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German Finance Minister Proposes Tax Incentives to Attract Foreign Skilled Workers: Boosting Talent Acquisition Strategies


Federal Minister of Germany for Finance, Christian Lindner, want to offer a tax discount to skilled foreign workers in a bid to attract them to move to Germany for work.

The Minister has made such a proposal during an event organized by the Friedrich August von Hayek Foundation in Berlin, during which he also noted that many other European Union Member States already offer such an amenity to foreign skilled workers, SchengenVisaInfo reports.

Why not a reduced tax burden for a few years for those who take up a job in Germany.

Germany’s Federal Finance Minister Christian Lindner

According to Minister Lindner, while Germany has been an attractive welfare state for immigrants, it is not alluring enough when it comes to taxes and duties, the education system, infrastructure and the digitalisation of administration.

Minister Lindner has, however, not made it clear, whether the tax discount he intends to offer to foreign skilled workers will be included in the relief package presented last Friday, on March 22. Amongst others, the package will provide a €3.2-billion tax relief for small and medium-sized companies.

Netherlands Already Offers Tax Discounts to Foreign Workers for 5 Years

One of the other EU countries that offer tax relief to foreign workers is the Netherlands. The Dutch authorities grant a 30 per cent reimbursement of taxes to highly skilled migrants moving to the country for specific employment roles for their 20 firs months of employment.

In the following 20 months, the tax-free allowance is reduced to 20 per cent, whereas in the subsequent 20 months, it decreases to 10 per cent.

Half of German Companies Facing Labour Shortages Despite Economic Stagnation

At the end of November 2023, the German Chamber of Commerce revealed that half of companies in Germany find it hard to fill in vacant positions due to a shortage of workers.

While the proportion of companies facing such hurdles has fallen from 53 per cent in January to 50 per cent in November, it is estimated that around 1.8 million jobs in the German economy remain unfilled.

Some sectors are not only talking about gaps in skilled labour, but about a general shortage of workers.

Achim Dercks, DIHK’s Deputy Chief Executive

One of the most affected crucial sectors is the health sector, with Germany needing at least 150,000 nurses alone by 2025, in order to prevent its health system from collapsing. The authorities are already targeting nurses from specific countries like Mexico and Brazil, to fill in the vacant positions.

Official reports estimate Germany will be short seven million skilled workers by 2035, due to its ageing population.

Germany Hopeful New Skilled Immigration Laws Will Relieve Labour Shortages

On March 1, 2024, the second phase of the German Skilled Worker Immigration Law came into force, opening new possibilities for foreigners to work in the country. Amongst the main reliefs that the law provides for foreigners are:

  • People with two and more years of experience in their field along with a professional or university degree are now eligible to gain employment in Germany.
  • Skilled workers can bring their parents and in-laws to Germany.
  • Many professionals will be able to start their qualification recognition process after they arrive in the country.
  • Non-EU nurses with less than three years of regulated nursing training will be able to work in the health and care sector.
  • Students will now be allowed to do part-time jobs, even before they are enrolled.
  • 25,000 foreign workers will be hired for short-term employment in 2024.
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