Germany’s second future financing act to boost renewable energy investments in real estate
The German fund industry and private investors could soon see new opportunities in renewable energy investments, thanks to a proposed bill from the Federal Ministry of Finance. The draft of the Second Law on the Financing of Future-Securing Investments (ZuFinG II) aims to remove regulatory hurdles and open up fresh possibilities for real estate and renewable energy investments. If passed, the legislation would significantly reshape how investments in renewable energy projects, particularly through real estate funds, are structured and taxed.
The new draft bill aligns with Germany’s broader goals for the energy transition and renewable energy integration, specifically in the real estate sector. Camille Dufieux, Managing Director of INTREAL, commented on the practical implications, stating: “The operation of real estate and renewable energy facilities are naturally connected. Large roof spaces on logistics warehouses, retail centers, and residential buildings are ideal for installing photovoltaic systems. However, regulatory and tax obstacles have previously hindered these types of investments. The draft bill will offer new pathways for renewable energy to become a more serious investment option, supporting the energy transition.”
The proposed legislation seeks to address the current limitations in Germany’s Capital Investment Act (KAGB) and Investment Tax Act (InvStG), which have traditionally restricted direct investments in renewable energy by real estate funds. By revising these laws, the bill would permit real estate special funds to manage assets used for renewable energy generation, storage, and transportation.
Michael Schneider, Managing Director at INTREAL, described the move as a “paradigmatic shift” for the industry. “Expanding both the KAGB and InvStG to include renewable energy investments is a long-awaited development, supported by many in the fund industry and by the BVI Federal Association for Investment and Asset Management,” said Schneider.
Key Changes and Tax Implications
A central component of the draft bill is the integration of tax and regulatory frameworks, which will allow investment funds to own up to 100% of companies that manage renewable energy projects. This includes direct ownership of renewable energy assets. Currently, funds are limited in the revenue they can earn from active entrepreneurial management—capped at 5% of a fund’s total annual income under Article 26 of the InvStG. Exceeding this cap jeopardizes a fund’s institutional status.
Under the new legislation, earnings from managing renewable energy projects would be exempt from this limit, allowing them to contribute more substantially to a fund’s income without risking institutional fund status. Importantly, even if these earnings stem from equity investments in renewable energy companies, they will still qualify. However, all such income would become subject to corporate income tax.
While the tax liabilities may seem like a downside, Dufieux views the changes positively. “Despite the corporate tax implications, these new regulations represent a step forward for the fund industry. They offer greater flexibility in renewable energy investments while ensuring the legal framework is consistent and supportive,” she summarized.
A Boost for Germany’s Energy Transition
The ZuFinG II draft bill, if passed, will not only facilitate new investment opportunities but also contribute meaningfully to Germany’s push for renewable energy and climate-friendly solutions. By making it easier for funds to invest in energy-efficient properties equipped with renewable energy systems, such as photovoltaic panels on commercial real estate, the law would help integrate green energy solutions into the country’s growing real estate and infrastructure sectors.
The draft is expected to undergo further discussions before it potentially becomes law, but experts are optimistic that its implementation will be a key driver in modernizing both Germany’s financial markets and its renewable energy landscape.
