Temporary doubling of the investment allowance

The Austrian Federal Government has announced an economic and structural programme for autumn 2025. The aim is to support economic growth and promote investment. For example, a temporary subsidy is to be introduced to mitigate the high burden of electricity costs. Furthermore, a new location fund is to be established to mobilise private capital, the expansion of broadband is to be advanced, and measures against general inflation are to be taken. A key element, however, is the temporary increase in the investment allowance (IFB), which is intended to act as a tax incentive.

Currently, the IFB amounts to 10% of the acquisition or production costs of eligible assets and 15% for certain investments in the area of ecological transition. The general IFB rate will now be doubled from 10% to 20%, and the rate for eco-investments from 15% to 22%. The temporary doubling of the IFB is envisaged for the period from 1 November 2025 to 31 December 2026. If acquisition or production is completed only after 31 December 2026, the increase is available only if the IFB is claimed for the portions capitalised during the eligible period.

Acquisition or production costs up to €1 million

The IFB enables companies to claim, in addition to depreciation, a notional business expense for the acquisition or production of depreciable fixed assets with a normal useful life of at least four years. The asset must also be attributable to a domestic business or a domestic permanent establishment. The relief is limited to acquisition or production costs of up to €1 million per business and financial 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 an IFB claimed must be recaptured if the eligible asset leaves the business assets within four years (calculated to the day).

No IFB may be claimed for acquisition/production costs in particular relating to buildings, low-value assets, used assets, installations for the extraction or use of fossil energy sources, certain intangible assets, and assets used to cover the investment-related profit allowance.

Note
Due to the mutual exclusion between the IFB and the investment-related profit allowance with regard to the allocation of acquired assets, the question arises for the entrepreneur as to which tax incentive to claim. This assessment is relevant only for natural persons or partnerships insofar as natural persons participate, as only they can claim the profit allowance for tax purposes. For corporations, this question does not arise; for them, claiming the IFB is in any case advantageous. The assessment between the IFB and the investment-related profit allowance depends on various factors and requires early planning. We recommend comprehensive advice in this regard.