The Investment Deduction (§7g EStG): How the Tax Benefit Works for Solar and Storage
The IAB under §7g EStG lets you claim up to 50% of acquisition costs in advance. How the instrument works for solar and storage investments – explained neutrally.
Anyone investing in a solar plant or battery storage may, under certain conditions, use the investment deduction (IAB) under §7g of the German Income Tax Act (EStG). It brings the tax effect of a planned investment forward and thereby creates liquidity – even before the asset is acquired.
What the IAB allows
The IAB lets you claim up to 50% of the anticipated acquisition costs of a planned investment as a profit-reducing item in advance. A key condition: the business's profit must not exceed €200,000 in the deduction year.
In the year of acquisition, the previously deducted amount is added back to profit. At the same time, the depreciation base can be reduced accordingly – so the tax effect is preserved over the lifetime; it was merely brought forward in time.
Special depreciation as a complement
In addition, §7g permits a special depreciation of 40% of the (reduced) acquisition costs, which can be flexibly distributed over five years. The regular straight-line depreciation of a photovoltaic plant runs over 20 years.
What remains in the end?
Over the full lifetime, the tax benefit of a depreciable investment equals the acquisition costs multiplied by your personal tax rate. The real value of the IAB is the liquidity and interest advantage from the time shift – not an additional subsidy.
Our IAB calculator shows how this might play out in your case as a non-binding model calculation.
Note: This article does not replace tax advice. The individual tax assessment is carried out by your tax adviser.