Depreciation (AfA): Who Qualifies and What You Get
Learn how business owners in Germany can claim tax deductions for equipment, tools, and machinery through the depreciation process.
Depreciation, often referred to locally as AfA, is a way for businesses to spread the cost of large purchases over the years that the items are actually used.
Who it's for
This is designed for business owners who purchase equipment, such as machinery, vans, or various tools, to run their operations.
What you get
You can receive a tax deduction for the cost of your business assets. Instead of deducting the full price of a large purchase all at once, you spread the deduction over the useful life of the item.
What it costs you
To use this, you must maintain a fixed asset register (known as an Anlageverzeichnis) to track your equipment and its value over time.
The catch to know
If you purchase a small asset that costs less than €800, you do not have to spread the cost out; you can deduct the entire amount immediately.
How to apply
- Keep all receipts and invoices for your business purchases.
- Record each item in your fixed asset register.
- Calculate the annual deduction based on the item's useful life.
- Include these figures in your tax filings.