Germany's upper house of parliament on Friday blocked a multibillion-dollar tax relief package for small and medium-sized companies, aimed at unleashing new investment amid weak foreign demand and high interest rates.

A clear majority of the Bundesrat, comprised of the 16 federal states, voted to refer the package, called the Growth Opportunities Act, to a parliamentary mediation committee.

It was unclear on Friday when this committee will meet and what a compromise on the package - which provides for tax relief of around 7 billion euros ($7.63 billion) a year from 2024, and a total of over 32 billion euros until 2028 - might look like.

The package had been expected to face opposition in the Bundesrat after it was approved by the Bundestag lower house of parliament last week, as the expected tax revenue shortfall is to be borne largely by the federal states and municipalities.

The law provides for companies to receive a state subsidy for 15% of their total investments in climate protection measures and it gives more scope to offset losses against profits and offset depreciation costs for a limited period of time for movable assets and residential buildings. ($1 = 0.9168 euros) (Reporting by Christian Kraemer Writing by Miranda Murray Editing by Rachel More)