Increased capital allowances on “green” investments

Accelerated capital allowances and other amendments to incentivize businesses towards expenditure to improve energy efficiency and cut costs.



The House of Representatives has recently approved amendments to the Income Tax Law, providing accelerated capital allowances as an incentive for companies and sole traders that incurred capital expenditure to improve their energy efficiency and reduce their operational costs.

The amendments are the following:

  • For capital expenditure incurred during the years 2023-2026 to improve the energy efficiency of a building, accelerated capital allowances will be granted at the rate of 7% (instead of 3%).
  • For investment in machinery and equipment connected to renewable energy systems and/or for investments in other technical systems to improve energy efficiency incurred during the years 2023-2026, accelerated capital allowances will be granted at the rate of 20% (instead of 10%).
  • For investment incurred during 2023-2026 for new commercial electric vehicles (i.e. vans), taxis and buses, accelerated capital allowances will be granted at the rate of 33,3% (instead of 20%). Installation of charging stations for electric vehicles also qualifies as an eligible expenditure in this respect.

Furthermore, the costs incurred to conduct a study to upgrade/improve the energy efficiency of a building used by the business or for the issuance of an energy saving certificate will be tax deductible, subject to conditions (i.e. to be conducted by an approved professional).

The companies and sole traders that are eligible to deduct capital allowances using the increased rates outlined above can opt not to apply the increased rates if they wish not to do so.

These amendments are applicable as of 1 January 2023 onwards.

PGE&Co remains at your disposal for any clarifications and for further assistance that might be needed on this or on any other matter.

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