Sustainable investments: tax advantages for companies are sprouting!

Sustainable investments: tax advantages for companies are sprouting!

Sustainability is increasingly becoming the focus of companies because it not only influences the company's image, but also its business success. Investments in ecological technologies and resource-saving processes are no longer an exclusive foreign policy, but are seen as the key to competitiveness. This reports Barnim Current.

The legislature promotes such sustainable investments with tax incentives, but also imposes increased reporting and verification requirements. The implementation of these measures shows that sustainability is not only an obligation in corporate strategy, but also an economic opportunity.

Tax incentives for sustainable investments

Companies can claim the investment deduction according to Section 7g EStG. This makes it possible to deduct up to 50% of the acquisition or production costs for certain movable assets to reduce profits. This requires that the investment takes place within a period of three years and is used in a domestic permanent establishment. The maximum amount for the deduction is 200,000 euros per company, which allows an investment volume of up to 400,000 euros.

In addition, declining balance depreciation will be reintroduced for movable fixed assets purchased between June 30, 2025 and January 1, 2028. Companies can claim up to 30% tax deduction, but a maximum of three times the straight-line depreciation. Particular attention is also paid to turbo depreciation for electric vehicles, which creates incentives for switching to environmentally friendly mobility.

Reporting requirements and sustainability commitments

A far-reaching set of rules concerns the Corporate Sustainability Reporting Directive (CSRD), which obliges larger companies to prepare comprehensive sustainability reports. These reports must also take into account tax-relevant aspects, such as government subsidies and CO2 pricing. Companies that employ more than 1,000 people must also comply with ecological and social standards throughout their entire supply chain, as set out in the Supply Chain Due Diligence Act. Sanctions for violations threaten not only in the form of legal consequences, but also in the form of reputational damage.

In a broader context, reference is made to the development of the plastic packaging tax implemented in Great Britain and Spain. This tax affects not only food packaging, but all areas of business. The introduction by the respective countries poses challenges for companies, especially when it comes to obtaining data for tax calculations. Companies need to be aware that they also face carbon and greenhouse gas pricing.

Another important aspect is tax transparency and compliance with regard to sustainability. Recommendations on this are supported by the OECD Guidelines for Multinational Enterprises and the G20/OECD Principles of Corporate Governance. These ensure that companies act responsibly in their tax obligations.

The public is showing increasing interest in the tax burden of companies and their contribution to financing the community. To meet this need, the GRI 207 standard for tax transparency reporting has been in effect since January 1, 2021, which requires detailed information on tax concepts and governance.

In order to fully exploit the advantages of sustainable business, it is recommended to work closely with tax advisors and sustainability experts. This enables optimal tax structuring and securing competitive advantages in a rapidly changing economic landscape, as shown by the findings of EY emerges.