences Act [Wirtschaftsstrafgesetz, WiStrG] and the imposition of a fine for non-compliance with the rent freeze. Letting is to be made more attractive again through (unspecified) tax “rewards”.
   
• The amendment of the Buildings Energy Act [Gebäudeenergiegesetz, GEG]by the "Heating Act" [Heizungsgesetz] is being cancelled. The Coalition Agreement leaves open what is to be stipulated in its stead, stating only that the “new GEG” will be designed to be "more open to technology, more flexible and simpler".
   
• Building standards are to be simplified and building type E, for which there was already a draft bill in the previous legislative period, is to be secured. Deviations from the recognised rules of technology are no longer to constitute a defect in future. It remains to be seen whether and to what extent this will lead to cheaper and simpler construction.
   
• The duration of permit procedures for industrial plants is to be shortened.

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Digitisation and data protection
 

• In data protection law, the different interpretations of data protection law by the state authorities currently burdening companies is to be reduced by centralising data protection supervision at the Federal Commissioner for Data Protection and Freedom of Information [Bundesbeauftragter für Datenschutz und Informationsfreheit, BfDI] instead of the data protection authorities of the states. These are not being abolished, however; this would also encroach on the administrative powers of the federal states as enshrined in the constitution. The joint body of the 18 German data protection authorities, the Data Protection Conference [Datenschutzkonferenz, DSK], is to be anchored in the Federal Data Protection Act [Bundesdatenschutzgesetz, BDSG] so that greater consistency in supervision can be achieved. From the perspective of companies, this can be welcomed. How feasible this is remains uncertain, as a (partial) “disempowerment” of the federal state data protection authorities is likely to meet with massive resistance from the federal states.
   
• The highly controversial Employee Data Protection Act [Beschäftigtendatenschutzgesetz]proposed by the last government, in contrast, is no longer mentioned and is therefore unlikely to materialise.
   
• The use of artificial intelligence (AI) is to be promoted. As part of an "AI offensive", supercomputing and high- performance computing centres are to be established and expanded. The provisions of the EU AI Regulation ("AI Act") are to be implemented in a "low-bureaucracy and innovation-friendly" manner in order to avoid burdens on the economy. From a legal perspective, however, we believe that there is a lack of clear practical measures that go beyond general programme statements.
   
• With regard to copyright, the Coalition Agreement mentions an obligation to pay remuneration to authors whose works are used to develop generative AI. However, it remains unclear what a fair balance of interests will look like in practice.
   
• The Coalition Agreement also lacks more concrete statements on other important digital policy issues. In particular, it makes no mention of the implementation of the European NIS-2 Directive (as well as the Cyber Resilience Regulation or the KRITIS Umbrella Act [KRITIS-Dachgesetz]). The draft implementation law from the previous legislative period was no longer passed by the old Bundestag, meaning that it was not possible for the provisions of the NIS-2 Directive to enter into force in Germany in March 2025 as planned. It remains to be seen how the content provided for there will change again, especially insofar as the previous draft deviated from the NIS-2 Directive (in favour of companies).

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Public procurement
 

• In the area of public procurement law, the Coalition Agreement is focussing on already known plans to simplify and accelerate procurement procedures that aim to relieve the burden on SMEs and the skilled trades in particular. The thresholds for national public tenders are to be raised to make them more flexible. The future German government also intends to advocate such a development at European level.
   
• Furthermore, the coalition partners are also planning strategic procurement management and intend to consolidate procurement platforms. The announced reform in the defence sector is of particular importance. The future government plans to make the procurement of defence equipment and defence-related technologies more efficient. This will be achieved above all through the greater use of exemptions under EU procurement law and the introduction of specific thresholds for defence-related projects. The aim is to strengthen the ability of the German Armed Forces and other security-related institutions to act without jeopardising transparency and competition.

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ESG
 

• The Coalition Agreement also provides for a series of measures in the area of ESG (environmental, social, governance), some of which are aimed at stronger regulation and the integration of sustainability criteria into corporate activities, whilst others restrict existing requirements. Particularly noteworthy is, for example, the planned introduction of binding ESG standards for public tenders. In future, companies bidding for public contracts will have to prove that they fulfil certain sustainability criteria, in particular in the areas of climate protection, social responsibility and governance structures.
   
• In contrast, the Supply Chain Due Diligence Act [Lieferkettensorgfaltspflichtengesetz, LkSG] is to be replaced by a new law that implements the European Corporate Sustainability Due Diligence Directive (CSDDD) in a low-bureaucracy and enforcement-friendly manner. The reporting obligations under the LkSG will cease immediately and sanctions will be suspended until the new law is introduced, with the exception of massive human rights violations.
   
• The carbon border adjustment mechanism (CBAM) is to become "less bureaucratic and more efficient" in order to enable effective carbon leakage protection. There will be compensation for exports of the products covered by CBAM.

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Approval procedures
 

• Reducing bureaucracy is one of the key pillars of the Coalition Agreement. Planning and approval processes are to be significantly reduced and accelerated in all areas of administration. The Coalition Agreement provides for a large number of measures and instruments to achieve this goal: imputed approvals, consolidation and standardisation options, an expansion of prequalifications, general approvals, the bundling and parallelisation of inspection procedures and a paradigm shift in the area of export controls.
   
• The planned introduction of a "one-stop shop" approach, where companies will be able to apply for all necessary approvals via a central digital contact point, is particularly relevant here. The aim is to secure Germany's competitiveness as a business location while at the same time complying with the legal requirements for environmental and social standards.

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Company law
 

• Like the previous government, the current black-red coalition is also planning to create a legal basis for the so-called “company with tied assets”[Gesellschaft mit gebundenem Vermögen](also known as a “company with steward-ownership” [Gesellschaft mit Verantwortungseigentum]). This is intended to offer entrepreneurs who value the long-term stability and social contribution of their company a simple alternative to existing foundation or company models, thus ensuring that the company's assets serve the purpose of the company in the long term and are protected against access by the shareholders. The Coalition Agreement does not specify what the new company form should look like (e.g. as a sub-form of the GmbH).
   
• In addition, the law on defective resolutions in stock corporation law is to be reformed, which will also have an impact on the law governing limited liability companies.

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