Depreciation and leasing

In short: Depreciation (AfA) spreads the acquisition cost of an asset over its useful life. Leasing is renting with regular instalments instead of buying.

In more detail: Straight-line depreciation = acquisition cost ÷ useful life in years. A €1,200 notebook with 3 years useful life is depreciated by €400 a year. Tax useful lives are given by the depreciation table. Digital assets (computers, software) have been depreciable over one year since 2021.

Not tax advice, rules change.

In Depth

• Low-value assets (GWG): Up to a value limit (€800 net) immediately deductible. A collective item is possible under conditions.
• Declining-balance depreciation: constant percentage of the residual value, higher depreciation at the start (permitted only for limited periods).
• Leasing: no capital tied up, predictable instalments, return or purchase at the end. Overall often more expensive than buying.
• Purchase with a loan: interest, ownership, residual value.
• Book value: acquisition cost minus depreciation so far.
• In the exam: comparison of purchase, loan and leasing by total cost.

See also: Payback calculation and TCO, Registering a business and self-employment