Entrepreneurs write off assets of the company assets in principle over the normal period of use of the respective object. The depreciation reduces the profit and also the income or corporate tax payable. With so-called special depreciation according to § 7g EStG, the depreciation can be significantly increased in individual marketing years. This significantly reduces the tax burden – this applies once again if the taxable income falls below the top tax rate of 42% or 45% by deducting the special depreciation.
1st principle: Special depreciation according to § 7g paragraph 5 EStG
According to § 7 (1) EStG, economic goods are in principle to be depreciated over the normal period of use. It indicates how long the respective item is likely to be used in the taxable person’s business – sole proprietorship, partnership or corporation – according to its purpose. The Federal Ministry of Finance (BMF) issues guidelines with the uniform AfA tables.
Exceptions to the principle of the normal period of use apply to real estate according to § 7 (4) and 5 EStG. These are to be written off at uniform percentages, i.e. 2 % or 3 % of the acquisition or production costs per year. However, exceptions also apply here, in particular through § 7 (4) sentence 2 and §§ 7h and 7i EStG.
With the special write-offs according to § 7g paragraph 5 EStG, the legislature extends the scope of § 7 EStG. It creates a tax electoral right through which taxpayers can depreciate certain assets significantly faster than over the normal period of use. Specifically, the following shall apply to the special depreciation of such items:
This article does not replace tax or legal advice in an individual case. Facts, current law, jurisdiction, documentation and implementation remain decisive.