How are fixed assets defined?
Fixed assets are
Tangible and intangible assets of your company
used in your business on a permanent basis and
remain in your company for more than one year.
The items must be self-contained, which means they can be used without other items in your fixed assets. If an item can only be used in conjunction with another item, it is not self-contained.
The cost of fixed assets is not (usually) immediately deductible from your income as a business expense. You must 'capitalize' these items in your fixed assets and depreciate them over the general useful life of the item.
This means that the loss in value of the asset will be recognized as an expense in your profit and loss account on a pro-rata basis over the years.
Depreciable fixed assets: Depreciation according to AfA
However, some items lose value over time as they "wear out". You can no longer value them at cost.
Examples of depreciable assets are your company car, your company PC, or your buildings.
The law prescribes useful economic lives for these assets and publishes them in so-called "depreciation tables".
The useful economic life (Nutzungsdauer in German = ND) specified in these tables for each fixed asset is based on the experience of the tax audit. You can only deviate from the operational useful life in individual cases and with a justification.
Some examples:
Camera: 7 years
Office furniture: 13 years
Mobile phone: 5 years
Laptop: 3 years
As our tax service client:
We will check for you whether an item qualifies as a fixed asset and also determine the correct depreciation for you.
However, there are some special rules for some items.
Breakdown and simplifications
Purchase price up to 250 euros net (gross for small entrepreneurs).
The cost is immediately considered a business expense and does not have to be included in your fixed assets.
Purchase price between 250.01 euros and 800 euros net (gross for small entrepreneurs)
The item is included in your fixed assets and is immediately written off in full.
Examples: Office telephones, office chairs, small furniture, and tools.
Purchase price of 800 euros or more (gross for small businesses)
The item is added to your fixed assets and depreciated over its useful life.
Example: Purchase of a camera on 03/01/2023 for 1,071.00 euros (gross):
Inclusion of the net value of the camera in the fixed assets (900.00 euros) (in the case of small entrepreneurs, the gross value is used).
For standard taxation: Input tax is claimed = 171.00 euros
The useful economic life of the laptop is 7 years
In the first year, the depreciation is calculated pro rata temporis:
900 euros / 7 years = 128.57 euros annual depreciation / 12 months * 10 months = 107.14 euros depreciation
Special depreciation for computer hardware and software for data entry and processing (from 01.01.2021)
Beginning in 2021, purchases of computer hardware and software for data entry and processing can be fully expensed immediately, regardless of the cost of the equipment.
This rule includes:
Computers,
Notebooks (> 9 inches)
Tablets and so-called peripherals (e.g. mouse, keyboard, printer, scanner, headsets, speakers, hard drives, and USB sticks).
The item is included in your fixed assets and is depreciated immediately.
Non-depreciable fixed assets
Certain items are considered to be non-depreciable, i.e. they do not depreciate through use. Examples include land and financial assets such as securities.
Non-depreciable fixed assets are not subject to depreciation. Therefore, they are always valued at cost and included in your fixed assets at that value, regardless of the period of use.
Summary of fixed assets
Fixed assets are presented in a summary of fixed assets. In this, you state the following information:
Book value (accounting value) at the beginning and end of the year,
Depreciation and amortization,
Additions and disposals.
You can usually obtain such a summary from your tax advisor or from your accounting tool (e.g. Lexoffice).
As our tax service client:
If you have prepared your own income statement and tax return and have claimed fixed assets, please provide us with the following information:
Acquisition cost
Date of acquisition
Expected useful economic life.
Sale of fixed assets
If you want to sell a fixed asset that was included in your business assets, you can do one of two things:
You can sell the laptop for business use. The proceeds of the sale are business income. You must charge 19% VAT to the customer, provided that you have taxable income and have also charged VAT on the purchase.
If you want to sell your laptop privately on eBay, this is how it works:
Formally, you transfer the laptop from your business assets to your personal assets. In return, the current market value of the device is added to your income. The current market value is basically the sales proceeds. This can be easily determined through platforms such as rebuy, increasing your profit. The result is not different from a business sale.
If you claimed VAT as an input tax when you bought the laptop, you will have to pay VAT when you sell it. This is 19% of the current market value. You can then sell it privately without VAT to an interested party, e.g. on eBay.
Contribution of fixed assets from personal assets
Have you started your own business and want to include your personal laptop in your business assets? This is possible.
The contribution of items from your personal assets is subject to what is known as "part value".
The current market value is the market value of the asset at the time of the contribution (e.g. in your case, your used laptop). You should estimate the current market value realistically, but as high as possible.
A high value increases your depreciation allowance, which currently means immediate depreciation in 2023 for a laptop.
To support your estimate, you can have the dealer confirm the value or simply find a current listing for the same equipment on the Internet (e.g., eBay Classifieds, Refurbed, ReBuy, etc.).
As our tax service customer:
You can send us the original invoice and, if applicable, a screenshot of a recent listing (see above), and we will include the equipment in your business assets at that value.
If it is not possible to compare the value because the device is out of stock or similar, simply send us the original invoice and your realistic estimate ("What would you get for the device if you sold it?").
We will take care of the rest, or contact you if we have any questions.