When calculating the taxable income, assets owned by an enterprise must be depreciated over their normal useful life using the straight-line method.
The following are the applicable rates using the straight-line method for various asset types.
|Plant and machinery||6% to 12.5%|
|Office equipment||6% to 14%|
Effective 1 January 2021, a full deduction is allowed in the year of acquisition for computer hardware, software, and related equipment such as laptops, scanners, printers, monitors, etc. (depreciated at the rate of 33.3% until 31 December 2020). The deduction can also be applied in respect of hardware or software acquired in prior years for which a useful life other than one year was used.
Acquired goodwill is amortized over a 15-year period using the straight-line method.
Qualifying businesses are able to use accelerated depreciation in addition to standard depreciation for movable fixed assets at a rate of 20% per year using the straight-line method. Qualifying businesses include those whose:
- Net assets do not exceed EUR 235,000;
- Business income is from agricultural or forestry activities, and net assets do not exceed EUR 125,000; or
- Taxable income does not exceed EUR 100,000.
In addition, in order to qualify, the asset must be used exclusively for business purposes for at least 1 year following the acquisition.
In response to the COVID-19 pandemic, Germany introduced accelerated depreciation for movable business assets for the years 2020, 2021 and 2022. The accelerated depreciation is computed using the declining-balance method with depreciation rates equal to 2.5 times the regular straight-line depreciation rates, capped at 25%.
Effective 1 January 2020, Germany has introduced a special depreciation for newly acquired electric delivery vehicles equal to 50% of the acquisition cost in the year of acquisition.
Businesses that meet the conditions for the accelerated deduction are also eligible to make a pre-acquisition deduction of up to 50% (increased from 40% effective 1 January 2021) prior to acquiring new movable fixed assets.
The asset must be acquired within 3 years following the year the deduction is claimed.
The deduction claimed is added back to taxable income in the year the asset is acquired or if it is not acquired within the time limit.
As with accelerated depreciation, the asset must be used exclusively for business purposes for at least 1 year following the acquisition.