How the 30% Super Depreciation Boosts Hardware Startups in the B2B Sector

The new 30% super depreciation could give hardware startups in the B2B sector a decisive advantage. Between 2025 and 2027, companies can immediately claim 30% of their investment costs for machinery, hardware, and digital infrastructure as tax deductions. This reduces the initial burden and increases liquidity—for both startups and their customers.

Key points at a glance:

• Tax benefit: 30% of the costs for eligible assets can be written off directly in the year of acquisition.
• Goal: Promote investment in modern technologies and digital infrastructure.
• Customer advantage: Companies save on taxes and can modernize their technical infrastructure more quickly.
• Funding period: 2025–2027, with additional tax cuts through 2032.

Startups can leverage this regulation to position their products more attractively, offer financing solutions, and develop new growth strategies. Now is the right time to educate customers about these benefits and position yourself strategically.

Current Challenges for Hardware Startups: Investment Barriers in B2B Markets

Hardware startups face major challenges in the B2B market. One of the main reasons for their failure is insufficient demand validation—an astonishing 57% of these startups fail for exactly this reason. Paul Graham summed it up back in 2012:

"Investors have a deep-seated bias against hardware".

This statement highlights that hardware companies are often perceived as less scalable than software solutions. Such structural disadvantages make it difficult for even technologically advanced startups to establish themselves in the market. In addition to the lack of demand validation, high investment costs are a central hurdle.

High Upfront Costs for Business Customers

Unlike software, which can often be tested for just a few hundred euros per month, hardware typically requires investments in the five- to six-figure range. This poses a problem, especially when potential customers already have long-term contracts with established providers or simply lack the necessary budget for larger capital expenditures. For mid-sized manufacturing companies, acquisition costs are often accompanied by follow-up expenses that further increase total spending.

Hardware startups also face significant financial burdens from research, development, and material costs. These factors drive up the final price of their products. In addition, long development cycles and regulatory requirements—such as safety certifications—increase both costs and time to market.

Challenges Due to Traditional Depreciation Rules

Another stumbling block is traditional depreciation rules, which make investments in new technologies even more difficult. Companies can often only claim their expenses for tax purposes over several years, leading to acute liquidity shortages in the year of acquisition. Riley Adams, a licensed CPA and Senior Financial Analyst at Google, explains:

"Fixed-asset accounting is about understanding how to properly account for the investments you make as a business and about understanding what would count as a capitalized cost".

Especially the straight-line depreciation method, where costs are spread over a long period, significantly slows down refinancing. These financial conditions lead many companies to postpone or even forgo necessary investments. The result: extended sales cycles and hesitant purchasing decisions from potential customers.

How the 30% Super Depreciation Works

The new super depreciation brings a breath of fresh air to the tax landscape and is specifically aimed at hardware startups. Developed by the Federal Ministry of Finance, this measure is part of a larger tax package designed to encourage investment.

How It Works and Requirements

With the super depreciation, companies can claim 30% of investment costs per year over three years for tax purposes. It applies to machinery, hardware, and digital infrastructure. Thanks to the Growth Opportunities Act, companies can apply this rule retroactively and increase their previous depreciation limits. The special depreciation increases from 20% to 40% and can be combined with declining-balance depreciation, which is capped at a maximum of 20% of the acquisition cost or residual book value.

This new depreciation structure creates a favorable environment for investment and provides companies with direct relief. The tax and liquidity benefits resulting from this will be examined in more detail in the next section.

Financial Benefits for Companies

According to the Ministry of Finance, the new depreciation rules could lead to tax revenue losses of around €2.5 billion by 2025—rising to €12 billion by 2028. For hardware startups, this means their B2B customers will gain a significant liquidity advantage, as they can claim a large portion of their investment costs for tax purposes in the first year. This not only provides financial relief but also a competitive edge for companies investing in hardware.

The Growth Opportunities Act aims to strengthen company liquidity and stimulate investment. Overall, tax reliefs worth billions are planned.

Qualification Criteria and Timeline

The super depreciation applies between 2025 and 2027 and is part of a comprehensive €46 billion tax package effective from 2025 to 2029. The goal is to stimulate the German economy after a 0.2% GDP decline in the previous year. All companies investing in movable assets such as machinery, hardware, or digital infrastructure are eligible.

The Ministry of Finance emphasizes the international significance of these measures:

"Starting from 2032, the total tax burden on companies will be slightly less than 25% instead of the current 30%. This is an important signal at the international level for Germany as a place to do business."
– Federal Ministry of Finance

In addition to the super depreciation, the federal government plans a gradual reduction of the corporate tax rate. Starting in 2028, this will be reduced by one percentage point per year, from 15% to ultimately 10% in 2032. The combination of immediate depreciation benefits and long-term tax cuts creates an environment that hardware startups can specifically leverage to strengthen their competitiveness.

