Tax update: standstill in depreciation
Background:
The German government had ambitious plans as part of the “Summer 2024 growth initiative”: companies were to be relieved by improved tax write-off options and motivated to invest. However, despite announcements, no corresponding legislation was passed. Important reform plans, such as an extension of declining balance depreciation, a higher limit for low-value assets or special depreciation for e-vehicles, are off the table for the time being.
What does that mean for you specifically?
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Degressive depreciation (AfA):
Degressive depreciation for movable fixed assets can only be used if they are purchased or manufactured by 31.12.2024.
Example: If you buy new machinery in November 2024, you can continue to use the declining balance method of depreciation beyond 2025 as long as the asset was purchased during this period. However, if the purchase is not made until January 2025, only straight-line depreciation is permitted. -
Low-value assets (GWG):
The GWG limit remains unchanged at € 800 net (i.e. excluding VAT). The original intention was to raise this threshold in order to be able to write off smaller investments more quickly for tax purposes, but this will not happen.
Example: An entrepreneur buys a laptop for €799 net in March 2025. This can be written off in full immediately. However, if the device costs €850, it must be depreciated over several years. -
Special depreciation for electric vehicles:
This measure was also not implemented. There are therefore no additional tax incentives for planned special depreciation allowances for electric cars, e.g. as part of company fleets.
Anyone purchasing an electric vehicle must continue to rely on the usual depreciation rules, without additional tax benefits.
Note:
It remains to be seen whether anything will change after the general election. The new government could take up the rejected plans again. Until then, however, anyone who wants to take advantage of tax benefits through depreciation should plan well.
Recommendation for action:
- Check your planned investments promptly.
- Pay close attention to the GWG limit – just a few euros can determine whether an immediate write-off is possible.
- Get tax advice for larger purchases to make the most of the benefits
