Tax policy upgrade | Left calls for excess profits tax for the defense industry

Armin Pappberger, CEO of the defense company Rheinmetall, can't complain: more and more public money is flowing his way. Photo: imago/Florian Gaertner Rheinmetall CEO Armin Pappberger has a good laugh. Last spring he made a book profit of more than half a million euros in less than two months by buying his own shares, as “Spiegel” reported. In 2021, the defense company recorded sales of 5.7 billion euros. In 2025 these were already 9.9 billion. Rheinmetall wants to generate sales of 50 billion euros by 2030, even though the company's shares plummeted last week.

"The rearmament path is a license to print money," criticized Christian Görke, financial policy spokesman for the Left Party in the Bundestag, on Monday. As a result of the upgrade and the budgeted special funds, increasing amounts of public money are flowing into the arms industry. Price controls don't seem to be working. The Left Party therefore submitted a proposal for an excess profits tax for the industry to the Bundestag. According to Görke, it is currently the most accepted measure for dealing with the profits of the defense industry.

"The upgrade path is a license to print money."

Specifically, the Left Party is calling for an excess profits tax for defense companies with a return on sales of five percent or more. Excess profits of defense companies with a turnover of one billion euros per year or more should therefore be taxed at 50 percent, plus existing corporate taxes. Rheinmetall achieved sales of 9.94 billion euros in 2025. Other affected companies would be KNDS (4.4 billion), Hensoldt (2.46 billion), TKMS (2.17 billion), Diehl (1.83 billion) and Renk (1.37 billion). For 2025, the Left expects potential revenues of 538 million only from Rheinmetall, with sales trending upward.

Excess profits are not covered by traditional profit taxation. They arise without much input from the companies concerned and occur, for example, during crises. There is no scientifically precise and generally valid limit between normal profits and excess profits. Excess profit taxes have recently been the subject of much discussion in Germany in connection with the profits of oil companies following the rise in fuel prices.

There is an oligopoly in the arms industry, says Ulrich Thoden, defense policy spokesman for the Left Party in the Bundestag. The state is by far the largest and in some cases the only buyer. A few specialized companies develop requested products; it is difficult to speak of competition in this field. You also have virtually no risk of acceptance. This impacts prices and increases profit margins. “If you tell an industrial partner that we will pay any price, you won’t get the product cheaply,” said Thoden, referring to the special fund.

There are de facto price controls for the arms industry in Germany, with a usual profit surcharge of five percent. The return on sales at Rheinmetall, for example, was 15.82 percent in 2025. “No one should be allowed to enrich themselves with weapons, no matter how specific conflicts and threats are assessed,” says the Left Party’s motion. In the end, taxpayers’ money would flow into profit margins.

There are several historical examples of excess profit taxes in the areas of armaments, energy and finance. All of them were abolished after a certain period of time. The Left's proposal does not include a time frame. »The tax can be ended again at any time by law. “First of all, it should limit the market failure,” said Görke in response to “nd” questions.

Associations like Fiscal Future, an organization for generation-fair budget and financial policy, argue for a permanent and cross-sector excess profits tax. The argument goes that this could make the tax system more crisis-resistant in the long term. The Bundestag rejected such a motion for a resolution from the Greens in the fall.

In recent months, some SPD and Green politicians have spoken out in favor of an excess profits tax for defense companies. Also because the idea is currently circulating at EU level. The Left Party's proposal only applies to German defense companies. Such a tax in Germany could still have a wide impact. After all, according to a report by the Stockholm peace research institute Sipri, the Federal Republic is now the fourth largest arms exporter in the world.

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