#Guest post
Many founders give away liquidity because they do not use the investment deduction. The tax burden can be reduced before an investment is made – an advantage that can be worth money, especially for boosted startups. A guest article by Marvin Großkrüger.
Anyone who grows without investor money finances every purchase from their own cash flow. The investment deduction reverses the order: it reduces the tax before investing and turns the tax savings into liquidity for the next step. Used correctly, it is one of the most underestimated levers for bootstrapped founders and solopreneurs.
What the investment allowance does
The investment deduction amount (IAB) according to § 7g EStG allows up to 50 percent of the costs of a planned purchase to be deducted today, reducing profits, before any investment has even been made. An example: If you plan to invest 40,000 euros next year, you can deduct 20,000 euros in advance. With a tax rate of 35 to 42 percent, that’s several thousand euros less tax immediately, in the current year.
Who can use it
The IAB is not a corporate instrument. It is also open to solopreneurs, and specifically to those who calculate their profits using income-surplus calculations, i.e. the majority of early founders. The prerequisite is a profit limit of 200,000 euros per company, which most people do not exceed in the initial phase anyway. Movable fixed assets are eligible: technology, machines, vehicles, workshop or studio equipment – including used ones.
The practical application
The effect can be further increased in the year of actual purchase. In addition to the dissolved IAB, small and medium-sized businesses can claim special depreciation of up to 40 percent under the conditions of Section 7g, in addition to the regular depreciation. All in all, a significant portion of the investment costs can be taxed in the first few years instead of spreading them over the full useful life.
But anyone who forms an IAB must actually carry out the investment within three years. If this does not happen, the deduction will be reversed retroactively – including interest on the additional tax payment. The IAB is therefore not a tax parking garage for non-binding intentions, but rather a tool for seriously planned purchases. In addition, the asset must be used almost exclusively, i.e. at least 90 percent, for operational purposes.
The IAB postpones taxes into the future
Important to understand: The IAB is primarily a deferral effect, not a final savings. You postpone taxes into the future instead of avoiding them permanently. This is still strong for growing bootstrappers because liquidity today is worth more than the same amount in two years and because the investment is due anyway. The key is to proceed with a plan rather than relying on luck: If you know what you want to buy, you will get the tax advantage exactly when you need it most.
About the author
Marvin Grosskrüger has been an entrepreneur for over twenty years and the founder of the Vestra business law firm. With a network of tax advisors, specialist lawyers and notaries, he supports entrepreneurs in making use of tax leeway that often remains unused in traditional advice – according to the guiding principle: structuring taxes into assets.
Note: This article provides general information and does not replace tax advice in individual cases. The values mentioned refer to the legal status of 2026. Whether and to what extent an investment deduction can be used depends on the specific business and project and should be agreed with the tax advisor.
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