Businesses with profit income
Commercial businesses, the self-employed and agricultural and forestry operations can generally use the IAB – including when profit is determined by cash-basis accounting (Einnahmen-Überschuss-Rechnung).
Investment deduction (Investitionsabzugsbetrag) · § 7g EStG
IAB: Lower taxes today, invest in PV tomorrow
The investment deduction (Investitionsabzugsbetrag) allows small and medium-sized businesses to claim planned investments – such as a photovoltaic system – as a profit-reducing item even before purchase, under certain conditions.
The principle
Tax relief before the investment
With the investment deduction (Investitionsabzugsbetrag) under § 7g EStG, businesses can deduct up to 50 % of the expected acquisition costs of a movable asset from profit as early as a year before purchase – the tax burden falls before any investment has even been made.
The effect: the tax saving improves liquidity exactly when you need it for the investment. For many businesses, this makes their own PV system considerably easier to finance.
- Up to 50 % of the expected acquisition costs can be applied as a profit-reducing item in advance
- The investment must be made within the statutory period of three financial years
- Can be combined with special depreciation under § 7g EStG
Important note – this is not tax advice: This page explains the investment deduction (Investitionsabzugsbetrag) in general terms only and is no substitute for tax or legal advice. Whether and to what extent an IAB applies to you – please consult your tax advisor. EEFA supports you with the technical and economic foundations: reliable quotes, yield forecasts and cost-effectiveness calculations for your planned system.
Statutory requirements and thresholds can change. The current legal situation in the respective assessment period always applies – another matter for your tax advisor.
Who is the IAB suitable for?
Designed for small and medium-sized businesses
The legislator aims the investment deduction (Investitionsabzugsbetrag) specifically at smaller companies – regardless of the sector.
Below the profit threshold
A prerequisite is that the business's profit does not exceed a statutorily defined limit in the year of the deduction. Your tax advisor checks whether you are below it based on your figures.
Business use
After acquisition, the asset must be used almost exclusively for business purposes and remain in the business – usually easy to demonstrate for a commercially operated PV system.
IAB and photovoltaics
How the tax benefit and the solar investment work together
The typical process when a business wants to use the IAB for a planned PV system:
Plan the investment
We create a concrete system concept with reliable acquisition costs and a yield forecast – the basis for the tax assessment.
Claim the IAB
Your tax advisor checks the requirements and applies the deduction in the tax return for the planning year – the profit falls immediately on paper.
Acquire the system
Within the three-year investment period, we build your PV system – on schedule, turnkey and with documented costs.
Addition & depreciation
In the year of acquisition, the IAB is reversed and offset against the acquisition costs; in addition, special depreciation may apply.
Detailed questions
Frequently asked questions about the investment deduction
Does the IAB even apply to photovoltaic systems?
For tax purposes, PV systems are regularly treated as movable assets and can therefore in principle qualify for the IAB. Note the interplay with the income tax exemption for certain small PV systems: where the yields are exempt from tax, an IAB is generally not available. Your tax advisor will clarify which situation applies to you.
What happens if I don't invest in the end after all?
If the investment is not made within the deadline, the deduction is reversed retroactively. The tax for the deduction year is reassessed, and interest on back payments may apply. An IAB should therefore only be applied on the basis of a serious, concretely planned investment – a reliable quote helps here.
Can I combine the IAB with special depreciation?
Yes, in addition to the investment deduction, § 7g EStG also provides for special depreciation for eligible businesses. In total, a considerable part of the acquisition costs can thus be brought forward for tax purposes. The specific arrangement belongs in the hands of your tax advisor.
What deadline applies to the investment?
As a rule, the acquisition must take place by the end of the third financial year following the deduction year. In the past, the legislator has extended this deadline in special situations – the rule applicable in the individual case is decisive.
What documents does EEFA provide for my tax advisor?
We provide you with a detailed quote including the expected acquisition costs, a yield forecast and a cost-effectiveness calculation for your planned system. This gives your tax advisor all the technical and economic foundations needed to assess the IAB soundly.
Are you planning a PV investment?
We provide the figures that you and your tax advisor need for the decision – quote, yield forecast and cost-effectiveness calculation included.