Growth Opportunities for Hardware Startups

The 30% super depreciation offers hardware startups exciting opportunities to realign their growth strategies and benefit from increased investment willingness among their B2B customers. With these tax advantages, startups can accelerate market entry and open up new avenues for growth.

Position Products as Tax-Advantaged Investments

Hardware startups should actively incorporate the tax benefits of the 30% super depreciation into their sales strategies. Instead of focusing solely on technical details, they can highlight the amortization advantage for their B2B customers. These customers can claim a large part of the acquisition costs directly for tax purposes, significantly increasing product appeal.

To illustrate this, startups could offer tax calculators or ROI tools that show potential customers their individual savings. In addition, they can create informational materials highlighting both the technical and tax advantages of their products. Such approaches can also be used in consulting sessions to help customers optimally plan their expenditures. This not only builds trust but also simplifies the sales process.

Offer Financing and Leasing Solutions

Despite the tax advantages, the high upfront costs of hardware products often remain a challenge. Here, specially tailored financing solutions such as venture leasing can help. The physical assets serve as collateral, reducing risk for both parties. Especially since hardware startups often have a significantly higher cash burn rate, such models provide valuable support.

Another approach is operating lease models, where customers can fully deduct lease payments as operating expenses. This is particularly relevant as global financing fell by 63% in February 2023 compared to the previous year. Flexible financing options not only preserve customer liquidity but also make market access easier for startups.

Target High-Growth Industries

Focusing on high-growth industries can be crucial for success. The federal government’s €46 billion tax package particularly targets manufacturing, the automotive industry, and the technology sector. In the field of electromobility, raising the price cap for eligible electric vehicles from €70,000 to €100,000 creates new opportunities, especially in the used EV market. Startups developing technologies such as charging infrastructure or batteries can benefit here.

The manufacturing industry also offers enormous potential, as companies are under pressure to modernize—especially with average GDP growth of just 0.8% since 2020. Startups driving automation and digitalization in production processes can position themselves as key partners. They also benefit from increased R&D subsidies: up to €3.5 million annually for SMEs and €2.5 million for large companies. Combined with depreciation benefits, this creates a supportive environment for innovative hardware solutions.

Planning Beyond 2027: Business Strategy After the Funding Period

With the expiration of the 30% super depreciation after 2027, companies face the challenge of realigning their strategies to continue growing sustainably. Forecasts predict that the German IT market will reach a volume of $30.34 billion by 2027 and continue to grow at an annual rate of 4.12%. This positive outlook provides a solid foundation for long-term planning. Below are strategies companies can use to ensure stability and prepare for future conditions.

Ensure Long-Term Business Stability

To remain competitive even without tax incentives, hardware startups must further develop their business models. A promising approach is the Hardware-as-a-Service (HaaS) model, which could generate revenues of $295.7 million by 2027—with an impressive annual growth rate of 18.2%. Successful real-world examples show that this model offers significant potential.

Diversifying revenue streams is another key to stability. Startups should explore various funding avenues, including crowdfunding, government funding programs, and strategic partnerships. Focusing on forward-looking technologies such as quantum computing—which is expected to reach a market size of $125 billion by 2030—also opens up new opportunities.

In addition to financial stability, building strong customer relationships is essential. Companies must stand out from the competition through technological excellence and outstanding service. Transparent communication with employees and investors strengthens trust and forms the basis for long-term cooperation. At the same time, flexibility remains crucial to respond to political and economic changes.

Flexibility Amid Political Changes

With the end of tax incentives, the ability to dynamically adapt business models becomes a decisive competitive advantage. Startups should design their models so they can expand product lines, enter new markets, or flexibly adjust prices. This is supported by government measures such as the promotion of AI competence centers and the simplification of immigration laws to attract IT professionals—trends likely to remain relevant beyond 2027.

Efficient cash flow management and building liquidity reserves help cushion financial shocks. At the same time, cost reductions should be targeted by cutting non-essential expenses while retaining critical know-how and key positions. The possible expiration of the Tax Cuts and Jobs Act (TCJA) in 2025 could also affect R&D tax credits, highlighting the importance of legislative developments for research and development investments.

Investing in future technologies is another building block for long-term success. In 2023 alone, quantum computing startups worldwide received over $2.35 billion in funding, while government grants for quantum technology exceeded $30 billion. Emerging fields such as quantum cybersecurity could reach a market value of $15 billion by 2030, while quantum cloud computing services could generate more than $10 billion annually.

Startups should also closely monitor current financial trends and identify potential challenges early. A diversified revenue structure and reduced dependence on the US market provide the flexibility needed to remain successful even after 2027. This strategic orientation lays the foundation for sustainable growth in a changing economic and political landscape.

