Save your severance pay with photovoltaics: Here's how!

Hamburg, date: Many companies are currently cutting staff and paying generous severance packages. Employees at management level are particularly affected - for example at SAP, Volkswagen, Miele, Bosch, EON and Wintershall DEA. Severance payments are fully taxed in Germany, unlike in other EU countries. However, there are ways to significantly reduce the tax burden: a photovoltaic investment can help. This article clarifies the 10 most important questions on the subject.

1. how do I benefit from the investment deduction?

The investment deduction amount (IAB) allows you to deduct up to 50% of a business photovoltaic investment from your taxable income before the purchase. This allows you to significantly reduce your tax burden in the year of settlement - in some cases even to such an extent that the settlement remains completely tax-free. Prerequisite: The PV system is actually purchased within three years.

Example: Sarah S. receives a large severance payment in year 1. In order to minimize her tax burden, she plans to invest 250,000 euros in a company photovoltaic system. She immediately deducts 50% of this as IAB. In the second year, she buys the PV system and additionally deducts a special depreciation allowance of 40% and a straight-line depreciation allowance of 5% on the system value after IAB.

Year 1

Settlement payment

Year 2

Acquisition and commissioning of the PV system

DepreciationIAB: € 125,000

Special depreciation: € 50,000

Straight-line depreciation: € 6,250

Effect on taxable income- € 125,000- € 56,250

In the example, the combination of IAB, special depreciation and scheduled depreciation means that at the end of the second year, €125,000 + €50,000 + €6,250 = €181,250 (= 72.5% of the investment costs) has already been written off against tax!

2. which rules apply to the special depreciation allowance (SAB)?

In addition to the early IAB depreciation, you can deduct a total of 40% of the remaining residual value as special depreciation for tax purposes in the year of acquisition and in the following four years. For example, you can write off 30% of the residual value in the first year and 2.5% in each of the following four years. You can also write off the investment evenly over 20 years using straight-line depreciation. Good news: The tax-saving combination of IAB, special depreciation and straight-line depreciation applies to both new and "used" PV systems that are already in operation at the time of purchase.

3 Which time frame is relevant for the IAB?

You can claim the IAB for tax purposes up to three years before the year in which you actually purchase the PV system. The date of acquisition is the date on which ownership is transferred to you according to the purchase contract - usually when the purchase price has been paid in full. However, PV purchase contracts may also stipulate that ownership is not transferred until the system has been fully installed and commissioned. If land or real estate is involved, ownership is transferred by notarization and entry in the land register.

4. what income does my photovoltaic investment generate?

The electricity generated by your company PV system is fed into the public grid and marketed by the service company. Should the electricity price achievable on the market ever fall below the feed-in tariff guaranteed by law for 20 years, the state will reimburse the difference as part of the so-called market premium. This means you benefit from a fixed minimum income that you can count on at all times. This regulation offers planning security for your long-term financial decisions.

5 How does the purchase process work?

Are you looking for a suitable PV project to reduce the taxation of your severance payment? The first step is to get an overview of which PV investments are currently available on the market. Then you need to carefully evaluate the technical information, contracts and approvals for the projects in question. Only then can you make an informed purchase decision. The support of experienced advisors is crucial here - Hansetrust business consultants are on hand to provide you with expert advice and help you find the right PV investment.

6. what information do I get in the "data room" of a PV project?

In order to make an informed decision about a PV investment, you need a lot of information - such as the size and output of the system, the permits granted, the terms of the purchase agreement, the financing structure, the date of commissioning and much more. You can find the necessary technical, legal and financial documents for the PV project in the so-called data room, which you can access online as a prospective buyer.

7. what legal form is required for the PV investment?

The high investment deduction amount (IAB) and the special depreciation allowance (SAB) only apply to business investments, which is why you must formally establish a taxable business. This is also possible for employees. The legal form does not matter: you can operate the PV system as a sole proprietor or, for example, with a GmbH, UG or KG. In the case of a sole proprietorship, you only need to register a business, which can also be done after the purchase.

8. will my PV investment cause administrative costs?

Your PV system is delivered turnkey and includes all the necessary contracts. You acquire a specific share in a professional PV project, which has its own meter and inverter and becomes your personal property upon purchase. An experienced service company takes care of your system throughout the entire term, including marketing the electricity generated, maintenance, monitoring, insurance, monthly payments and annual invoicing. This makes your PV investment an attractive combination of tax benefits and stable returns, with minimal administrative effort for you.

9. does external financing make sense?

A significant part of the PV investment is already financed by the tax savings. Debt financing of the remaining investment amount can also make sense, as the interest on the loan is deductible, which further reduces the tax burden. External financing also protects your liquidity. In order to determine the best financing strategy, an individual analysis of the tax and interest effects is required in each case - make use of expert tax advice here.

10. how does Hansetrust support my PV investment?

Hansetrust supports you at all times if you want to invest in photovoltaics in a tax-optimized way. We have access to numerous current PV investments and will find solutions that best suit your needs. Thanks to a network of experienced project providers with a proven track record built up over many years, we have access to a wide range of high-quality projects. As an experienced business consultancy in the field of alternative investments, we attach great importance to personal service and tailor-made strategies. Marco Busacker, Managing Director of Hansetrust, emphasizes: "Over the years, we have built up extensive expertise in the optimization of investments. This enables us to offer our clients not only profitable investments, but also truly effective tax solutions."

Find out more at Hansetrust
Your reliable specialist for tax-optimized direct photovoltaic investments with IAB

HANSETRUST
Sachwertanlagen und Investmentvermögen
Schaarsteinwegsbrücke 2
20459 Hamburg
Germany
Tel 040 688 743 48
Fax 040 688 743 67
Mail post@hansetrust.de

About Hansetrust
Your reliable specialist for tax-optimized photovoltaic direct investments with IAB
The name Hansetrust - Sachwertanlagen und Investmentvermögen - has stood for Hanseatic action, integrity and professionalism for over 15 years. As an independent specialist, we are successfully active in the market for direct solar investments and have an established network of PVA providers. When selecting our project partners, we focus on reliability, years of experience and a positive track record. Professional planning, conservative parameters in the profitability forecast and the quality of the components used, such as inverters, modules and transformers, have a decisive influence on the security and yield of a photovoltaic investment. The core of our activities is providing individual advice to private and institutional investors.