How to legally pay less tax on digital investments in Germany: write-offs, deductions and grants

What this overview covers

The rules below concern German income and corporate tax for businesses that determine their profit by balance sheet or by cash-basis accounting. VAT on purchases is a separate topic: if you can deduct input VAT, the net price is what counts for the limits mentioned here. Rules change, so check the current status before every larger investment.

Computers and software: written off in one year

Since the 2021 tax year, the Federal Ministry of Finance has allowed a useful life of one year for computer hardware and software. Notebooks, desktop PCs, tablets, printers and other peripherals, as well as operating and application software including ERP and CRM software, can therefore be depreciated in full in the year of purchase.

This is an option, not an obligation. If you expect higher profits in later years, a longer depreciation period can sometimes be more favourable. Your tax adviser can calculate both variants.

Low-value assets up to €800

Movable assets that can be used on their own and cost no more than €800 net can be deducted in full in the year of purchase (§ 6(2) EStG). Examples include a card terminal, a printer or kitchen equipment below this limit. Keep the invoice and a short note on what the item is used for.

Planning larger purchases: investment deduction and depreciation

With the investment deduction under § 7g EStG, businesses with a profit of up to €200,000 can deduct up to 50% of the expected cost of a planned movable asset up to three years before buying it, up to €200,000 in total. The asset must be used at least 90% for business. This suits planned purchases such as kitchen equipment, a delivery vehicle or server hardware.

For movable assets bought between 1 July 2025 and 31 December 2027, declining-balance depreciation is available again, at up to three times the straight-line rate and no more than 30% a year. It moves depreciation into the first years after the purchase.

Websites, subscriptions and services

Running costs are usually deductible business expenses in the year they arise: hosting, software subscriptions, maintenance contracts, advertising, consulting and training. Ask for invoices that list services separately, so each item can be classified correctly.

A newly developed website is less clear-cut: depending on its scope, it can be an immediately deductible expense or an intangible asset depreciated over several years. Agree the classification with your tax adviser before the project starts.

Grants come before tax savings

A grant reduces the cost directly; a deduction only reduces the tax on it. Check funding programmes such as Bavaria's Digitalbonus or the BAFA consulting grant before you sign a contract, because most programmes exclude projects that have already started.