The IAB in your German tax return: where and how to actually claim it

The investment deduction (Investitionsabzugsbetrag, IAB) has no field of its own in the main German income-tax return — it is claimed in the business's profit computation: with cash-basis accounting in the Anlage EÜR form (section "Ermittlung des Gewinns", determination of profit), with balance-sheet accounting off-balance-sheet via the electronic E-Bilanz dataset, and with a stake in a GmbH & Co. KG the company declares it in its own determination filing — the investor personally enters nothing for the IAB. That is the answer in one sentence. This article walks through the three routes in detail: lines, datasets, deadlines — and the mistakes that happen most often in practice.

Whether you qualify for the IAB under §7g EStG in the first place — profit threshold, eligible assets, access for employees — is covered in Investitionsabzugsbetrag: all §7g EStG requirements — and who can use it; what it is worth in euros is shown in the worked example in IAB under §7g EStG: example calculation for battery storage. This piece is about the final, purely procedural step: claiming it vis-à-vis the tax office.

Where is the IAB entered in the tax return?

There are three routes, and which one applies depends solely on how the business determines its profit — not on the size of the IAB. Sole proprietors and freelancers using cash-basis accounting enter it in the Anlage EÜR; balance-sheet businesses report it off-balance-sheet via the E-Bilanz; and with partnerships such as a GmbH & Co. KG, everything runs through the company's own filing. What all three routes share is the form requirement: §7g (1) sentence 2 no. 2 EStG demands that the deduction, set-off and reversal amounts be transmitted "in officially prescribed datasets by remote data transfer" — i.e. electronically, in practice via ELSTER or your tax software.

How do I enter the IAB in the Anlage EÜR (ELSTER)?

Forming the IAB belongs in the "Ermittlung des Gewinns" section of the Anlage EÜR — in the form for 2024 that is line 88 ("less investment deductions under §7g (1) EStG"); the amounts must be explained on a separate sheet for each individual asset. The later set-off in the year of investment under §7g (2) sentence 1 goes into lines 84 to 86, split by the year in which the respective IAB was formed. And the reduction amount under §7g (2) sentence 3 — the cut to the acquisition cost that lowers the depreciation base — sits not in the profit block but with the fixed assets (2024: line 35).

What matters is what the IAB is not in the EÜR: a business expense. It does not appear among the expenses and changes neither income nor costs — it is deducted from the result as a separate adjustment item after the totals. So rely on the line's label, not its number: the line numbers move with almost every assessment period (in 2022, formation was still line 101). If a formed IAB later has to be reversed — voluntarily or after the window expires — that too happens not in the current form but by filing a corrected Anlage EÜR for the original deduction year; the mechanics are described in Reversing the IAB: what happens if you don't invest — deadlines, interest, ways out.

In the investment year, the same return is also where the depreciation elections are made — special depreciation under §7g (5), declining-balance or straight-line. Which combination yields the biggest year-1 effect is compared in Sonder-AfA §7g (5) vs. declining-balance AfA §7 (2): which combination, when?.

How is the IAB booked — does it have to appear on the balance sheet?

No. The IAB is neither a balance-sheet nor a P&L item — there is no journal entry that records it. Deduction, set-off and reversal are made off-balance-sheet as adjustments to the tax profit and are transmitted to the tax office with the E-Bilanz dataset under §5b EStG. If your accounting software shows accounts for it anyway, those are statistical memo items for the reconciliation — not real bookings.

The common search misconception "booking the IAB" dates from the era of the old Ansparrücklage (savings reserve): until 2007 that really was a balance-sheet position. Its successor, §7g in its current form, deliberately works differently — purely for tax, outside both the commercial and the tax balance sheet. That the IAB operates off-balance-sheet was most recently confirmed by the Federal Fiscal Court in its judgment of 16 January 2025 (IV R 28/23) — with a pleasant consequence for limited partners: the off-balance-sheet set-off leaves the partner's tax capital account untouched. Why that matters for investors is covered in the next section.

What do I enter as an investor in a GmbH & Co. KG?

For the IAB itself: nothing. With partnerships, the company takes the place of the taxpayer for §7g purposes (§7g (7) sentence 1 EStG). The GmbH & Co. KG forms the IAB in its own profit computation and declares it in its separate and uniform determination filing — electronically, as on all three routes. The €200,000 profit threshold is likewise tested at company level, not for you as a limited partner. Since the Annual Tax Act 2020, moreover, an IAB deducted from the partnership's joint profit can only be absorbed by investments of the company itself — for a project participation, where it is the KG that acquires the storage system or PV plant anyway, that is the standard case.

Your own task is limited to the Anlage G: there, in the section "Gewinn als Mitunternehmer(in)" (profit as co-entrepreneur; lines 8 to 11 in the form for 2024), you state the participation — the company's name, its business tax office and tax number. You do not have to compute the determined profit share yourself: your residence tax office adopts it bindingly from the KG's determination notice (§182 AO), usually via direct official channels. If the share is negative thanks to IAB and depreciation, your income-tax assessment offsets it automatically against your salary and other income — that is where the refund arises which makes up the participation's tax lever.

