US Tax Reform 2025: What Consequences Does the OBBBA Have for German Companies With US Operations?
U.S. Tax Reform Passed – Why the OBBBA Matters for German Businesses with U.S. Exposure
With the passage of the “One Big Beautiful Bill Act” (OBBBA), the United States is implementing a series of tax measures that will significantly impact multinational businesses — including those headquartered in Germany with physical or economic ties to the U.S.
From 2025 onward, research and development costs incurred within the U.S. will once again be eligible for immediate expensing under Sections 174 and 174A. This measure reinstates a major tax incentive for U.S.-based innovation activities, while non-U.S. R&D expenditures remain capitalized — increasing the importance of geographic allocation in cost planning. In parallel, the 100% bonus depreciation regime for qualified property is set to return for assets acquired after January 19, 2025, reviving a key driver for onshoring and capital investment in the U.S.
On the financing side, the OBBBA reinstates the 30 percent EBITDA-based limitation on interest deductibility under Section 163(j) from 2025. However, additional restrictions — such as the treatment of capitalized interest — are scheduled to apply from 2026, requiring careful reassessment of intercompany debt structures and profit repatriation strategies.
From an international tax perspective, the reform modifies the mechanics of GILTI (Global Intangible Low-Taxed Income), abolishing the Transitional Intangible Regime and adjusting CFC (Controlled Foreign Corporation) attribution periods and FTC (foreign tax credit) availability. These shifts are likely to affect the global effective tax rate (ETR) of multinational groups and could require model adjustments, particularly in light of Pillar Two interactions.
Lastly, while certain controversial provisions — such as Section 899 (retaliatory tax) — were removed in the Senate, the U.S. administration retains authority to respond to “unfair” foreign tax regimes. German exporters and digital service providers should be aware that additional measures under trade law (e.g., tariffs, Section 891 sanctions) may be explored if U.S. interests are perceived to be disadvantaged by Pillar Two top-up taxes or other international minimum tax regimes.
In summary, the OBBBA introduces a materially different U.S. tax landscape from 2025 onward. For German companies with U.S. operations — be it R&D centers, manufacturing subsidiaries, IP platforms or holding structures — a reassessment of tax planning models, cross-border financing, and compliance exposure is highly recommended.
Our colleagues at Alvarez & Marsal Tax U.S. have published a detailed analysis of the key reforms and their implications:
For further questions or a discussion of how these developments may affect your U.S. or global tax position, feel free to reach out to your Alvarez & Marsal Tax contact.