Action Steps for Hardware Startups

After learning about the funding opportunities, it’s time to plan concrete actions. The 30% super depreciation offers hardware startups an excellent opportunity to strengthen their market position and drive growth. The key is to take a targeted approach to fully exploit the potential of this incentive. Here are three approaches that can help: educating your customers, adapting your products, and building strategic partnerships.

Inform Customers About Tax Benefits

Many companies are unaware that they can benefit from the super depreciation. In fact, about 70% of eligible startups do not use tax incentives such as R&D tax credits, often due to a lack of information. Here, you can position yourself as a valuable partner and create a competitive advantage at the same time.

Launch information campaigns to make the financial benefits tangible for your customers. Use concrete calculation examples to show how investments in your hardware become more attractive through accelerated depreciation. Use formats such as webinars, whitepapers, or personal consultations to convey this knowledge and build trust.

Align Products with Funding Programs

Adapt your product development to the criteria of the super depreciation. Technologies such as cloud-based solutions, computer and telecommunications hardware, and internet-related services are particularly in focus. Products for e-commerce—including mobile payment systems, digital inventory management, and cybersecurity—also offer great potential for funding.

If you also want to claim R&D tax credits, your products should meet the “four-part test”: technological uncertainty, experimental processes, technological nature, and a qualified purpose. Therefore, document every step of your development, including research expenses and staff involvement.

"The R&D tax credit is a government program that gives money back to companies that develop new products or improve existing ones." - Jennifer Evans, principal, @patternpulseai

Build Strategic Partnerships

Collaborations with financial institutions, tax advisors, and industry partners can expand your reach and make it easier to access funding programs.

"Strategic business partnerships are about more than just working together. They're intentional collaborations where two organizations combine their unique strengths to create something greater than they could achieve alone. Think of it as finding your perfect business match: Your expertise, values and goals align in a way that amplifies both parties' impact." - Caitlyn Wells, Founder of Upwell Strategies

Example: In February 2025, Whipsaw entered a partnership with NAS startup Gridstack. Whipsaw offered flexible design services, facilitated contacts with manufacturing partners, and supported with equity-based financing. Within 18 months, Gridstack developed a market-ready product and made a lasting impact on the NAS industry.

Partnerships can validate your startup, reduce risk for investors, and strengthen customer trust. At the same time, they open access to new markets and target groups.

"Partnerships let you share resources, tap into new customer bases and even split risks so big ventures don't feel so daunting." - Theresa Caragol, Founder and CEO at AchieveUnite

Focus on partnerships that offer mutual benefits and foster the exchange of ideas and technologies. This not only increases your innovative strength but also your credibility.

FAQs

How can hardware startups specifically leverage the 30% super depreciation to increase their market opportunities?

How Hardware Startups Can Benefit from the 30% Super Depreciation

Hardware startups have the opportunity to strategically use the 30% super depreciation by presenting their products as ideal solutions for companies looking to take advantage of tax benefits. This regulation makes investments in modern technologies and infrastructure especially attractive for businesses. Startups should therefore focus on clearly highlighting the financial advantages of their products for potential customers. This can significantly boost demand for new hardware solutions.

Additionally, startups can create further incentives by offering flexible payment models or financing options. This makes it easier for companies to access the offered products and lowers possible entry barriers. Such measures not only strengthen the startup’s market position but also help drive digitalization and modernization of the economy—a win for everyone involved.

How can hardware startups in the B2B market benefit from the 30% super depreciation and overcome their biggest challenges?

Hardware Startups in the B2B Market: Challenges and Opportunities

Hardware startups in the B2B sector often face major hurdles. High development and production costs, long timeframes to market readiness, and limited access to capital make it difficult to compete. Developing new hardware also requires extensive testing and complex processes, further complicating the path to scaling.

But there is hope: The introduction of the declining-balance 30% super depreciation for investments in 2025 to 2027 opens up a promising opportunity. Companies can deduct investments in new hardware, machinery, and digital infrastructure for tax purposes. This not only improves their liquidity but also increases their willingness to invest in modern technologies.

This brings several advantages for hardware startups. Increased demand for innovative products leads to better planning and more stable growth. Thanks to the tax relief, customers can adopt new technologies more quickly, providing startups with additional opportunities to strengthen their market position.

This tax incentive benefits both sides: companies modernize their infrastructure, while hardware startups benefit from increased demand and better growth conditions. A real win for the entire market.

Which industries benefit most from the 30% super depreciation and why?

The 30% super depreciation brings major advantages especially to CAPEX-intensive industries such as mechanical engineering, IT, digital infrastructure, and e-mobility. Companies in these sectors can claim their investments in new technologies, machinery, and digital systems for tax purposes more quickly. This not only improves liquidity but also shortens the time until investments pay off.

Companies investing in green technologies also benefit significantly from this regulation. The tax advantages increase motivation to invest in modern and often costly solutions. This supports both digitalization and economic modernization.