Definition
The investment allowance (Investitionsfreibetrag, § 11 EStG) is an additional business-expense deduction for acquiring or producing depreciable fixed assets. It reduces taxable profit without reducing depreciation: the asset is still written off in the normal way, and the allowance comes on top.
Rates and ceiling
The rate is 20 % of the acquisition cost, or 22 % for ecological assets under § 11 Abs 2. The € 1.000.000 limit applies to the assessment base per financial year, not to the allowance itself — so € 1.000.000 of acquisitions yields up to € 200.000 of deduction. Both rates share that single ceiling.
Not alongside the profit allowance
§ 11 Abs 4 rules out the investment allowance for any asset already carrying the investment-based profit allowance. So each asset takes one or the other, never both. The allowance is also unavailable under any flat-rate profit calculation, such as Basispauschalierung.