Germany's DIW Advocates Tax Relief To Promote Research

by Ulrika Lomas, Tax-News.com, Brussels

12 November 2009

The Deutsche Institut für Wirtschaftsforschung (DIW), the largest economics research institute in Germany, has urged the government to introduce much-needed tax incentives in order to promote research and development.

According to the DIW, the financing of innovative projects has been made more difficult as a result of the ongoing global economic and financial crisis, primarily due to tougher financing conditions for established businesses, and to the rise in risk premiums generally.

DIW’s expert Rolf Ketzler emphasized the need for the government to be proactive and to amend its tax and finance policy accordingly. Failure to do so, he added, will risk the further decline of investment in innovative projects, with dire consequences for the future of Germany as a research location. Germany is already lagging behind in international comparison as regards young, innovative companies, Ketzler explained.

Although the government’s economic stimulus packages contained certain tax measures to benefit research and innovation, the DIW underlined the fact that these initiatives were focused purely on the environment, whereas other key areas were neglected.

Convinced that research and development in Germany must be boosted by the introduction of new tax incentives, Ketzler has urged the government to relax the limit on loss carry forwards to benefit young, innovative companies in particular.

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