Background
Assets used by taxpayers to generate income and whose use extends over a period of several years are generally depreciated on a straight-line basis over their useful lives. For computers, peripheral devices and software, the official depreciation tables of December 15, 2000, previously scheduled a useful life of three years. For business software systems (ERP software), a period of five years was generally assumed as the normal useful life in accordance with the circular of the Federal Ministry of Finance dated November 18, 2005.
Decision of January 19, 2021
In their video conference on January 19, 2021, the German Chancellor and the heads of government of the German states passed the following resolution, among others: "In order to further stimulate the economy and promote digitization, certain digital assets will be immediately depreciated retroactively to January 1, 2021. To this extent, the costs of computer hardware and software for data input and processing can be prospectively fully taken into account for tax purposes in the year of acquisition or manufacture. At the same time, all people working in home office will benefit from this as well. Implementation shall to be regulated by sub-law and thus made available quickly."
Circular of the Federal Ministry of Finance dated February 26, 2021
The tax authorities implemented the resolution in a circular dated February 26, 2021. According to this, a normal useful life of one year can be taken as a basis for certain computer hardware (including associated peripheral devices) as well as for the operating and user software required for data input and processing. This option therefore allows the full deduction of corresponding acquisition or production costs in the year of acquisition or production.
The beneficiary "computer hardware" is listed conclusively in the circular and includes in particular:
- Desktop computer
- Notebook computer, among others including tablet computer, slate computer, mobile thin client
- Desktop Thin Client
- Workstation
- Mobile Workstation
- Small-Scale Server
- Docking station
- External power supply
- Peripheral devices with input devices (among others including keyboard, mouse, graphics tablet, scanner, camera, microphone, headset), external storage (including hard drive, DVD/CD drive, flash memory (USB stick), tape drives (streamers)), and output devices (including projector, plotter, headset, speakers, and computer monitor or display and printer).
According to EU regulation, computer hardware must meet the requirements for the environmentally compatible design of computers and computer servers.
Software includes operating and user software for data input and processing. In addition to standard applications, individual software including ERP software, software for merchandise management systems or other application software for company administration or process control are
also eligible.
Time application
The shortened useful life will apply for the first time to fiscal years ending after December 31, 2020. For assets of private property used to generate income, the new regulation will apply accordingly from the 2021 assessment period.
It is also possible to immediately write off the residual value in the 2021 assessment period for assets that were acquired in earlier years and whose old standard useful life has not yet expired. Example: A company implemented new ERP software in 2019 and initially depreciated it over five years. The residual book value existing until December 31, 2020 can be fully written off in 2021.