Investments must generally be depreciated over several years. Simplified rules apply for assets with acquisition or production costs of between €150.01 and €410.00 or €1,000.00.
Low-Value Assets (GWG) up to €150.00
A low-value asset (geringwertiges Wirtschaftsgut, GWG) is any asset whose acquisition or production costs do not exceed €150.00. They must be moveable and depreciable as well as independently usable, and must be listed sequentially with their acquisition or production costs in a separate register. Where the stated conditions are met, these assets are deducted in full as business expenses in the year of acquisition/production.
Conditions
- Moveable assets are physical objects, but not immovable property and not intangible assets.
- The maximum amount of €150.00 is to be considered exclusive of VAT, regardless of whether the business is entitled to deduct input tax. However, this amount includes all acquisition costs, i.e. also incidental acquisition costs.
- The asset must be independently usable, meaning it can be used not only in conjunction with other assets but also on its own.
Examples of such assets include photocopiers, office furniture and computers. A monitor for an office PC therefore does not qualify as a low-value asset, because it cannot be used independently.
Low-Value Assets from €150.01 to €410.00
These assets must be included in the fixed asset register. These assets may be written off 100% in the year of acquisition/production. This is sensible in almost all cases. Exceptionally, it may be advantageous to depreciate these assets over several years.
Assets whose acquisition costs exceed €410.00 are depreciated over their individual useful life.
Alternatively, from 2010 onwards there is the option to apply the pooling method used in 2008 and 2009 to all investments with acquisition costs of between €150.01 and €1,000.00:
Pooling Method
Where the acquisition costs of an asset exceed €150.00 but do not exceed €1,000.00, a pool (Sammelposten) may be formed. All assets of a given year with acquisition or production costs above €150.00 and not exceeding €1,000.00 are combined in this pool.
This pool is depreciated on a straight-line basis over 5 years. The point of acquisition during the financial year does not affect the calculation of the depreciation amount. If an asset leaves the business, the pool is not written down but continues to be depreciated until the end of the 5-year period. The depreciation period may not be shortened even if the pool contains assets with a shorter useful life, such as computers. A new pool must be created for each financial year.
In most cases it is advantageous to use the immediate write-off for low-value assets up to €410.00 and to depreciate all more costly investments over their individual useful life. Which option is optimal for you depends on the financial and tax situation of your business.
If you have any questions or would like to arrange a consultation appointment, please do not hesitate to contact us.