Field help: Reduction amounts in accordance with section 7g, para. 2, sentence 2 of the Income Tax Act (EStG)
Reduction amount according to sect. 7g para. 2 sentence 3 of the Income Tax Act (EStG)
(see investment deduction amounts)

For the planned acquisition or production of movable fixed assets, you can deduct an investment deduction amount (IDA) of 50% of the expected acquisition or production costs, up to a maximum of 200.000 Euro, from off-balance-sheet profit (sect. 7g paras. 1 to 4 Income Tax Act (EStG)) (see page "Investment deduction amounts").

If the asset for which an investment deduction was formed is acquired or produced within the investment period of 3 years, the following applies:

• The investment deduction amount taken into account for the asset acquired is to be added, thereby increasing profits, off the balance sheet. However, the addition is limited to the amount deducted for the asset in question, up to a maximum of 50% of the acquisition or production costs.
• The actual acquisition or production costs of the asset will be reduced by the amount deducted from the investment (up to 50% of the acquisition or production costs), thereby reducing profits. However, the reduction may not exceed the amount of the investment deduction. This reduction amount must be entered in the books.

Note: The reduction reduces the basis of assessment for further depreciation, for both straight-line depreciation and special depreciation in accordance with sect. 7g paras. 5 to 6 Income Tax Act (EStG). This can lead to assets becoming "low-value" assets for tax purposes if the tax base falls below 800,01 Euro.

The "Second Corona Tax Relief Act" of 29 June 2020 already extended the investment deadline for investment deductions that were created in 2017 and for which the three-year deadline would have expired in 2020 by one year to 31 December 2021 (sect. 52 para. 16 of the Income Tax Act (EStG)).

The investment deadlines in accordance with sect. 7g of the Income Tax Act (EStG) have already been extended in 2022: For investment deductions for which the three-year investment period or the investment period extended to four years expires in 2021, the investment period will be extended by one year to four or five years. This means that if the deduction amount is created in 2017 or 2018, the investment period now only ends on 31 December 2022 (Sect. 52 para. 16 sentence 4 of the Income Tax Act (EStG), amended by the "Act on the Modernisation of Corporate Tax Law").

The investment deadlines in accordance with sect. 7g have recently been extended again: if the three-year or already extended investment deadlines expire in 2022, they will be extended by a further year to four, five or six years (sect. 52 para. 16 sentences 3, 4 of the Income Tax Act (EStG), amended by the "Fourth Corona Tax Assistance Act" dated 19 June 2022).