Location Promotion Act: New impetus for investments and the capital market

On December 19, 2025, the Bundestag passed the Business Location Promotion Act (StoFöG). The aim of the law is to strengthen Germany as a business and financial location in the long term, promote private investment and relieve companies of the burden of bureaucracy. The Federal Council is expected to approve the law at the end of January 2026 so that the StoFöG can enter into force soon. With a bundle of measures, the StoFöG provides targeted impetus to increase competitiveness and enhance the attractiveness of the location for investors and companies.

Key Facts

• Growth-oriented companies and start-ups benefit from easier access to the capital market through the introduction of shares with a nominal value of less than 1 euro and the option of using English-language prospectuses. This lowers the entry barrier for IPOs and makes it easier to raise capital, especially for young, innovative companies and SMEs.
• Venture capital and private equity investors are given more leeway through more attractive tax conditions for investments in infrastructure and renewable energies. The expansion of investment opportunities for special investment funds and the equalization of income from infrastructure projects with direct investments create new opportunities for institutional and private investors.
• Fund providers and asset managers benefit from increased flexibility in the structuring of investment funds. The tax qualification is also retained for investments in commercial partnerships, which offers new structuring options.
• Financial service providers and banks will be relieved of administrative work by the abolition of the employee and complaints register, the million-loan reporting system and the crypto securities list. The regulatory adjustments will ensure more efficient processes and less bureaucracy in financial supervision.
• Managers of financial institutions will gain more legal certainty through the clarification of the segregated banking regime.

The Location Promotion Act is intended to remove barriers to investment

With the StoFöG, the legislator is responding to key structural challenges that are currently shaping Germany as a business location: Decarbonization, geopolitical uncertainties and sluggish digitalization are hampering investment and inhibiting growth. This is precisely where the StoFöG comes in, with the aim of removing barriers to investment and strengthening Germany as an attractive location for companies and investors.

These measures are planned:

Easier access to the capital market: new prospects for start-ups, SMEs and private investors

The StoFöG creates new opportunities for IPOs. Shares with a nominal value of less than EUR 1 and the admission of English-language prospectuses lower the hurdles for companies wishing to position themselves on the capital market. Lowering the minimum nominal value of shares increases the flexibility of capital measures, especially for smaller companies. In particular, a lower minimum nominal value facilitates the denomination of shares, which can lead to increased capital increases.

The EU Listing Act is all about making it easier for small companies to access the capital market.

The financial market as a whole could also benefit: For example, companies can raise new equity more quickly and at lower cost. This is particularly interesting for start-ups. With the StoFöG, the German government would also like to make a contribution to the further development of the savings and investment union .

More flexibility for fund providers, asset managers and institutional investors

For fund providers and investors, regulatory uncertainty will be eliminated: in future, funds will retain their tax qualification even if they invest in commercial partnerships. At the same time, investment opportunities will be significantly expanded: special investment funds will be able to invest in renewable energies, charging infrastructure, infrastructure companies as well as PE and VC funds without restriction. It will also be possible to hold 100% of companies that specialize in renewable energies or infrastructure projects. Income from these areas is treated as a direct investment for tax purposes.

Another change concerns the so-called roll-over rule. This is the possibility of reinvesting profits from the sale of shares in corporations in a tax-neutral manner in new investments instead of having to pay tax on them immediately. The previous maximum limit of 500,000 euros is to be raised to 2 million euros. Growth sectors in particular are to benefit from this regulation in order to make new investments more quickly and cheaply.

Bureaucracy reduction and efficiency gains for financial service providers and banks

The Location Promotion Act also abolishes banking supervisory structures such as the employee and complaints register at BaFin and the WpHG Employee Notification Ordinance; the provisions on expertise and reliability will be transferred to the Ordinance on the Specification of Conduct Rules and Organizational Requirements for Investment Service Providers (WpDVerOV) and will therefore continue to apply in the future. The BaFin crypto securities list introduced in 2021 will also be abolished, as will the million-loan reporting system.

More legal certainty for management boards by adapting the Trennbanken regime

The Standortfördergesetz provides an important clarification in banking supervisory law in favor of managing directors. In future, criminal liability in accordance with Section 54 (1) No. 1 KWG will be limited in the event of breaches of the separation banking regime and will extend to transactions identified in the risk analysis to be carried out in accordance with Section 3 (3) KWG. Previously, there was already a threat of criminal sanctions for a general breach of Section 3 KWG; with the reference to specifically named paragraphs, managing directors should benefit from increased legal certainty and lower personal liability risks.

Timetable – when the new regulations come into force

The amending laws enter into force on the day after their publication in the Federal Law Gazette. This concerns, for example, the expiry of the WpHG Employee Disclosure Ordinance and the associated employee and complaints register. This could happen as early as February. With regard to the other legislative proposals, a case-by-case assessment is required; the majority of the amending acts will enter into force in the course of 2026 and 2030 at the latest, unless they are already in force on the day after promulgation.

Who can benefit from StoFöG

The StoFöG opens up a wide range of opportunities for various players in Germany as a financial and business location. Depending on the business model and field of activity, there are different starting points:

• Start-ups and growth-oriented companies. The StoFöG facilitates access to the capital market through the introduction of shares with a nominal value of less than EUR 1. In addition, the production of English-language prospectuses will be permitted in future. This simplifies access to international investors and reduces the effort involved in preparing prospectuses.
• Venture capital and private equity investors. The StoFöG offers extended tax structuring scope and investment opportunities, particularly in the areas of infrastructure and renewable energies. Investments via VC and PE structures will be made more attractive for tax purposes, and income from these areas will be treated as a direct investment for tax purposes, subject to further conditions. In future, special investment funds will be able to invest in renewable energies, charging infrastructure and infrastructure companies without restriction.
• Fund providers and asset managers. The StoFöG increases flexibility in fund structuring by ensuring that funds retain their tax qualification even if they invest in commercial partnerships. The expanded investment options for special investment funds and the tax equivalence with direct investments offer new scope for structuring.
• Banks. The StoFöG creates noticeable relief in operational business through the abolition of the employee and complaints register and the crypto securities list. The abolition of the million-loan reporting system is also intended to reduce administrative hurdles for banks. The risk of unclear criminal liability is also reduced through the clarification of the criminal offense under Section 54 (1) KWG. This means more legal certainty for management.