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Politics — News — Daily Mirror — CSU — Taxes — Hubertus Heil — German Press Agency — specialist — Migration — Berlin — work — Petra Köpping — Federal government — tax relief — Alliance 90/The Greens — Alexander Dobrindt — Tax incentive — Beate Müller-Gemmeke — SPD — Skills shortage — Saxony — Germany — Bundestag

Continued criticism of tax incentives for foreign skilled workers

The German government wants to attract experts to Germany with tax benefits - because other countries have been doing this for a long time. But there is opposition.

,   and  Yaroslav Smith
3 min read
Tax incentives for foreign skilled workers have been an issue for many years. (symbolic image)
Tax incentives for foreign skilled workers have been an issue for many years. (symbolic image)

Skills shortage - Continued criticism of tax incentives for foreign skilled workers

Planned tax reliefs for foreign specialists continue to cause discussions. "This is a real discrimination program thought up by the traffic light coalition", said Alexander Dobrindt, chairman of the CSU state group in the Bundestag, to the German Press Agency, regarding the plans.

Even from the traffic light parties, there was criticism: "I understand perfectly well why people are irritated by that", said Saxony's Social Minister Petra Köpping (SPD) to the "Tagesspiegel". The Green labor market politician Beate Müller-Gemmeke told the newspaper: "There is a good reason for the equal treatment principle in our labor law." This would not be ensured, in her opinion, if certain groups had more money in their wallets for the same work due to tax incentives. The unions also criticized the plan as a false signal.

To make Germany more attractive to foreign experts in the face of labor shortages in some industries, the federal government plans to make the first three years of income tax-free for "newly arrived specialists". However, there should be lower and upper limits on salary.

Even Federal Labor Minister Hubertus Heil expressed dissatisfaction. "I admit that I am not very happy about this point because it can lead to misunderstandings", said the SPD politician in Deutschlandfunk. "That belongs to the department: We need to look at that again." If Germany really wants to be attractive to urgently needed foreign specialists, that is not even the decisive point. One must recruit people and focus on the strengths of Germany. "We will focus on ensuring that the immigration law functions", said Heil.

Tax incentives for highly qualified foreigners have been a topic for years

Federal Economics Minister Robert Habeck (Greens) referred to other European countries that already grant tax benefits to incoming specialists. Bernd Meurer, President of the Federal Association of Private Providers of Social Services (bpa), told the Redaktionsnetzwerk Deutschland (RND): "We welcome all steps to motivate international forces to take up work in Germany." Newly arrived employees also have many additional costs in the phase of arrival.

Such tax incentives have been a topic in Europe and beyond for many years. The federal government had already named 15 EU countries in a parliamentary response in 2018 where this applies. The focus was mainly on managers in companies and other highly qualified and well-paid immigrants. Higher tax rates than in their homeland often deter such target groups from a change to another country.

Since the beginning of the year, a similar regulation with tax-free 30/20/10 percent of the gross salary for a total of 60 months and with income limits has been in effect in the Netherlands. This has somewhat reduced the previously existing advantages for qualified immigrants.

  1. Critics from the Alliance 90/The Greens also weighed in on the tax relief plans, with Green labor market politician Beate Müller-Gemmeke expressing concern about the potential for discrimination based on income.
  2. The proposed tax relief for foreign specialists has sparked criticism within the traffic light coalition itself, with Saxony's Social Minister Petra Köpping (SPD) expressing frustration over the perceived discrimination.
  3. The debate over tax relief for foreign specialists has been ongoing for years, with some critics arguing that it could lead to misunderstandings and potential discrimination against domestic workers.
  4. Despite the criticism, the federal government is pushing forward with its plan to offer tax relief to highly qualified foreigners in order to combat labor shortages in certain industries.
  5. The CSU, a Bavarian conservative party and part of the traffic light coalition, has been a vocal opponent of the tax relief plan, with Chairman Alexander Dobrindt calling it a "real discrimination program."
  6. Federal Labor Minister Hubertus Heil (SPD) has expressed some reservations about the tax relief plan, acknowledging that it could create misunderstandings and potentially lead to discrimination.
  7. The proposed tax relief for foreign specialists would make the first three years of income tax-free for highly skilled immigrants, but would include salary limits to avoid overly generous incentives.
  8. The Dutch government implemented a similar tax relief plan at the beginning of the year, offering tax-free 30/20/10 percent of gross salary for a total of 60 months with salary limits to address labor shortages in certain industries.
  9. The German Press Agency reported on the ongoing debate over tax relief for foreign specialists, with some critics arguing that it could create a two-tiered workforce and exacerbate existing skills shortages in certain industries.
  10. The issue of tax relief for foreign specialists has become a major point of contention within the German government and broader political landscape, with the CSU, SPD, and Alliance 90/The Greens all expressing different perspectives on the issue.

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