The Investitionsabzugsbetrag (IAB) is one of the most valuable tax instruments available to dental practices in Germany. Under §7g EStG, practices can deduct up to 50% of the anticipated purchase price of planned investments — before the purchase actually happens — reducing taxable income in the year of claim.
How the IAB works in practice
If your practice plans to purchase a new digital X-ray system for €40,000 in the following two years, you can claim an IAB of up to €20,000 (50%) in the current tax year. This reduces your taxable profit by €20,000 now, deferring the tax. When the equipment is purchased, the purchase price is reduced by the IAB amount, which then reduces future depreciation.
Eligibility requirements
To claim an IAB, your practice must: be a Freiberufler (self-employed dental practice, not a GmbH), have a profit that does not exceed €200,000 in the year of claim, intend to use the planned investment in the practice (not personally), and actually purchase the investment within three years of the claim.
The most common IAB mistakes
The most frequent errors: claiming the IAB without a specific purchase plan (which creates a reversal risk with interest if no purchase happens), failing to track which purchases are linked to which IAB claims, and missing the three-year purchase deadline. A missed deadline triggers a retroactive reversal of the deduction plus 6% annual interest — a costly mistake on large claims.
A tax advisor who works regularly with dental practices will structure your IAB claims as part of an annual equipment investment plan, ensuring you maximize the benefit without any reversal risk.