How Germany is mobilising private capital for growth

Germany is promoting investment - in facilities, networks, digitisation and new technologies. To this end, the German government is deploying three levers: tax incentives, high levels of public investment and a new instrument designed to attract private capital to large-scale projects: the Deutschlandfonds, or Germany Fund.

Public investment and tax incentives 

The additional investment resources provided via theSpecial Fund for Infrastructure and Climate Neutrality also send out an important signal. It has its own borrowing authorisation for investments totalling 500 billion euros. 300 billion euros is earmarked for investments by the Federation, a further 100 billion euros will be for investments from the Climate and Transformation Fund, and 100 billion euros will go to the federal states and local authorities. The idea is to quickly address shortcomings in the areas of transport, energy, education and digitisation – location factors that can also make private investment projects more attractive and easier to plan.

At the same time, the German government is using a “growth booster” to directly incentivise investment: accelerated depreciation options of up to 30 percent will apply to investments until the end of 2027. From 2028, the corporation tax rate will be gradually reduced from 15 to 10 percent. The idea is to provide faster tax relief and improve international competitiveness.

Sharing risk, incentivising private investment

In December 2025, Germany’s Federal Government and the state promotional bank KfW launched the so-called Deutschlandfonds - the Germany Fund. The Federal Government is providing public funds and guarantees amounting to around 30 billion euros with the aim of stimulating a total of around 130 billion euros in additional investments - on top of the aforementioned special fund.

Risk sharing is at the heart of the Germany Fund: guarantees, shareholdings and co-investments are to encourage private investors and companies to finance long-term projects with high initial costs. The Germany Fund is targeted at industry and SMEs, as well as at start-ups, young and rapidly growing firms and energy suppliers. 

The aim is to facilitate a wide range of future-oriented investments in technologies and production facilities, to expand renewable energies, heating and electricity networks and to promote innovative fields such as deep tech, artificial intelligence and biotech. Investments in extracting raw materials and boosting Germany’s defence capabilities are also to be promoted.