Investment Deduction
The investment deduction is a collective term for tax schemes that give entrepreneurs an extra tax benefit when investing in business assets. The most well-known is the small-scale investment deduction (KIA), but there are also the energy investment deduction (EIA) and the environmental investment deduction (MIA). The KIA gives you an extra deduction on top of normal depreciation. The percentage depends on the total investment amount in a year. For investments between approximately €2,801 and €387,580, you can deduct up to 28% extra. The EIA and MIA apply to specific investments listed on the Energy List or Environmental List and offer percentages up to 45%. Important: the investment deduction only applies to business assets you use professionally. Additionally, each investment must be at least €450 per asset. Second-hand goods may also qualify, but additional conditions apply.
Example
You are a freelancer and buy a new business car for €25,000 and a laptop for €1,500. Your total investment is €26,500. According to the KIA table, you may deduct 28% extra: €7,420. On top of regular depreciation, you get €7,420 in extra deductions, saving you approximately €2,744 in tax at a 36.97% rate.
Why does this matter?
The investment deduction makes it fiscally more attractive to invest in your business. Combine the KIA with the self-employed deduction and SME profit exemption for maximum tax benefit. Plan large investments wisely: sometimes spreading them over two years is more advantageous.
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