Elterngeld and a solar direct investment: income limit, assessment period and clawback

Anyone expecting a child while planning an energy direct investment usually gets two separate pieces of advice: one on Elterngeld, one on tax. The two overlap, though. Elterngeld asks for the taxable income of the previous year, for business income and for the tax assessment; a solar park in your own name supplies exactly these figures, in its first year often with an investment deduction (Investitionsabzugsbetrag, IAB) and high depreciation.

Some of this helps, some of it costs money and one point can come back years later. We go through the timeline in order and calculate with a sample household whose child is born in October 2027.

Does a solar park direct investment count for Elterngeld at all?

Yes. Anyone who runs a solar park or a battery in their own name earns business income. Elterngeld law calls this profit income (Gewinneinkünfte) and counts it alongside salary (§ 2 (1) sentence 3 no. 2 BEEG). For the income limit it counts anyway through taxable income.

A small rooftop system is different. Revenue from photovoltaics on, at or in buildings up to 30 kWp per residential or commercial unit has been tax-free since 2022 (§ 3 no. 72 EStG) and therefore does not count as income for Elterngeld either. That exemption never applies to a ground-mounted park, whatever its size. The hobby option for small older systems does not help here either: a direct investment is run with the intention of making a profit, see Liebhaberei and profit intention.

Anyone searching for how to leave solar income off the application should know two things. The Elterngeld office takes profits as stated in the income tax assessment (§ 2d (2) BEEG); that assessment shows the park. Incomplete information is an administrative offence under § 14 BEEG, on top of any repayment.

Which income counts for the 175,000 euro limit?

Taxable income in the last completed assessment period before the birth, i.e. the previous calendar year. For a child born in October 2027 that is 2026. This is not gross pay but the figure from the tax assessment under § 2 (5) EStG: after work expenses, special expenses and the allowances for children. If both parents are entitled to Elterngeld, the sum of both incomes counts, married or not (§ 1 (8) sentence 2 BEEG; BEEG guidelines, no. 1.8). Single parents test only their own. The limit of 175,000 euros applies to births from 1 April 2025, for couples and single parents alike; in the twelve months before that it was 200,000 euros (§ 28 (5) BEEG).

The limit has no taper. A single euro above it is enough for both parents to lose the entitlement entirely. With two well-paid parents up to 14 monthly amounts of 1,800 euros are at stake, i.e. 25,200 euros of basic Elterngeld, plus a possible sibling bonus. Because the cliff is this sharp, every item that moves the previous year's income is worth a look.

What does an investment deduction change about the previous year's income?

It lowers it by up to half of the planned investment cost. The IAB under § 7g EStG is a deduction from profit in the year before the purchase; it reduces business income and therefore taxable income under § 2 (5) EStG, which § 1 (8) BEEG refers to. It is not claimed during the year but in the tax return for that year. Until the assessment is issued, the Elterngeld office pays subject to revocation or decides provisionally (§ 8 (2) and (3) BEEG). Who may use an IAB and for which assets is covered in IAB requirements.

Our sample household: parent A is employed with taxable income of 168,000 euros in 2026. Parent B was on parental leave without Elterngeld after the first child until August 2026 and has worked full-time since September for 5,000 euros gross a month; that gives about 16,000 euros for 2026. The couple is married and assessed jointly. A solar park direct investment of 120,000 euros is planned for 2027, and the 2026 return includes an IAB of 60,000 euros for it.

Without the IAB the household is 9,000 euros above the limit at 184,000 euros; with it, it is at 124,000 euros. Tax for 2026 falls by 26,689 euros, and instead of nothing there are 25,200 euros of Elterngeld: twelve months for B, two partner months for A, each at the maximum. The timeline shows what counts when.

On paper an IAB of 9,000 euros would already suffice for this household; that would be half of an 18,000 euro investment. But the IAB is not a switch you flip for Elterngeld. It requires that the purchase is genuinely planned within three years. It also ties the money into an investment that has to stand on its own. And the tax saving is not a gift: the deduction is added back to profit at the time of purchase, as The Investitionsabzugsbetrag explained simply shows.

Which parent should hold the investment?

For the limit it makes no difference, for the amount of Elterngeld it does. The income limit adds both incomes together; it does not matter who claims the IAB. In the assessment, however, each parent is looked at separately. Profit income shifts only the assessment period of the person who has it. When in doubt, the investment therefore belongs with the parent whose salary in the calendar year before the birth matches the last twelve months, not with the one who has only just returned to full pay after parental leave, part-time work or a job change.

This allocation has tax and civil-law consequences beyond Elterngeld: who registers the business, who is liable, who is entitled to the revenue. It therefore belongs before signing and in the discussion with your tax adviser, not in the Elterngeld application.

Does the investment shift the Elterngeld assessment period?

Yes, for the parent who holds it. For employees Elterngeld is normally based on the twelve calendar months before the month of birth (§ 2b (1) BEEG). Anyone who also has profit income is assessed on the calendar year before the birth instead, for their salary too (§ 2b (3) BEEG). This applies even if the profit was zero or negative: the Federal Social Court confirmed the assessment period for an activity with nothing but losses (BSG, judgment of 28.03.2019, B 10 EG 6/18 R); the BEEG guidelines expressly treat zero and negative income as mixed income (no. 2b.3.1). According to the guidelines an IAB counts in the profit as well (no. 2d.1.1); the deduction in the prior year alone can therefore shift the period before the park has even been bought.

Parent B from our example shows how much this matters. B earned full pay in the twelve months before the birth but only four months of pay in calendar year 2026.

