The Enhanced Investment Deduction An Underutilized Opportunity
Though it has long been part of the tax code, the Enhanced Investment Deduction (EID) remains relatively unknown to many businesses. This “super-deduction” plays a vital role for companies looking to fund innovative initiatives. Starting January 1, 2025, benefit from a significant advantage with a deduction of up to 40% on your investments.
Unlock Additional Value:
The EID provides an extra deduction for targeted investments in patents, environmentally neutral or positive R&D, and energy savings. It also covers niches such as zero-emission trucks, cybersecurity, and the digitalization of payments and invoicing.
It complements existing fiscal incentives for research and innovation, such as the well-known payroll withholding tax exemption for research personnel and the innovation income deduction.
Don’t Miss the March 31, 2025 Deadline
While awaiting the arrival of the new EID regime, mark your calendars for March 31, 2025—your final opportunity to optimize your fiscal year 2025.
You have three months from the close of the fiscal year during which the assets were acquired or created to submit your application for certification of eligible 2024 investments to the appropriate regional authorities.
Boosting Green Investments with the EID in 2025
The reform of the EID, applicable to investments made from January 1, 2025, aims to accelerate the transition to a sustainable economy. It goes beyond “simple” energy-saving investments, expanding eligibility to four categories of green investments:
- Energy efficiency and renewable energy,
- Zero-emission transport,
- Reduction of environmental footprint (e.g., decreasing raw material consumption and waste production, product reuse and recycling, decarbonizing industrial processes, greening industrial sites) (new), and
- Digital investments dedicated to reducing environmental impact (new).
These high-value environmental investments will see their enhanced deduction increase to 40% for self-employed individuals and SMEs, and to 30% for large companies. This translates to a net saving of 10% and 7.5%, respectively, on fixed asset values.
Under the new EID regime, the technological deduction for R&D and patent investments will be subject to a single rate of 13.5%. Spreading the deduction across multiple fiscal years will still be possible, at an annual rate of 20.5%.
Don’t let this opportunity slip away! By reading our white paper, discover what the EID and our services can offer you.
For answers to your questions, feel free to contact our experts!
