Profits from defense companies - the left wants to tax excess profits

Defense spending increases Left wants excess profits tax for defense companies As of: November 11, 2026 • 9:24 a.m

The Left is calling for an excess profits tax for defense companies in view of the sharp increase in profits due to higher defense spending. How effective would that be?

It's a crucial week in the Bundestag. What else is there money for in the coming year? And why not? The resolution will take place on Thursday when the Budget Committee meets for its so-called cleanup meeting.

Until then, there will likely be a lot of fighting between the Union and the SPD, for example over the question of where the money for a reduction in electricity taxes for everyone should come from.

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“We have an acceptance problem among the population,” says Ulrich Thoden. The defense policy spokesman for the Left Party refers to the planned defense spending in the coming year. The Bundeswehr should then have 140 billion euros at its disposal - 32 billion more than this year. Reducing electricity tax for everyone would only cost just under five billion euros.

According to Thoden, the increase in defense spending can be explained, on the one hand, by increasing armaments. On the other hand, the defense companies would also increase their profits through ever larger price markups. In order to limit this development, the Left is calling for the excess profits of companies such as Rheinmetall, TKMS and Hensoldt to be taxed.

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“In view of the arms buildup path, the defense companies are currently receiving a license to print money,” says Christian Görke. The former finance minister of Brandenburg and current Bundestag member of the Left has developed a concept for such an excess profits tax together with Thoden.

When it comes to the profits of defense companies, Görke speaks of “excesses” and a “self-service mentality.”

For defense expert Christian Mölling, however, an excess profits tax is at the wrong end. "If you only collect the money from the company afterwards, you won't get the price distortion for a specific product under control," he says.

It would be better to improve pricing and price testing - including parliamentary control. MPs do not always have the necessary insight, especially when it comes to more complex transactions between the arms industry and the Ministry of Defense.

Theoretically, there is price control for military equipment in Germany. Since there is no free market for them and the state is usually the only buyer, the imputed profit is usually set at five to six percent according to the so-called Bonn formula. However, this can be deviated from, for example if there is a particular urgency.

Germany's largest defense company Rheinmetall, for example, generated significantly more profit from every euro in sales last year with a return on sales of 15.82 percent. In total, the six largest German defense companies earned more than 22 billion euros in 2025 from the sale of weapons, tanks and warships.

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Criticism of the pricing of military equipment also comes from the Federal Audit Office, among others. In a special report last year, he warned that the special fund for defense and the weakening of the debt brake could set off a price spiral. "From a security policy 'Whatever it takes!' There must be no internal administrative 'money doesn't matter!' "said Kay Scheller, President of the Court of Auditors, at the time.

For the left-wing politicians Thoden and Görke, the high returns are clear evidence that additional profits are being made here at the expense of taxpayers. They therefore propose to levy an excess profits tax of 50 percent from a return on sales of five percent. The Left's concept is also based on the Bonn formula and is intended to ensure that any additional profits made by companies are subsequently skimmed off by the state.

However, defense expert Mölling cautions that price increases do not always automatically mean that profits will increase. These can also be a reflection of higher raw material or energy prices.

Nor can it be concluded from a high return on sales at companies like Rheinmetall that profits from armaments projects with the Bundeswehr have increased. After all, most companies operate internationally and therefore have other customers than just the German state.

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The excess profits tax should apply to companies that generate more than one billion euros per year. In addition to Rheinmetall and Renk, this would also affect Hensoldt, TKMS, KNDS and Diehl Defense. And Airbus, a conglomerate that builds military aircraft in addition to passenger aircraft, could also be included. "You only get the German arms companies," says Thoden, "but Germany is also the fourth largest arms exporter in the world."

How much such a tax would bring is difficult for Thoden and Görke to quantify. The annual reports of only four companies are publicly available. But based on this alone, the two left-wing politicians calculate that an excess profits tax for defense companies would have brought in 590 million euros in additional tax revenue last year and, according to preliminary figures, this year even almost a billion euros.

“We’re already making a lot of money,” admits Görke. The aim of such a tax is also to avoid ever higher price surcharges. The left-wing faction wants to submit a corresponding proposal for a legislative initiative to the Bundestag this week.

This topic in the program: tagesschau.de | Profits from arms companies - Left wants to tax excess profits | 11/11/2026 | 8:55 a.m