There are multiple definitions - click on the translation that matches your context.
Steuervergünstigung means:
Substantiv
partial
noun
be careful using the word "privilege" to convey the idea of a tax-related benefit or advantage. The word privilege is used, at least in the US, in the context of a "privilege tax" such as the one imposed on owning a car.
a tax reduction given to certain classes of taxpayers
If your counterpart has a tax advantage and you don't, that makes competing that much more difficult.