Advance depreciation

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In German tax law, advance depreciation is a type of depreciation that is intended to favor investments by small and medium-sized companies.

The advance depreciation is regulated in Section 7g (2) sentence 2 EStG . Up to 40 percent of the anticipated acquisition or production costs can be deducted from profit for the future acquisition or manufacture of a wearable, movable asset .

The prerequisites for advance depreciation are:

  • the business assets do not exceed 235,000 euros;
  • the acquisition or production takes place a maximum of three fiscal years after the year of the special depreciation;
  • the asset is used almost exclusively for business purposes in the year of acquisition or manufacture and in the following year.

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