Profits from defense companies: Too much money from weapons

Although expectations have recently fallen slightly, the Rheinmetall boss remains confident. “We have very good growth with high profitability,” said Armin Papperger last Thursday. For the current year, Germany's largest defense company is expecting sales of 13.2 billion euros. The value is slightly lower than the target range of 13.7 to 14.2 billion euros targeted for this year - but for the left in the Bundestag, the “profitability” of defense companies, which Papperger praised, is a problem.

On Monday, the parliamentary group in Berlin presented a bill that would limit the profits of defense companies. Accordingly, German weapons manufacturers should pay an excess profits tax of 50 percent if their return on sales is more than 5 percent. This means: If more than 5 euros in profit remains when a defense company turns over 100 euros, the higher tax rate of 50 percent applies to this profit.

In addition, the corporation tax of 15 percent and the municipal trade tax, which is due anyway, should also be added. In this way, the Left expects 72 to 86 percent taxes for the excess profits of defense companies.

“No one should be allowed to enrich themselves with weapons, no matter how specific conflicts and threats are assessed,” says the Left’s draft law. The group criticizes a “highly dysfunctional market” that is determined by a few companies. That is why there are always “extreme price jumps” when purchasing arms. The Left's proposal is scheduled to be discussed in the Bundestag at the beginning of 2027 - but it is highly unlikely that the government factions will agree to such a draft from the opposition.

“Of course we hope for support from the progressive camp in the Bundestag and will seek discussion,” said the Left MP and acting chairman of the Finance Committee in the Bundestag, Christian Görke, to the taz. Together with the defense policy spokesman for the Left, Ulrich Thoden, he supports the content of the proposal. Thoden criticized the fact that prices were being charged for military equipment that were “sometimes fifty percent above the market price”. That’s why Rheinmetall and Co. “shouldn’t throw more tax money at them.”

In fact, at Rheinmetall, not only sales but also the profit margin increased significantly in parallel with the creation of the special debt pot for the Bundeswehr. While the company's sales were around 5.6 billion euros in 2021, they will increase to around 13.2 billion euros in the current year. During the same period, profits more than doubled - from almost 600 million euros in 2021 to around 1.3 billion euros in the current year.

With its profit margin of 16 percent, the German arms giant is well above the 5 percent limit set by the left-wing faction. The value is also higher than in other fields in German industry. For comparison: The chemical company Evonik achieved a return on sales of 13.3 percent (before taxes and interest) in the 2025 financial year in an extremely positive market environment, while Volkswagen only achieved 2.8 percent in the same year.

It is also interesting that economists expect a low overall economic benefit from defense spending. Since the defense industry is heavily utilized and characterized by little competition, additional spending is more likely to lead to price increases than to an expansion of production, according to a June 2025 study by economists Tom Krebs and Patrick Kaczmarczyk from the University of Mannheim.