Insights
TAX & BUSINESS
Temporary Doubling of the Investment Allowance
The general investment allowance rate (IFB) of 10% is temporarily doubled to 20%, as is the rate for eco‑investments from 15% to 22%.
The Austrian federal government has announced a stimulus and structural programme for autumn 2025. The aim is to support economic growth and promote investment. A temporary incentive is to be created to ease the high electricity‑cost burden. Furthermore, a new location fund is to be established to mobilise private capital, broadband expansion is to be accelerated and measures against general inflation are to be introduced. A central element, however, is the temporarily limited increase of the investment allowance (IFB), which is intended to act as a tax incentive.
Currently, the IFB is 10% of the acquisition or production costs of eligible assets and 15% for certain eco‑investment assets. The general IFB rate is now being doubled from 10% to 20% and the rate for eco‑investments from 15% to 22%. The temporary doubling of the IFB is scheduled for the period between 1 November 2025 and 31 December 2026. If the acquisition or production is completed after 31 December 2026, the increase only applies if the IFB is claimed for the portions activated during the eligible period.
Acquisition or production costs up to EUR 1 million
The IFB enables companies to claim a notional business expense, in addition to depreciation, for the acquisition or production of assets of depreciable fixed assets with an ordinary useful life of at least four years in addition to depreciation. The asset must also be attributable to a domestic business or a domestic permanent establishment. The benefit is limited to acquisition or production costs of up to EUR 1 million per business and fiscal year.
It should be noted that the actual tax saving from the IFB depends on the applicable progressive income tax rate (up to 55%) and that a claimed IFB must be added back to taxable income if the eligible asset leaves the business assets within four years (exact day calculation).
No IFB can be claimed for acquisition/production costs, in particular relating to buildings, low‑value assets, used assets, installations for the promotion or use of fossil fuels, certain intangible assets and also assets that have been used to cover the investment‑related profit allowance.
Note
Due to this mutual exclusion between IFB and the investment‑related profit allowance regarding the “designation” of acquired assets, the entrepreneur faces the question of which tax incentive to utilise. This consideration, however, is only relevant for natural persons or partnerships where natural persons are involved, as only they can claim the profit allowance tax‑wise. For corporations the question does not arise; for them the IFB claim is in any case advantageous. The weighing up of IFB against the investment‑related profit allowance depends on various factors and requires early planning. We recommend comprehensive advice in this regard.
Currently, the IFB is 10% of the acquisition or production costs of eligible assets and 15% for certain eco‑investment assets. The general IFB rate is now being doubled from 10% to 20% and the rate for eco‑investments from 15% to 22%. The temporary doubling of the IFB is scheduled for the period between 1 November 2025 and 31 December 2026. If the acquisition or production is completed after 31 December 2026, the increase only applies if the IFB is claimed for the portions activated during the eligible period.
Acquisition or production costs up to EUR 1 million
The IFB enables companies to claim a notional business expense, in addition to depreciation, for the acquisition or production of assets of depreciable fixed assets with an ordinary useful life of at least four years in addition to depreciation. The asset must also be attributable to a domestic business or a domestic permanent establishment. The benefit is limited to acquisition or production costs of up to EUR 1 million per business and fiscal year.
It should be noted that the actual tax saving from the IFB depends on the applicable progressive income tax rate (up to 55%) and that a claimed IFB must be added back to taxable income if the eligible asset leaves the business assets within four years (exact day calculation).
No IFB can be claimed for acquisition/production costs, in particular relating to buildings, low‑value assets, used assets, installations for the promotion or use of fossil fuels, certain intangible assets and also assets that have been used to cover the investment‑related profit allowance.
Note
Due to this mutual exclusion between IFB and the investment‑related profit allowance regarding the “designation” of acquired assets, the entrepreneur faces the question of which tax incentive to utilise. This consideration, however, is only relevant for natural persons or partnerships where natural persons are involved, as only they can claim the profit allowance tax‑wise. For corporations the question does not arise; for them the IFB claim is in any case advantageous. The weighing up of IFB against the investment‑related profit allowance depends on various factors and requires early planning. We recommend comprehensive advice in this regard.