Laptops: Purchase price can now be fully deducted

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Federal Finance Minister Olaf Scholz (SPD) wants to promote the purchase of computers and software programs across Germany with immediate write-offs in the billions.

"The purchase of digital assets should be fully tax-deductible in the first year," he said of the federal and state decision this week.

This creates a major tax incentive to invest in new technology now.

Not only companies should benefit from this, but all employees who had to relocate their offices due to the corona restrictions.

"This is good news for everyone who is currently working in the home office," said Scholz.

He puts the financial impulse at 2.3 billion euros per year.

The digital economy is already looking forward to it.

"This is an important measure that relieves working people and can also boost sales of hardware and software," says Thomas Kriesel, Head of Taxes, Corporate Law and Finance at the Bitkom digital association.

The assertion of advertising costs or operating expenses will be simplified.

In other words: the tax return no longer has to be spread over several years.

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The simplification is now coming in the corona pandemic, but actually it is an unprocessed point from the coalition agreement 2018. Whether and to what extent every computer used for business but self-purchased can be written off immediately for work in the home office - and whether This also applies to color printers, monitors and smartphones - it will be seen in the coming weeks.

The Federal Ministry of Finance has not yet wanted to make a clear statement.

The digital association Bitkom takes a broad approach.

"The regulation will bring tax relief for all taxpayers who need hardware and software for their professional or commercial activities," says tax expert Kriesel.

He reminds, however, that the new regulation is only fully effective for companies if they can reduce the profits they generate.

As far as companies make losses, there is no direct tax relief.

Workers in the home office already have the option of writing off technical equipment that they need for their job directly.

There is a limit to this, however.

This is at a price of 952 euros including VAT to be claimed directly in the tax return.

We are talking about low-value assets.

If the acquisition costs are higher, the amount must be spread over three years.

For example, a laptop that costs 1500 euros can be estimated at 500 euros per year.

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The exact time of purchase is decisive here.

"In the year of purchase, there is a monthly depreciation", says Tobias Gerauer from the Bavarian income tax aid.

If you buy in the middle of the year, you can only use six twelfths, i.e. half of the annual value - in the example 250 euros.

The other 250 euros are then added at the end of the fourth year.

Those who spend more than 1000 euros save taxes

In this context, it is also important that only “independently usable assets” can actually be sold, as Gerauer says.

At the moment, this does not include monitors or printers, after all, these devices cannot be used independently and are useless without being connected to a computer.

In practice, however, it is common practice for these devices to be used at least up to a purchase price of 150 euros.

It is now unclear whether the 952 euro limit for low-value assets, which is relevant for employees, will be dropped entirely, whether it will only be raised or even officially extended to other devices such as monitors.

An important advantage of fully considering the entire purchase price in the first year compared to the previous rule is already becoming apparent for everyone in the home office: Anyone who spends more than 1000 euros on a new device saves taxes in any case.

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So far this has not been said.

This is because the expenses for a technical device are credited to the flat-rate income allowance.

Anyone who cannot claim further expenses for tax purposes and therefore does not get the lump sum of 1000 euros does not benefit from it.

The tax office always automatically deducts the 1000 euro flat rate for income-related expenses from the taxable income.

"Small expenses as part of the advertising costs have no effect," says Gerauer.

An immediate depreciation of the entire purchase price also has positive effects for the home office flat rate, which can be set in 2020 and 2021 by anyone who does not have a separate office in their own apartment.

It is also included in the flat-rate for income-related expenses, so it does not bring any additional benefit to those who cannot include additional expenses in the tax return.

Because the home office flat rate is five euros per working day at home, with a maximum of 600 euros.

So there is still a long way to go before we reach the 1000 euro threshold.

But if you add a new computer for 1500 euros, you can quickly get well over 1000 euros.

That is, computer purchases plus home work have a noticeable tax effect.

The immediate write-off of digital assets should now be implemented as quickly as possible. It is still unclear whether a new law is necessary for this or whether this can be regulated by sub-law. If the Federal Ministry of Finance has its way, no new law is necessary. A letter from the ministry to the highest financial authorities of the federal states with all the details should be sufficient. The effective date is undisputed: retroactive to January 1, 2021.