The German Finance Minister aims to attract foreign skilled workers by offering tax incentives.

Key Points

• Germany's Minister of Finance is proposing tax discounts for skilled foreign workers to attract them to the country.
• By 2035, Germany anticipates a shortage of seven million skilled workers due to its aging population.
• Several other European Union countries already offer tax relief to foreign skilled workers, such as the Netherlands.

Germany's Minister of Finance, Christian Lindner, is advocating for tax discounts to entice skilled foreign workers to relocate to Germany for employment. This proposal was made during an event organized by the Friedrich August von Hayek Foundation in Berlin, where Lindner highlighted that many other EU member states already provide similar benefits to foreign skilled workers.

According to Lindner, while Germany has traditionally been attractive to immigrants due to its welfare state, it lacks appeal in terms of taxes, education, infrastructure, and administrative digitalization. However, it remains unclear whether the tax discount proposal will be included in the relief package recently presented by Lindner, which aims to provide €3.2 billion in tax relief for small and medium-sized companies.

Among the EU countries offering tax relief to foreign workers is the Netherlands, which grants a 30% tax reimbursement to highly skilled migrants for their first 20 months of employment, followed by reduced rates in subsequent periods.

Despite economic stagnation, a significant number of German companies are struggling to fill vacant positions, with sectors like healthcare facing acute shortages. The German Chamber of Commerce revealed that around 1.8 million jobs remain unfilled in the German economy, a situation exacerbated by the aging population.

Germany hopes that the new Skilled Worker Immigration Law, which came into effect on March 1, 2024, will alleviate labor shortages. This law allows skilled workers with professional or university degrees and two or more years of experience in their field to gain employment in Germany. Additionally, it introduces provisions such as allowing skilled workers to bring their parents and in-laws to Germany, easing qualification recognition processes, and permitting students to work part-time even before enrollment. Furthermore, the law aims to hire 25,000 foreign workers for short-term employment in 2024.