GERMANY Trends and Developments Contributed by: Rainer Wilke, Ingo Theusinger and Ralph Schilha, Noerr
On 26 February 2025, the EC presented an omnibus package aimed at amending the CSRD and the Corporate Sustainability Due Diligence Directive (CSDDD). The goal is to enhance the EU’s competitiveness by simplifying sustainabil- ity rules and reducing administrative burdens by at least 25%. This is supposed to foster a more business-friendly environment. The scope of the CSRD should be significantly reduced so that – as also under the CSDDD – only large companies with more than 1,000 employees (instead of 250) will be required to provide a sustainability report. This applies to large companies with and without capital market orientation. The implementation of the reporting obligation for large groups or large companies without capital market orien- tation should be postponed for two years to facilitate smoother adaptation. The deadline for national implementation of the CSDDD has been extended, moving the implementation to 26 July 2027 and postponing the first application phase to 26 July 2028. The Directive will also simplify due diligence obligations. Such uncertain legal situations present risks for the companies concerned. It is therefore essential to establish a functioning compliance system and to monitor the evolving legislative framework accordingly. Tax law The German tax system is known for its com- plexity and its frequent reforms. This requires companies to keep up with any changes. The government has proposed tax relief measures for businesses to encourage investment, par- ticularly in the field of research and develop- ment. However, discussions on tax cuts remain politically contentious and could be reignited following the recent election by the forthcoming coalition formation. Environmental taxation has also become an increasingly important issue in
recent years, particularly for companies operat- ing in energy-intensive sectors. To ensure com- pliance with all German tax regulations and to avoid internal investigations and criminal charg- es, frequent consultations with experts in Ger- man tax law are key. Geopolitcal regulations and polycrises Geopolitical tensions, such as territorial disputes or economic sanctions, can be unpredictable and might complicate risk assessment and crisis management strategies. In times where regula- tions and government policies are rapidly chang- ing, companies must remain agile as regards modifying their crisis management frameworks to comply with new legal requirements. Polycrises – ie, situations where multiple crises occur simultaneously – complicate crisis man- agement as well. It is necessary to reallocate resources, determine the order of priority and develop a dynamic crisis management system that provides flexibility and addresses both Germany aims to become the European hub for AI and digital transformation. The govern- ment has committed significant funding to AI research, smart manufacturing (Industry 4.0) and cybersecurity. In Industry 4.0, production is interlinked with state-of-the-art information and communications technology (ICT). Rigid and firmly defined value chains are becoming flexible and dynamic. The Digital Strategy 2025 initia- tive provides funding and support for businesses involved in AI, blockchain and cloud computing, making the field of AI attractive for foreign inves- tors and businesses. known and unknown threats. Trends in Industrial Sectors AI
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