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Germans rage at 30pc tax break offered to immigrants
Skilled migrants to receive discount during first three years of employment
![Germany](/https/www.telegraph.co.uk/content/dam/money/2024/07/11/TELEMMGLPICT000384169867_17206942091850_trans_NvBQzQNjv4BqqVzuuqpFlyLIwiB6NTmJwRcfSI6dlxc0VDfiMWTAIeM.jpeg?imwidth=680)
Germany is planning to offer a 30pc tax break to highly educated migrants in a bid to tackle its skilled worker shortage.
The measure forms part of the coalition government’s budget that was unveiled on Friday after months of tough negotiation between the country’s three ruling parties.
If adopted into law, the proposal would result in skilled migrants receiving 30pc off their taxes in the first year of their work, 20pc off in the second and 10pc in the third.
More than a third (36pc) of companies in Germany are currently experiencing a shortage of skilled workers, according to a report by the Institute for Economic Research think tank.
However, the policy has sparked backlash and allegations that it favours foreign workers over nationals.
The Christian Democratic Union Party on the centre right of the political spectrum, said the idea amounted to “discrimination against the country’s residents”. The party’s general secretary Martin Huber has branded the policy “scandalous”.
At the same time, the Left Party and Green Party have alleged the move could be in breach of the German constitutional principle of equal treatment.
Debate over immigration has made local headlines after football player Toni Kroos said he believed immigration in Germany “too uncontrolled” and that the country has changed considerably in the 10 years since he left.
Mr Kroos, who now lives in Spain and played in the country’s unsuccessful Euros squad, said he welcomed migrants but that Germany was not successful in managing mass immigration.
If it is introduced, Germany would not be the first European company to offer tax breaks to encourage skilled workers.
The Netherlands currently has a similar system in place with highly skilled foreign workers offered a 30pc tax break for their first 20 months of working in the country. This then drops to a 20pc reduction for the next 20 months, and a 10pc discount after that.
It is not yet clear what conditions Germany would place on the scheme, but one option could be that it is open to foreign workers with a university degree or an income of at least €40,000 (£34,000). The Federal Finance Minister Christian Lindner said the tax break would apply to “qualified specialists”.
If enacted, the government will define an upper and a lower limit for qualifying salaries and will review the scheme after five years.
Last year, Germany updated its Skilled Immigration Act to lower the bar for skilled immigrants arriving in the country from outside of the European Union.
Since November, more academic and highly-qualified workers have been able to work in Germany on an EU blue card – a work permit that helps migrants enter the country without having to meet certain German language requirements.
In its proposed budget, to be considered by the Cabinet on July 17, the German government says it will simplify the immigration of skilled and other workers into the labour market. If it is accepted, it will be debated by the national parliament and likely passed at the end of this year.
As part of its “growth initiative”, the government has also proposed measures to make it easier for refugees to take up employment in the country.