The difference is 12,000 euros. There is a way out that happens to suit loss years: on application only the salary of the twelve months counts if profit income averaged less than 35 euros a month both in the calendar year before the birth and in the year of birth up to the previous month (§ 2b (4) BEEG). Negative values meet this condition; the explanatory memorandum names losses expressly as a use case (Bundestag document 19/24438, p. 27). An IAB year at minus 60,000 euros is clearly below it.

Two caveats belong with it. For the months of the year of birth, profit is determined under § 2d (3) BEEG, i.e. initially with the 25 percent flat cost allowance; without the actual costs including depreciation a running park can easily exceed 35 euros. And the decision on the application is final, even if the figures change later (§ 2b (4) sentence 4 BEEG).

Does park revenue reduce Elterngeld during the benefit months?

Yes, if the park shows a profit in those months. That happens faster than expected. Elterngeld replaces income. Anyone with income during the benefit months receives only the percentage of the difference to income before the birth (§ 2 (3) BEEG). Profit income in these months is not taken from the tax assessment but from a separate statement. In it the Elterngeld office generally sets operating costs at 25 percent of revenue (§ 2d (3) sentence 2 BEEG). For a solar park that is far too little: its largest cost item is depreciation; the flat allowance leaves it out.

On application the actual operating costs count. According to the guidelines these expressly include depreciation and the IAB, with annual depreciation counted at one twelfth per month (no. 2d.3.2). In the year of purchase, with special and declining-balance depreciation, this usually results in a loss. Months with only negative income are disregarded in the difference calculation (BSG, judgment of 27.10.2022, B 10 EG 4/20 R); Elterngeld then stays in full.

The application can also be made implicitly by documenting higher costs; it is better not to rely on that. When special depreciation is claimed therefore affects not only tax but also Elterngeld; it belongs in the same discussion with your tax adviser. After the benefit period ends, actual income must be documented (§ 8 (1) BEEG).

What happens to Elterngeld if the IAB is reversed?

Then the previous year's income rises after the fact and the basis of the Elterngeld becomes shaky. If the planned investment is not made by the end of the third following year, the tax office reverses the IAB in the year of the deduction and amends that assessment, even if it has long become final (§ 7g (3) sentences 2 and 3 EStG). For an IAB from 2026 the deadline runs until 31.12.2029. Taxable income for 2026 is then back where it would have been without the IAB; in our example above the limit.

The BEEG does not say expressly how the Elterngeld office deals with this. For everything it does not regulate itself, it refers to the administrative procedure rules of SGB X (§ 26 (1) BEEG), which provide for withdrawing and revoking decisions. We found no judgment and no passage in the guidelines on exactly this case. We therefore treat it as an open risk: anyone who has to or wants to reverse the IAB should have the consequences for Elterngeld already paid clarified first and inform the Elterngeld office of the change.

How interest on the additional tax arises and which ways out exist before the deadline is described in Reversing the IAB. For parents the Elterngeld side comes on top: an IAB that is mainly meant to secure the limit and whose investment is uncertain can end up costing more than doing without it.

What applies to a severance payment in the year before the birth?

It counts in full for the limit but not for the amount. A severance payment is part of taxable income; the fifth rule (Fünftelregelung) changes only how the tax on it is calculated, not the income itself (§ 34 (1) sentence 1 EStG). A severance payment of 80,000 euros can therefore lift a household with 120,000 euros above the limit, even though the ongoing salary is far below it.

In calculating the amount of Elterngeld, however, it is left out. One-off severance payments are other payments (sonstige Bezüge) for wage tax purposes (R 39b.2 (2) sentence 2 LStR). Such payments do not count for Elterngeld (§ 2c (1) sentence 2 BEEG; BSG, judgment of 27.06.2019, B 10 EG 2/18 R). What matters is the year in which it is received. If the severance is paid only in the year of birth, it no longer affects the limit for this child; it does for a further child born the following year. How the tax on a severance payment behaves with the fifth rule and an IAB together is set out in Investing a severance payment tax-efficiently.

What argues against timing an investment around Elterngeld?

Four points that weigh against the figures in the tables.

• Elterngeld is capped, the investment is not. At most 25,200 euros of basic Elterngeld face an investment that runs for 20 years and in the worst case is lost entirely. If it does not work without Elterngeld, it does not work with it either.
• The IAB is only as safe as the investment. If it does not happen within the deadline, the prior year's income comes back, with interest on the tax and an open outcome for Elterngeld.
• Liquidity is tight around a birth. Equity tied up in a park is not available for parental leave, a move or childcare.
• The limit may change. The 2025 coalition agreement announces a noticeable increase of the income limit as well as the minimum and maximum amounts, and more flexible rules for the self-employed. Nothing has been passed so far; for births after a reform the calculation may look different.

Which questions should you settle beforehand with your tax adviser and the Elterngeld office?

• Which calendar year is the limit year and how high is the combined taxable income there likely to be, including bonuses and severance payments?
• Can the investment for which the IAB is claimed actually be made within the deadline? What happens if it is delayed?
• Which parent holds the investment and what did that parent's salary look like in the calendar year before the birth?
• Is an application under § 2b (4) BEEG an option and how high is the profit in the year of birth up to the previous month with actual costs?
• Which park revenue and which depreciation fall into the Elterngeld months? Will the application for actual operating costs be made?
• Will the tax assessment for the limit year be available when you apply or will the decision be provisional?
• Who informs the Elterngeld office if the assessment for the limit year changes later?

How we approach Elterngeld in the initial call

If you are expecting a child, mention it early. The expected month of birth affects deadlines and sequence: when the IAB is claimed, when the park is taken over and which parent holds it. We do not calculate Elterngeld ourselves; that belongs with the Elterngeld office and your tax adviser. Which project figures the two need and when they are available is what we clarify in a non-binding initial call. We give no return promises in the process.