Frankfurt's Data Center Boom Sparks Push for Local Tax Reforms by 2030
The Frankfurt-Rhein-Main region remains Germany's leading hub for data centers, with 55 facilities already operating in Frankfurt alone. These account for nearly a third of the country's total capacity. Now, local authorities are pushing for tax reforms to ensure municipalities benefit more from the industry's growth.
Over the past few years, the region has steadily expanded its data center infrastructure. By 2030, another 25 facilities are expected to open in the surrounding area. This rapid growth has made the sector a key source of tax revenue, outperforming many other industries.
In response, authorities in Dietzenbach and Hanauābacked by Kreis Offenbach, HSGB, and the Regionalverband FrankfurtRheinMaināhave proposed changes to business tax rules. Their plan would link tax assessments to a data center's installed IT capacity in megawatts, rather than employee numbers. They also argue that taxes should be paid where the facility is located, not where the company is headquartered.
The push for reform comes as Hesse faces a municipal financial crisis. Stakeholders stress the need for a sustainable tax policy that secures long-term benefits for host communities. Meanwhile, U.S. tech giant Google is investing ā¬5.5 billion in Germany, including a new data center in Dietzenbach and an expansion of its existing site in Hanau.
So far, no other German municipalities outside Hessen have put forward similar tax reform proposals for data centers.
If adopted, the proposed tax changes could reshape how municipalities profit from data center investments. The reforms aim to ensure that local governments receive a fairer share of revenue from an industry that continues to expand rapidly. For now, the Frankfurt-Rhein-Main region remains the only area actively pursuing such measures.
