Germany changes VC rules

In May, the country's finance ministry blocked a bill meant to bring tax relief to investors in startups but it has now agreed to measures that essentially reimburse losses made by VCs.

Investors in Germany are set to benefit from a new measure that means they can reclaim losses from their taxes, according to local publication Heise.

The bill gained a majority vote from the federal government yesterday.

The rule follows a decision in May 2016 by finance minister Wolfgang Schäuble to block a bill that would have provided tax breaks to VC firms. The ministry said at the time that the regulations did not have enough substance to justify a dedicated bill but confirmed it was pursuing other ways of improving the legal framework.

Due to strict EU regulations, the new rules will also apply when an investor supplies cash to an established company that is struggling financially in order to safeguard jobs.

The measures are expected to cost the government up to €600m ($676m) per year and will come in force retroactively to January 1 2016.

Germany hopes to usher in a new Gründerzeit, referring to a time of economic growth in Germany and Austria in 19th century preceding the great stock market crash of 1873.

See more from this Government Report: Germany


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