Digitale Wirtschaftsgüter

Since 2021, companies have been allowed to depreciate computer hardware and software for tax purposes over just one year. This has consequences that often only become apparent when devices are retired: many devices are on the books at zero euros even though they still have a market value. Here you can read what digital assets are and what the rule means when selling.

What does the BMF letter regulate?

The basis is the letter from the German Federal Ministry of Finance dated February 22, 2022. It replaces a first letter dated February 26, 2021 and applies to profit determinations for fiscal years ending after December 31, 2020. The key points:

Point	Rule according to the BMF letter
Covered hardware	including computers, desktops, laptops, tablets, workstations, docking stations, small servers, external storage, power supplies and peripherals such as keyboard, mouse, printer, scanner, monitor or headset
Covered software	Operating and application software for data entry and processing, including ERP software
Useful life	One year may be applied; the taxpayer may also deviate from it
Type of depreciation	Normal straight-line depreciation under § 7 (1) EStG, no immediate write-off and no new depreciation method
Year of acquisition	It is not objected to if depreciation in the year of acquisition is taken in full instead of pro rata
Documentation	The assets must be entered in the inventory register

The letter is binding on the tax authorities and concerns the tax balance sheet. Whether the short useful life is also applied in the commercial balance sheet is a separate question. This entry does not replace tax advice.

Distinction from low-value assets and pooled items

The 1-year depreciation is not the same as the immediate write-off of a low-value asset (GWG). A GWG can be written off immediately up to a value limit, regardless of its type. The 1-year depreciation, by contrast, depends on the type of asset and applies regardless of price, including for expensive workstations or servers. The general rules on depreciation for IT are described in a separate entry.

What the rule means when retiring devices

Anyone who uses the 1-year depreciation usually has a Residual book value of zero or a memo value after the year of acquisition. However, the devices remain in the inventory register until they leave the company. When devices are retired, there is a Asset disposal:

• Sale: The proceeds are set against a book value of zero and are therefore recorded in full as income. For VAT purposes the sale is generally taxable.
• Disposal: The device is written off without proceeds. Proof of disposal is important for accounting.
• Transfer to employees: Here, payroll tax questions may additionally arise.

Important in practice: The tax book value says nothing about the market value. A three-year-old business laptop can be fully depreciated and still have a noticeable resale value. How useful life, depreciation and residual value relate to one another is shown in the guide Useful life of laptops: depreciation and residual value.

Digital assets and Second IT

Second IT buys used IT hardware at market-based prices and determines the value with database support on the basis of current market data. Every device receives an erasure certificate with serial number, which also documents its removal from inventory. As part of the Consulting Second IT analyzes your inventory and identifies realization potential.

Frequently asked questions about digital assets

Do I have to depreciate computers over one year?

No. According to the BMF letter, a useful life of one year may be applied, but the taxpayer can also choose a longer useful life. Coordinate the decision with your tax advisor.

Does the 1-year depreciation also apply to monitors and printers?

Yes, the BMF letter counts peripherals such as monitors, printers, scanners, keyboards and mice as computer hardware. The prerequisite is that they are used for data entry and processing.

What are the tax consequences if I sell depreciated laptops?

Since the book value is zero, the sale proceeds are recorded in full as income. VAT is also generally due. The devices are removed from the inventory register.

Is the 1-year depreciation the same as a low-value asset?

No. A low-value asset can be written off immediately up to a value limit, regardless of its type. The 1-year depreciation, by contrast, depends on the type of asset and applies regardless of price, including for expensive workstations or servers.

Since when has the 1-year depreciation applied to computers and software?

It applies to profit determinations for fiscal years ending after December 31, 2020. The basis is the BMF letter dated February 22, 2022. It replaces a first letter dated February 26, 2021 and also covers operating and application software.