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German Government to Introduce Tax Relief on Venture Capital Grants

German Government to Introduce Tax Relief on Venture Capital Grants

Germany’s Finance Minister Wolfgang Schäuble will introduce a tax break for government-funded venture capital grants in a bid to encourage more private investment, a senior politician has said. Brigitte Zypries, Parliamentary State Secretary at the German Ministry for Economic Affairs and Energy, made the announcement in her speech to open this year’s Next 14 conference in Berlin on Monday.

She said the need to to mobilise more private venture capital in Germany was a pressing one, admitting that “this is an area where we have still some catching up to do compared to other countries.”

And now a tax relief for the government’s investment grant for venture capital is set to come in being, she added, as “this legislative procedure is in progress.”

Zypries’ talk was entitled ‘The new German dream – startups in the international digital economy’, and she insisted that the problems facing the country’s digital economy were being addressed: “Germany isn’t sleepwalking; the German government is taking action. For us in the federal government, the success of the digital transformation of our economy and of our society is just as important as the success of our energy reforms.”

‘Buzzing With Entrepreneurship’

And while she was keen to elevate Berlin to the same level as Silicon Valley, London and Tel Aviv as an international hotspot for young entrepreneurs, she also praised other centres of innovation in the country – namely Munich, Hamburg and the Rhine-Main region – as “buzzing with entrepreneurship.”

But despite the positives, the number of new businesses established in Germany has been falling for the past three years, although the trend has slowed down somewhat in the past 12 months. Zypries was keen to put this down to the country’s relatively buoyant economy – more jobs means less reason to set out on your own – but she also admitted that, as a general rule, “people in Germany tend to be less keen to set up their own company than people in other countries.”

The tax relief is only part of what the politician described as “an ambitious program centred on digital internationalisation” which will be approved by the cabinet this summer, with the stated aim of creating an environment “in which Germany can thrive as the number one growth country for information and communication technology in Europe. To achieve this goal we need to foster a startup culture in Germany.”

These are encouraging words to hear from a senior member of the administration, as well as her assertion that “in order to remain dynamic and competitive, our economy relies on motivated entrepreneurs. We need creativity, both for innovative ICT applications and for the old economy. Startups are key drivers for all the main sectors in Germany.”

A Long Way Still to Go

It seems the lesson that entrepreneurs create jobs and prosperity has fully hit home, as has the importance of attracting talent from around the world: “They are the next generation of the so-called German Mittelstand.”

Those efforts will also extend to promoting the idea of entrepreneurship and self-employment in schools, if the traditional reluctance of Germans to take the plunge is to be addressed. “We know we still have a long way to go,” Zypries added, especially when it comes to supporting young companies.

But: “I’m convinced that the companies that are set up today will be the champions of tomorrow. The economy needs fresh input from motivated entrepreneurs, if it wants to remain dynamic and competitive.”

Following on from the splurge of political interest in entrepreneurship ahead of last year’s federal election (including at Next 13), it’s good to see the powers that be in Germany appear to be on the right path. We may well find out more when the Interior Minister, Thomas de Maiziere, gives the closing keynote at this year’s event – part of Berlin Web Week – on the ever-growing significance of the digital economy.

About David Knight

David is co-founder and Editor-in-Chief of Silicon Allee. Originally from London, he has lived in Berlin for over seven years, having previously worked for news portals including Bild.de and Spiegel Online before helping to found Silicon Allee in 2011.

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