According to a new letter from the Federal Ministry of Finance, a normal useful life of one year can be used as a basis for “computer hardware” as well as for “software”. In contrast to low-value assets, only pro rata temporis depreciation is possible in the year of acquisition or completion in accordance with Section 7 (1) Sentence 4 of the German Income Tax Act (Einkommensteuergesetz – EStG ) if the acquisition did not take place in the first month of the (financial) year. Acquisition costs for computer hardware and software can thus in future be written off in full within 12 months (instead of over three years, for example).
The term computer hardware also includes peripheral devices (e.g. printers) and is precisely defined in the letter.
Software is understood to mean operating and user software, which includes standard applications as well as individually produced programs such as ERP software, software for merchandise management systems or other application software for company administration or process control.
The new one-year useful life can be applied for the first time in profit assessments for fiscal years ending after December 31, 2020, i.e. for the first time for the assessment period 2021.
If there are residual book values from previous purchases of computer hardware or software, these can be written off in full in fiscal years ending after December 31, 2020, i.e. for the first time in 2021.
These principles will also apply accordingly to the deduction of income-related expenses, e.g. for employees working from home, from the 2021 assessment period onwards.