Saving tax as a freelancer or self-employed professional: the §7g lever alongside your own practice

Self-employed professionals in a good year know the effect: the profit from the cash-basis accounts lands in the income tax assessment with nothing to cushion it, and the advance payments set for the following year are based on the best year, not the next one. The usual advice, more business expenses, a company car, a Rürup pension, is quickly exhausted at this income level. The investment deduction (Investitionsabzugsbetrag, IAB) under §7g EStG is equally available to freelancers and commercial traders; what is usually missing inside their own business is an asset worth using it on. How an energy direct investment fills that gap, in order.

Why does progression hit the self-employed harder than employees?

Because nothing sits between profit and tax. An employee has wage tax withheld monthly, the employer carries half of the social contributions, and pension commitments or salary conversion reduce taxable income without any action on the employee's part. A self-employed professional pays tax on the profit from independent work (§18 EStG) or from a trade in full and personally in the year it arises: from roughly €68,000 of taxable income the top rate of 42 % applies, from roughly €278,000 the 45 % rate, each plus solidarity surcharge; at the top, around 47.5 %. Health and pension provision is paid entirely out of their own pocket, from already-taxed money once the deduction caps are exceeded.

The largest pension lever for the self-employed without a professional pension scheme is the Rürup (basic) pension: in 2026, contributions are deductible as special expenses up to €30,826 (single) or €61,652 (joint assessment) (§10 para. 3 EStG). That is a lot, but capped, and the capital is locked until retirement. Business expenses only work if they are genuinely business-related; a laptop or an office lowers the tax bill but creates no structuring room on the scale of a six-figure profit. Where the remaining levers for high earners rank by effect is covered in Legally reducing your tax: the most effective strategies. What remains is the lever with the largest single effect: §7g EStG.

Can't I simply form the IAB in my own business?

You may, but it rarely achieves much. The investment deduction is open to any business with a profit of at most €200,000 in the year of formation, and unlike many owners of larger companies, a solo professional's profit is often below that line. The hurdle is a different one: the IAB may only be formed for movable assets that are used exclusively or almost exclusively for business purposes in a domestic permanent establishment of that business (§7g para. 1 sentence 1 EStG). A consulting or development business does not need six-figure capital goods; computers, office equipment and a vehicle come nowhere near exhausting the allowance of 50 % of acquisition cost. The IAB is open to that business, but has no object.

Nor can a photovoltaic plant or battery storage system simply be bought into the freelance business. Operating an energy plant that sells electricity to third parties is a commercial activity and does not belong to freelance business assets; it would be a business of its own even if the same person runs both. That is precisely the route: the energy direct investment is held as a separate, newly founded commercial business. This business has an asset the IAB is designed for, its own profit cap with no legacy profits, and its losses from the IAB, special depreciation and declining-balance depreciation are offset in the same year against the freelance profit at your personal top rate. All requirements are covered in Investitionsabzugsbetrag: all §7g EStG requirements, and who can use it; the full mechanics with figures are shown in IAB under §7g EStG: example calculation for battery storage.

Freelance and commercial side by side: does it taint?

For individual freelancers, no. Commercial tainting under §15 para. 3 no. 1 EStG concerns partnerships: if a freelance GbR or partnership company carries on even a minor commercial activity, its entire activity is deemed commercial. A natural person, by contrast, can run a freelance business and a commercial business side by side, as long as both are factually separable and accounted for separately; the freelance income remains freelance and free of trade tax. Anyone working in a partnership, an office-sharing arrangement with pooled profits or a partnership company therefore holds the direct investment personally and never through the partnership; the mechanics are shown in Saving tax as a physician or dentist: the §7g lever alongside the practice using a group practice and in Saving tax as a lawyer or law-firm partner: the §7g lever alongside the firm using a law firm.

When does the money arrive? Lowering advance payments instead of waiting for the assessment

Here the self-employed have an advantage that employees do not have in this form. Anyone paying income tax through advance payments pays quarterly on 10 March, 10 June, 10 September and 10 December (§37 para. 1 EStG), based on the last assessment. On application, the tax office can adjust these advance payments to the tax expected for the current year (§37 para. 3 sentence 3 EStG). Once it is clear that you will form an IAB this year, the expected loss of the investment business can be included in that application; the relief then arrives as a lower or suspended advance payment in the same year, not as a refund after the assessment in the following year.

The adjustment is at the tax office's discretion; it may ask you to substantiate the intention to invest. In practice, a reservation or subscription confirmation, the financing commitment and a short description of which asset will be acquired when are what helps. With an advance payment due in December, the application is worthwhile even late in the year; the adjustment is possible up to 15 months after the end of the assessment period, including retroactively. If the IAB is later not backed by an investment, it is reversed and the tax is reclaimed with interest; the consequences are described in Reversing the IAB: what happens if you don't invest, deadlines, interest, ways out. Where the IAB then goes in the tax return and how advance payment and assessment interlock is shown in The IAB in your German tax return: where and how to actually claim it.

What changes for VAT, trade registration and bookkeeping?

