The Finance Committee of the German Bundestag has finalised its deliberations on the Future Financing Act and submitted a recommendation for a resolution. The Bundestag will vote on it on Friday. The Future Financing Act improves employee capital participation for startups and scaleups and is intended to increase Germany’s competitiveness. The startup association is satisfied.
The planned Future Financing Act is intended to mobilise more private capital and make Germany more attractive as a financial centre. This will implement agreements from the coalition agreement and the German government’s startup strategy. The focus is primarily on young, innovative companies, the start-ups, but also other small and medium-sized enterprises (SMEs), which make up a large part of the German economy.
The expansion of the capital market is not an end in itself. Rather, the aim is to stimulate the real economy. A strong capital market should ensure growth in all sectors of the economy, as it is a key source of investment with long-term investment cycles, for example in research and development. It is also crucial for offering growth companies good opportunities.
Christian Miele, CEO of the Startup Association, expressed his satisfaction with the progress made in the introduction of the Future Financing Act: “Today is a good day for the German startup ecosystem: the coalition government has achieved a great success with the adoption of the Future Financing Act in the Finance Committee of the Bundestag. The new rules for employee participation are probably the biggest startup reform in Germany.
As a startup association, we have been campaigning for years to ensure that the special needs of startups are addressed with the urgently needed reforms so that startups and scaleups can keep up with the international competition for top talent. Good employees are critical to the success of startups. This is why the law can be an important accelerator for the growth of startups and scaleups in Germany.
In addition to avoiding dry-income taxation, the expansion of the scope of application is particularly important. Scale-ups in rapid growth phases in particular will benefit from the significant expansion of the scope of application. This will rectify key design flaws in the Fund Location Act adopted in 2021.
One fly in the ointment is that the so-called “group clause” was removed in the parliamentary process. Employees of subsidiaries should also benefit from the employee share ownership incentive. As provided for in the protocol declaration, improvements should be made here as quickly as possible. On this point, the law falls short of the ambitions of the government draft.
There is still a long way to go before we become the global market leader for start-ups. The world around us is not sleeping. Germany needs to become faster and more digital – top talent won’t come to us just because of the beautiful cities.”
The government draft is available here.
About the Startup Association:
The Startup Association has almost 1,200 members and was founded in Berlin in September 2012. The association sees itself as the representative and voice of startups in Germany: it represents the interests, viewpoints and concerns of startup companies vis-à-vis legislation, administration and the public. It promotes innovative entrepreneurship and aims to promote the startup mentality in society. The association sees itself as a network for startups in Germany.