IAB 2023: Invest by 31 December 2026 – here’s how to make it work

Anyone who claimed an investment allowance (IAB) in 2023 had three years in which to make the investment. This deadline is now coming to an end: by 31 December 2026 The asset must have been purchased and be ready for use. Many people claimed the IAB 2023 on their tax returns and then put the project on the back burner. Now time is running out – more so than most people realise.

Basics: I explain in detail how the IAB works in the article The Investment Allowance (IAB) explained simply.

When is the deadline for investing in the IAB 2023?

The investment must be made by the end of the third financial year following the deduction. In the case of an IAB from 2023, for most businesses this means 31 December 2026. If your financial year differs, the deadline will be extended accordingly.

The date of purchase is crucial. Placing an order or making a deposit is not sufficient. The asset must be in your possession by the end of the year delivered and ready for use be. Furthermore, the investment in the same company take place, for which you set up the IAB.

The good news is that, since 2020, you no longer have to specify a particular asset. Any movable, depreciable asset that fits into your business is eligible. So you’re not tied to the project you had in mind back in 2023.

Why you only have 4 to 5 weeks left

Admittedly, there are still a good two months to go until the end of the year. However, an IAB project requires lead time: contracts, funding, delivery, installation and final acceptance. On top of that, there are public holidays and full order books in December. With most suppliers, therefore, your decision must until around mid-November must be finalised so that the plant can be up and running by 2026. Anyone who only makes an enquiry in December will usually be too late.

What happens if you don’t invest?

In that case, the IAB will be revoked with retroactive effect in 2023. The tax office will amend your 2023 tax assessment and claim back the tax you saved. On top of this, there will be interest on arrears at a rate of 0.15 per cent per month. This interest does not start to accrue from the date of revocation, but has been accruing since 2025.

An example: A single entrepreneur had a taxable income of €300,000 in 2023 and had set aside an IAB of €100,000 for a planned investment of €200,000.

• Income tax for 2023 excluding IAB: around €116,700
• Income tax for 2023 with IAB: around €74,000
• Threat of an additional tax payment: around €42,700, or around €45,000 including the solidarity surcharge – plus interest

Calculated on the basis of the 2023 standard rate, excluding church tax.

You can see how much is at stake based on your income using my IAB Calculator.

What else the 2026 investment will bring you

If you invest in good time, you will retain the tax benefit from 2023. Upon acquisition, the IAB will be added to the profit for 2026 and, at the same time, deducted from the acquisition costs – the two amounts cancel each other out.

In addition, you can claim special depreciation under Section 7g(5) of the Income Tax Act (EStG) for the new asset: up to 40 per cent over the first five years, in addition to the standard depreciation. And for future projects, you can already set up a new IAB for 2026.

The IAB defers part of the tax to later years. Anyone who continues to have a high taxable income can make use of the IAB several times in future, thereby permanently reducing their taxable income.

Here’s what you need to do now

• Check IAB: Take a look at your 2023 tax return: How much is the IAB, and for which business was it calculated?
• Involve a tax adviser: Find out which investment is suitable for this business and how much is still outstanding.
• Select a project: Make sure that it remains financially viable even without tax relief. Projects outside the electricity market, such as a Compost bin, spread the risk.
• Book your appointment: Make sure you receive written confirmation of the delivery and commissioning dates before 31 December 2026. For solar PV systems, the grid connection may be delayed – be sure to ask specifically about this.
• Collecting receipts: Keep the invoice, delivery note and acceptance or commissioning report, ensuring they are dated.

Frequently asked questions about the IAB 2023

When is the deadline for investing in an IAB 2023? Until 31 December 2026, provided your financial year corresponds to the calendar year.

Is placing an order or making a deposit by the end of the year sufficient? No. The asset must be delivered and ready for use by 31 December 2026.

Do I have to buy exactly the asset I had planned to buy in 2023? No. Since 2020, any eligible movable asset may be held within the same business.

What happens if I invest less than planned? The IAB may cover no more than 50 per cent of the actual investment. The remainder will be waived with retroactive effect for 2023.

How much will it cost if I miss the deadline? The tax that was evaded will be reclaimed, plus interest at 1.8 per cent per annum.

Can I invest in another business? No. The investment must be made in the business for which the IAB was set up.

Conclusion

The deadline for the IAB 2023 is fast approaching. Anyone who does not invest by the end of 2026 will have to pay the 2023 tax, plus interest. Those who decide now will secure this benefit and can even enhance it through the special depreciation allowance and a new IAB.

I’ll guide you through the process, from assessing your personal situation right through to making a decision and putting it into action. To this end, I’ll put you in touch with selected partners. The tax assessment should be left to your tax adviser. If you have an outstanding IAB 2023, Book an appointment now – before the providers stop accepting projects for this year.

This article is for general information purposes only and does not constitute tax or legal advice. Last updated: October 2026.