One detail for the conversation with your tax adviser: following the Federal Fiscal Court's judgment of 16 January 2025 (IV R 28/23), the off-balance-sheet §7g mechanics do not touch the limited partner's tax capital account — how far losses are deductible under §15a EStG is additionally addressed in a properly structured participation via the design of the registered liability amount, and belongs to the structural review before closing.

Can I claim an IAB retroactively — after filing the return?

Yes — as long as the assessment for the deduction year is not yet final. The IAB is an election that can be exercised or amended until finality: after filing the return, within the one-month objection period, and during pending objection or court proceedings. In practice: if you have filed your return and only afterwards — say, through a concrete project — have reason to form an IAB, you can keep the assessment open with an objection and add the deduction, again transmitted electronically via a corrected Anlage EÜR or E-Bilanz.

The room for manoeuvre narrows sharply once the assessment is final. An IAB can still come into play when an assessment is amended for other reasons — but under §351 AO only within the scope of that amendment. And since the Annual Tax Act 2020, §7g (2) sentence 2 EStG draws a clear line: if the IAB is claimed only after the initial assessment has become unappealable, it can no longer be used for an asset that had already been acquired at that point. The once-popular move of neutralising a tax-audit adjustment with a retroactive IAB on the long-completed investment (Federal Fiscal Court, 23 March 2016, IV R 9/14) is therefore history for amounts formed today — as the tax administration confirmed in its circular of 15 June 2022.

By when do I have to claim the IAB — and when does the money arrive?

The IAB is claimed with the tax return for the deduction year — there is no separate application deadline; the regular filing deadlines of §149 AO apply. For the 2025 assessment period that means: by 31 July 2026 without a tax adviser, by 1 March 2027 with one. The Covid-era extensions have expired; from the 2025 assessment period, the regular schedule applies again.

The cash effect arrives with the assessment notice — or earlier: if the IAB is foreseeable, you can apply to the tax office for a reduction of your ongoing prepayments, so the saving takes effect before the assessment. How large the effect is at the top marginal rate is calculated in IAB under §7g EStG: example calculation for battery storage. And for your own business there is genuine timing flexibility: since the IAB may be formed up to three years before the investment, an acquisition made in 2026 can still be covered by an IAB in the — not yet filed or still open — return for 2025 or earlier years.

One widespread misunderstanding deserves a clear correction: with a KG participation, joining in 2026 does not let you recover tax for 2025. The company forms the IAB for its own financial year; your loss share arises in the year you invest and takes effect in your assessment for that year — not retroactively in earlier years. Retroactive reach into still-open prior years exists only in your own business with your own profit computation. Anyone wanting to use the lever across several years therefore plans forward — how that becomes a recurring rhythm is shown in Using the investment deduction every year: building a portfolio over multiple years.

Which filing mistakes happen most often?

• The IAB is booked as a business expense or balance-sheet item instead of an off-balance-sheet adjustment — the EÜR totals or the balance sheet then no longer add up.
• The set-off in the investment year (lines 84–86) is forgotten — the IAB formally stays open and runs into the reversal with interest, see Reversing the IAB: what happens if you don't invest — deadlines, interest, ways out.
• The set-off is entered under the wrong deduction year — the lines distinguish by the year of formation, not the year of investment.
• The reduction amount (line 35) is not reconciled with the depreciation base — special and regular depreciation then run off the wrong figure.
• Filing on paper without an approved hardship application — electronic transmission is a substantive condition, not a formality.
• As a KG investor, the IAB is mistakenly "entered" again in the personal return — it belongs exclusively in the company's determination filing; at investor level only the Anlage G counts.
• The €200,000 profit threshold is tested at partner level instead of company level — what matters is the profit of the business forming the IAB.
• The return is filed so late that the initial assessment becomes final before the IAB is added — then the bar of §7g (2) sentence 2 EStG bites.

What does this mean for your next tax return?

• Own business with cash-basis accounting: deduct the IAB in the "Ermittlung des Gewinns" section of the Anlage EÜR (2024 form: line 88), explain per asset on a separate sheet, file electronically — and in the investment year, do not forget the set-off (lines 84–86) and the reduction (line 35).
• Balance-sheet business: do not look for a journal entry — the IAB runs off-balance-sheet through the E-Bilanz; the reconciliation is your tax adviser's job.
• KG participation: enter nothing for the IAB — just complete the Anlage G with the company, its business tax office and tax number, and await the determination notice; offsetting against your salary happens automatically.
• Timing: claim the IAB with the return for the deduction year (2025 period: by 31 July 2026, or 1 March 2027 with an adviser) — and if the formation is foreseeable, apply for a reduction of your prepayments.
• Retroactively only with an open assessment: keep the objection deadline in view instead of hoping for a correction after finality.

Whether a direct investment with an IAB fits your income and tax situation — and what the process from formation to the Anlage G looks like in your specific case — is something we clarify in a no-obligation initial consultation, together with your tax adviser if you wish.