The Small-scale Investment Allowance (KIA)
There is a special tax deduction that allows you to achieve a reduction in taxes, known as the Small-scale Investment Allowance (KIA). What does this entail exactly? You are allowed to increase your costs on paper, resulting in less profit and consequently less tax to pay. If you invest significantly more than €2,600 annually or, conversely, less than €1,300, you don't need to worry about your year-end closing. However, if your annual investments fall between €1,300 and €2,600, continue reading for instructions.
To qualify for the KIA, you must have invested at least €2,600 in the past year. An expenditure is considered an investment only if it costs more than €450 and is used over multiple years, such as a laptop, camera, or printer. If you add up all expenses above €450, you must exceed the threshold of €2,600.
At the end of the year, you can assess whether you meet this threshold. If you fall just short of €2,600, it may be advantageous to make investments for the next year now. If you are certain you won’t reach it, consider making the investment in January to increase your chances of benefiting from this scheme in the next calendar year. Try to invest as much as possible in one year.
Have you made investments in December that might have been better placed in January? Consult with us for advice.
Some points to consider:
- A passenger car is not considered an investment for this scheme.
- If you have to pay VAT, all the amounts mentioned above are exclusive of VAT.
- If you are exempt from VAT or use the VAT Small Entrepreneurs’ Scheme (KOR), all the amounts mentioned above are inclusive of VAT.
- The specified amounts are specific to the fiscal year 2023. Different threshold amounts may apply to other years.