Germany's governing coalition is arguing over whether to tax the income generated by artificial intelligence. The news site of German TV channel ARD, tagesschau, reported on October 29 that Karin Prien, a CDU deputy leader and the federal family minister, told the weekly Stern that if value creation is increasingly done by AI, it must be taxed.
"anders geht es nicht"
(There is no other way.)
For now the discussion has stopped at the level of statements. There is no bill, no tax rate, and no agreed tax base.
A month of reversals
The debate was kicked off by Digital Minister Karsten Wildberger. He told Der Tagesspiegel that the technology generates enormous turnover and should be taxed, with the money used to fund industrial transition. His worry was jobs: large numbers of positions disappearing and the world of work being thoroughly upended. Asked whether the burden would fall mainly on big tech companies, he said that could be discussed.
He then walked it back on RTL and ntv, ruling out any immediate levy by the government and arguing that growth should come first. By mid-October, German media were describing the minister as rejecting an immediate tax.
Economy Minister Katherina Reiche took the same line at an event hosted by Die Welt: roll out AI first, talk about taxation later. Reports say Chancellor Merz is currently critical of an AI tax. Prien's remarks at the end of October revived a topic that had already cooled, and she steered the conversation toward what AI means for young people's career prospects.
The SPD parliamentary group set out its position in a September resolution: technological progress should not make people poorer, and it must not lead to a situation where machines take the well-paid jobs and workers are left with low-paid ones. The paper calls for wider coverage of collective bargaining agreements and for fair taxation of profits.
Microsoft co-founder Bill Gates has long called for taxes on robots and AI to blunt the incentive for companies to replace people with machines, an international reference point the reports mention.
The tax base is undecided, and the differences are large
The parties are not using the same word. Wildberger spoke of turnover, Prien of value creation, and the SPD of profit. The three could point to completely different lists of companies.
A tax on profit would spare model developers that are still losing money and land on large companies that already earn it. A tax on turnover would hit loss-making firms too, and the cost could be passed along in prices to German businesses that use AI services. A tax on value creation would be the hardest to put into practice: whether and how the labor costs a factory saves with AI count would first have to be defined.
There is also no answer on where the tax would be collected. Levying it on AI providers would mostly hit US companies, which is how some people on social platforms have read it. Levying it on German companies that use AI would collide directly with the pace of adoption that Reiche and Merz are worried about. The German government has published no draft text, so the analysis above is inferred from public statements, and it is not possible to verify how far the discussion inside the coalition has gone.
The growth camp has numbers of its own. A model by the Ifo Institute estimates that by 2034 generative AI could add about 440 billion euros of value a year to Germany, with broad adoption contributing about 330 billion euros. That study is about the cost of restricted training data: tighter access to training data would cut the gain by about 155 billion euros. It did not measure the effect of a tax.
What to watch for Chinese readers
Chinese companies are unlikely to be the main subject of this debate any time soon; for now it is aimed at employment and at the revenue of US tech companies. Chinese teams that sell AI products in Germany should keep an eye on the tax base. If it ends up as turnover, calculated on a provider's revenue in Germany, small teams that are not yet profitable could be covered as well.
There is no sign that the tax will arrive quickly. Merz's and Reiche's positions are on the record, and the SPD has not yet put forward a specific tax. The next real test will be whether anyone in the coalition writes it into an official budget or bill.
Sources: tagesschau, Stern, CocoLoop, Der Tagesspiegel, GermanPolicy; the Ifo Institute model was checked for the basis of its value-added estimates.