Field help:
Expenses for low-value assets (GWG)
In principle, the acquisition or manufacturing costs of assets with a useful life of more than one year must be spread over the years of use, i.e. depreciated. However, an exception applies to low-value assets (GWG).
Low-value assets are depreciable movable fixed assets that can be used independently and for which the acquisition or production costs do not exceed a certain limit.
These are the new tax rules for acquisition or production from 01.01.2018:
(1) GWG with acquisition costs up to 250 Euro
GWG with acquisition or production costs up to 250 Euro (without VAT) can be immediately deducted as operating expenses or depreciated over the service life. The voting right can be exercised individually for each asset (asset-related voting right). There is no special obligation to keep records, e.g. in a list of assets (sect. 6, para. 2a, sentence 4 of the Income Tax Act (EStG)).
(2) GWG with acquisition costs over 250 Euro to 800Euro
GWG with acquisition or production costs of 250,01 Euro to 800 Euro (excluding VAT) can be fully deducted as operating expenses in the year of acquisition, production or contribution or optionally depreciated over the service life. In this case, the GWGs must be listed in a special list of assets, with the date of acquisition, production or contribution and with the acquisition or production costs. The list shall not be required only if that information is apparent from the accounts. As of 2018, assets up to 250 Euro no longer have to be listed in an asset list (sect 6, para. 2, sentences 4 and 5 of the Income Tax Act (EStG)).
(3) GWG with acquisition costs over 250 Euro up to 1.000 Euro
A collective item can be formed for GWG with acquisition or production costs of between 250,01 Euro and 1.000 Euro (excluding VAT), which is to be dissolved over a period of 5 years at a rate of 20% in each case to reduce profits (so-called pool depreciation). The option must be exercised uniformly for all assets of the fiscal year with acquisition costs of more than 250 Euro to 1.000 Euro (fiscal year-related option). Apart from the book-entry of the addition in the collective item, there are no other documentation obligations. This means that you do not have to keep an inventory (sect. 6, para. 2a, sentences 1 and 4 of the Income Tax Act (EStG)).
(4) Assets over 800 Euro must be depreciated according to the general rules. Every year the so-called "Depreciation for wear and tear" is deductible. However, there is still the possibility of forming a so-called collective item for costs up to 1.000 Euro and to dissolve it linearly over 5 years.
In the case of types of surplus income (employment, renting and leasing, other income), low-value assets with acquisition costs of up to 800 Euro (excluding VAT) can be immediately deducted as income-related expenses or alternatively depreciated over their service life.
For the respective limit amount of 800 Euro, 250 Euro or 1.000 Euro, the net value - without VAT - is always decisive. This also applies to small entrepreneurs who make use of the small business regulation according to sect. 19, para. 1 Value Added Tax Act (UStG) and therefore do not pay VAT, as well as to entrepreneurs who carry out turnovers exempt from VAT, e.g. doctors. Nevertheless, they can deduct the costs, including value-added tax, as operating expenses by means of immediate depreciation or collective depreciation (R 9b para. 2 of the Income Tax Regulations (EStR)).
Typical low-value assets include desks, bookcases, computer tables, side tables, desk chairs, dictation machines, calculators, computers, laptops, and the like.
An important prerequisite for immediate depreciation is that the asset can be used independently. This is not the case if it can only be used together with other assets in accordance with its operational purpose. For example, the monitor, printer and scanner can only be used together with the computer. Because of their technical characteristics, these devices are designed to function together with the computer and lose their own usability when separated. Therefore, the acquisition costs are not deductible in one amount, even if they are less than 250 or 800 Euro.
If you transfer a reinvestment reserve in accordance with sect. 6b of the Income Tax Act (EStG) or a reserve for replacement procurement in accordance with sect. 6.6 of the Income Tax Act (EStR) or a subsidy from public funds to the acquisition or production costs of new assets, an immediate write-off is possible, provided that the amount after reduction is less than 150 Euro.
Recording obligations: It is not necessary to keep an investment directory for low-value assets up to 250 Euro. Assets of such low value shall not be charged to the accounts of the enterprises.
Retroactively from 01.01.2021, there is a particularly advantageous new regulation for computers of all kinds and for software: The Federal Ministry of Finance states extremely generously that the normal service life is generally one year. This means that the acquisition costs can now always - regardless of the amount - be deducted in full as income-related expenses or business expenses in the year of acquisition (BMF letter dated 26 February 2021, IV C 3-S 2190/21/10002:013).