For VAT, less than many expect, but differently from what the guides for rooftop systems suggest. For VAT purposes you are a single taxable person: the enterprise comprises the entirety of the entrepreneur's commercial and professional activity (§2 para. 1 UStG). A freelancer who charges VAT on their fees cannot elect a separate small-business exemption for the energy business; the plant simply runs inside their existing enterprise. That is an advantage: the 19 % VAT on the plant's purchase price is reclaimed as input tax in the usual advance VAT return, and the electricity revenue is invoiced like the fees. The details, from the 0 % rate that does not apply here to the input tax adjustment under §15a UStG, are explained in VAT on PV and storage direct investments: why 19% is charged here, and how it flows back. Only those who render exclusively VAT-exempt services, for instance in the medical professions, need to set up the VAT side separately.

For trade tax, the freelance activity stays out of scope. Only the investment business is commercial; it benefits from the allowance of €24,500 (§11 para. 1 GewStG), and anything above that is largely credited against income tax under §35 EStG; in the early years, when depreciation pushes down the business's profit, none arises anyway. Trade registration with the municipality and the associated membership of the chamber of commerce come on top; both are formalities and are organised with the subscription. The full trade tax calculation, from the loss years to the multiplier question, is shown in Trade tax on PV and storage direct investments: how much of it actually sticks.

For bookkeeping, it remains cash-basis accounting (EÜR), just twice: one EÜR schedule for the freelance business, whose result flows into schedule S, and a second EÜR schedule for the investment business, whose result goes into schedule G. Both profit calculations stay strictly separate; shared bank accounts or mixed receipts are the most common trigger for queries. The reporting for the second EÜR is supplied by the plant's asset management, and your tax advisor takes over the figures. The direct investment therefore costs time mainly in the decision phase; the path to closing is shown in From first enquiry to closing: how a direct investment works step by step, and what happens afterwards over the holding period is described in What happens after closing: reporting, asset management and why a partner is not a broker.

What does it deliver in tax terms? The worked example

Starting point: a self-employed IT consultant with taxable income of €200,000 in the top bracket (44.3 % including solidarity surcharge, excluding church tax). She invests €300,000 in an energy direct investment that acquires a utility-scale battery storage system; the IAB is formed in the year before acquisition, special depreciation and declining-balance depreciation apply in the year of acquisition:

A good 40 % of the investment volume comes back as tax relief in the first year in this constellation; the individual items and the pitfalls behind them are broken down in IAB under §7g EStG: example calculation for battery storage. For the self-employed, timing matters: through adjusted advance payments, the IAB portion already takes effect in the year of formation, that is, before the equity is even called. Since energy projects are typically 60 to 75 % debt-financed at the plant level, the actual equity outlay is also far below the nominal amount; how tax refund and project financing net out is shown in How much equity is actually required?. Whether special and declining-balance depreciation are taken in full in year one or spread out is covered in Sonder-AfA §7g (5) vs. declining-balance AfA §7 (2): which combination, when?. All variants presuppose a business the tax office recognises as a genuine commercial operation; what that depends on is shown in Liebhaberei and profit intention: when the tax office cancels the tax lever.

What applies to freelancers with a GmbH, commercial consultants and married couples?

Anyone running their practice through a UG or GmbH faces the same question as every owner-manager: invest privately and let the IAB work against up to 47.5 % on salary and bonus, or through the company against around 30 % corporate and trade tax. Those who draw a salary in the top bracket and have private liquidity are usually better off privately; the full comparison is in Invest through your GmbH or privately? The honest tax comparison, and the business-owner perspective with the profit cap in the operating company is in Saving tax as a business owner or managing director: the §7g lever alongside your company.

Whether your own activity is classified as freelance or commercial, which for consultants, software developers without a university degree or sales agents is often the latter, changes nothing about the mechanics: you then have two commercial businesses side by side, each with its own profit calculation, its own trade tax allowance and its own §7g cap; the tainting question does not even arise. And for married couples under joint assessment, the investment business's loss works against the joint taxable income, including the employed partner's salary; what the lever looks like from the employee's side is shown in Saving tax as a high-earning employee: the §7g lever alongside your salary.

How does this fit with fluctuating project years?

Well, because the IAB can be dosed afresh each year and does not have to be formed in the investment year itself. Project business fluctuates: a large contract, a year with three clients instead of one, then a lull. The IAB can be formed in a strong year and backed by the acquisition within the three following years; in a weak year, simply no new one is formed. Repeating this over several years gradually builds a portfolio of several plants; the strategy is described in Using the investment deduction every year: building a portfolio over multiple years. What remains essential is discipline: an IAB formed without a subsequent investment is reversed retroactively, with interest. Anyone who assesses their order book realistically therefore forms the IAB only once the project and the financing are in place.

Whether the structure fits your situation depends on income, legal form and liquidity, and on a project that stands on its own without the tax effect. That is exactly what we examine in a no-obligation initial consultation: tax effect, advance-payment timing, effective equity outlay and project risk, worked through on your numbers and in coordination with your tax advisor. We give no return guarantees.