Dear Clients,
With the eco-social tax reform, in addition to the existing special depreciation models (declining balance, accelerated depreciation for wear and tear), an investment allowance was introduced as a further investment incentive with effect from January 1st, 2023. The new investment allowance is strongly reminiscent of the regulation in force until the year 2000.
What is the investment allowance?
The investment allowance (Investitionsfreibetrag = IFB) is an additional taxable operating expense and reduces the taxable profit. Depending on the type of investment, 10 % of the acquisition/production costs can be additionally claimed. In the case of investments in the field of greening, this is even 15 %.
The assessment basis (maximum beneficiary investment amount) is capped at EUR 1 million per business and business year. This means possible additional operating expenses of EUR 100.000 (with 10 % IFB) or EUR 150.000 (with 15 % IFB). Within a group of companies, the maximum amount of EUR 1 million is available to the group leader and each individual group member.
Which investments are eligible?
Investments in depreciable fixed assets are eligible. Beneficiary assets must also be unused and have a useful life of at least 4 years.
Which investments are not eligible?
- Non-depreciable assets (e.g. land)
- Assets that have a useful life of less than four years or that are not used in Austria (see above).
- Assets for which an investment-related profit allowance was claimed
- Certain assets such as cars and station wagons with a CO2 emission value of more than 0 g/km (i.e. all cars/station wagons that are not fully electric), buildings or goodwill.
- Investments immediately deducted as low-value assets (Geringwertige Wirtschaftsgüter)
- Non-physical assets, with the exception of those that can be assigned to the areas of digitalisation, ecologisation, health/life science
- Equipment used for the extraction, transport or storage of fossil fuels as well as equipment that directly uses fossil fuels (e.g. tractors, trucks).
Who can claim the investment allowance?
The IFB can therefore generally be claimed by sole proprietors, partnerships and corporations (e.g. limited liability companies) if business income is generated. It requires a determination of profits by means of a comparison of business assets (balance sheet) or a complete income-expenditure account - the claiming of an IFB is therefore excluded if a lump sum is applied.
When can the investment allowance be claimed?
The IFB is only available in the year of acquisition or production of the asset benefiting from the allowance. For the first time, an IFB is available for acquisitions/manufactures after 31 December 2022.
IFB vs. other investment allowances?
- Simultaneous claiming of an IFB and investment-related basic allowance for the same investment object is not permitted.
- IFB and declining balance depreciation for the same asset is possible
- Research premium and IFB can be claimed at the same time
- Public subsidies do not exclude IFB for the same asset (but as a rule the acquisition/production costs are reduced by the tax-free public subsidies)
- Flat-rate taxation precludes the claiming of an IFB.
When must the IFB be taxed retrospectively?
A claimed IFB must be retrospectively taxed if the beneficiary asset - calculated to the day - is removed from the business assets within 4 years (exception: due to force majeure or official intervention) or is taken abroad without being transferred for use in an EU/EEA state in return for payment.
Best regards
Manfred Gross
Vienna, March 2023
