Reformed Investment Deduction Starting in 2025: What Changes for You as an Entrepreneur?

These changes are designed to encourage investments that contribute to sustainability, innovation, and digitalization. This article provides an overview of the main aspects of this reform.

The three pillars of the new investment deduction

The reformed investment deduction consists of three parts: (1) the basic deduction, (2) the increased thematic deduction, and (3) the technology deduction:

1. Basic Deduction (10%)
This deduction is intended for small companies and individuals. The standard rate is 10%, but it will be increased to 20% for investments in digital assets, such as electronic payment systems or registered cash systems.

2. Thematic Deduction (30% or 40%)
Investments addressing four specific themes will qualify for a higher deduction:

• Efficient energy use and renewable energy
• Carbon-free transport
• Environmentally friendly investments
• Digital support for the above themes

For small businesses, the deduction is 40%, while large companies can claim 30%. Various lists have been established for each specific theme to determine which investments qualify for the deductions.

3. Technology Deduction (13.5%)
This 13.5% rate is intended for investments in research and development of innovative, environmentally friendly technologies. Patents also fall under this deduction. This deduction aligns with the previous increased investment deduction for patents and environmentally friendly research and development investments. Businesses can choose to spread this deduction over the depreciation period of the investment, with a spread deduction of 20.5%.

Stricter conditions and formalities

The new scheme imposes stricter requirements regarding both investment criteria and administrative obligations. To use the thematic investment deduction, a certificate must be added to the corporate tax return for the relevant year, issued by the competent government service. This certificate must be requested within three months after the end of the fiscal year. For the technology deduction, as before the change, a specific certificate must be requested. However, this must now be added to the return, and a stricter deadline applies.

Finally, the existing prohibition on cumulative use of the research and development tax credit and the partial exemption from withholding tax for researchers will also be extended to the investment deduction.

Government agreement 2025-2029

The recently published government agreement of the new federal government includes several measures related to the investment deduction. It has been decided to abolish the regional environmental certificate required for the technology deduction. Additionally, it is proposed to harmonize the deduction percentage for thematic investment deductions, which would become 40% for all companies.

A summary of the main points from the government agreement can be found in our other post.

What does this mean for your business?

Although the reform introduces more complex procedures, it simultaneously offers opportunities for businesses that want to invest in sustainability and digitalization. It is crucial to timely assess whether your planned investments meet the new requirements and to apply for the necessary certificates.

Our PKF BOFIDI experts are here to help

Do you have questions about the reformed investment deduction or need assistance with your fiscal planning? Contact our experts. We will gladly guide you through this new regulation.