AfA for photovoltaics: straight-line, declining balance, special depreciation
A 20-year useful life, 5% straight-line per year, 30% declining balance in the booster window, plus a 40% special allowance: an overview of the depreciation routes for commercial PV systems, with the logic of when each route spreads the tax burden best.
Managing Director & CEO, NEXA Horizons · Climate Financing Platform · LinkedIn ↗For tax purposes, a commercial PV system counts as a movable asset with a standard useful life of 20 years. From this follow three routes for AfA (Absetzung für Abnutzung, the German depreciation allowance), and they differ in one point: when the tax relief arrives.
- Rate
- 5% per year
- Effect
- constant over 20 years
- Rate
- up to 30% of book value
- Effect
- relief up front, until end of 2027
- Rate
- 40% on top
- Effect
- freely spread over the first five years
Route 1: Straight-line depreciation, 5% per year
The standard: acquisition costs divided by 20 years, the same amount every year. A €300,000 system yields €15,000 of depreciation per year, reliable and plannable over the entire term. Straight-line fits when profit stays stable over the years and there is no need to pull relief forward.
Route 2: Degressive AfA, 30% of residual value (investment booster)
For acquisitions between July 1, 2025 and December 31, 2027, the investment booster permits degressive AfA (declining-balance depreciation) at up to 30% per year of the current residual book value:
| Year | Depreciation (€300,000 system) | Residual book value |
|---|---|---|
| 1 | €90,000 | €210,000 |
| 2 | €63,000 | €147,000 |
| 3 | €44,100 | €102,900 |
After a few years, switching to straight-line depreciation of the residual value pays off (permitted; the reverse is not). The declining-balance route pulls roughly half of the total depreciation into the first four years; the details are in Sonder-AfA and the 2026 investment booster.
Route 3: Sonder-AfA under § 7g Abs. 5 EStG, 40% on top
Regardless of the chosen depreciation route, businesses that meet the § 7g requirements (profit up to €200,000, 90% business use) can additionally deduct 40% of the acquisition costs reduced by the investment deduction as Sonder-AfA (a special depreciation allowance on top of regular depreciation), freely distributable over the first five years. Combined with the upstream investment deduction (Investitionsabzugsbetrag), the full toolkit emerges: up to 70% of the investment takes effect for tax purposes before regular depreciation even begins. For your own number: IAB calculator.
Which route for whom?
- High profit now, booster window open: declining balance, plus Sonder-AfA where applicable. Maximum relief up front, where the marginal tax rate is high.
- Stable profits, long horizon: straight-line. Constant relief, no planning acrobatics.
- Profit near the €200,000 threshold: sequence the steps with your tax advisor; the IAB and the Sonder-AfA depend on that threshold, the choice of depreciation route does not.
Two side notes: battery storage is depreciated separately depending on the setup (a shorter useful life is possible), and small systems under § 3 Nr. 72 EStG (up to 30 kWp on certain buildings) are not depreciated at all because their income is tax-exempt.
The bottom line
Depreciation does not decide whether the system pays off, that is what the profitability calculation does. It decides how quickly the tax savings arrive. For the project side (potential, grid connection, financing), NEXA delivers the numbers for each property: Start the analysis
This article explains general tax rules and is not tax advice. Whether and how the instruments described apply to your business is a question for your tax adviser.
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