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Immediate depreciation for computers and software

The Federal Ministry of Finance is shortening the depreciation period for hardware and software to 1 year from 2021.

Until now, computers and standard software have had to be depreciated over three years, provided that the acquisition costs exceed the limit for low-value assets. At the beginning of the year, however, the grand coalition decided to shorten this depreciation period to one year. But what the coalition wants to sell as a new investment incentive in the Corona crisis had already been agreed in the coalition agreement in 2018 and has not yet been implemented. As a result, the surprise announcement also initially caused irritation among the federal states, which considered a statutory regulation to be necessary for the change. However, the Federal Ministry of Finance has now reached agreement with the finance ministries of the federal states that the change will be implemented solely by amending the depreciation rules in the official depreciation table.

The German Federal Ministry of Finance has therefore now regulated that, from 2021, a standard useful life of one year will apply to desktop computers, notebooks and tablets, workstations, small-scale servers, docking stations, peripheral devices and software. The affected software categories include standard applications as well as applications tailored to individual users, such as ERP software, software for enterprise resource planning systems or other application software for company administration or process control. However, the regulation now published leaves room for interpretation, as it does not explicitly speak of immediate depreciation, i.e. full depreciation in the year of acquisition. However, depreciation over a period of one year (e.g., if acquired in May, depreciation of 8/12 of the acquisition costs in the year of acquisition and 4/12 in the following year) would mean unnecessary bureaucratic effort. There is therefore much to suggest that immediate depreciation is indeed envisaged, or that the tax offices will at least not raise any objections to immediate depreciation.

In other respects, however, the Ministry has immediately provided clarity: For assets that were previously only partially depreciated, which were acquired before 2021 and fall under the now shortened depreciation, the remaining residual value can be fully depreciated in 2021. However, there is no obligation to fully write off this remaining residual value in 2021.


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