Prioritizing Venture Capital Over Bureaucratic Processes
The German government is taking steps to improve the business location and investment climate, with a focus on boosting investments, reducing barriers, and improving financing for small businesses and start-ups.
Although no distinct "location promotion law" with all these exact targets has been explicitly named, relevant reforms and legislative initiatives reveal the government's direction.
One of the key areas of reform is streamlining public procurement to facilitate easier access for SMEs and start-ups. The Ministry for Economic Affairs and Energy is pushing for changes to make government procurement faster, simpler, and more flexible. This includes:
- Raising the upper limit on the value of direct government contracts from €15,000 to €50,000.
- Introducing temporary exceptions and special procedures for climate-friendly and innovative products.
- Increasing the procurement upper limit for innovative start-ups up to €100,000.
These measures aim to eradicate bureaucracy, accelerate procurement reviews, and open government business opportunities more widely and fairly to small businesses and start-ups.
Other government efforts include the "Skilled Workers for Germany" project and the introduction of the opportunity card visa, which facilitate skilled immigration to Germany, indirectly supporting start-ups and small businesses with improved access to qualified workers.
The government has also focused on digital and cybersecurity regulation, with the recently adopted NIS 2 Implementation Act, which imposes new cybersecurity measures on companies, including SMEs, reinforcing a secure and resilient business environment.
In addition, the government plans to strengthen the financial hub of Germany by removing tax obstacles to investments in renewable energies and infrastructure, allowing investment funds to more easily invest in commercial venture capital funds, and quadrupling the tax allowance for reinvesting profits from company sales. Changes to the Anti-Money Laundering Act are also contained in the draft.
To facilitate cross-border distribution, prospectuses for securities may be published entirely in English in the future.
A cabinet decision is targeted for September 10th, with the improvements outlined in a draft bill by the Ministry of Finance dated August 15th. These improvements are intended to be immediate, with the aim of improving the financing conditions for start-ups in Germany and boosting private investments.
The German government is not only streamlining public procurement to facilitate easier access for small businesses and start-ups, but also plans to strengthen the financial hub of Germany by removing tax obstacles to investments, allowing investment funds to invest more easily in commercial venture capital funds, and quadrupling the tax allowance for reinvesting profits.
The government's efforts to improve the financing conditions for start-ups in Germany and boost private investments also extend to facilitating cross-border distribution, with prospectuses for securities potentially being published entirely in English in the future.