Arbitrary depreciation 2023

In the current book year (2023) it is possible to benefit from a new temporary scheme, which will make it attractive to invest in assets for your business before the year is over. Normally, arbitrary depreciation can only be done in certain cases. For example, when buying an environmentally friendly asset or if you are a starting self-employed entrepreneur. With the temporary scheme, it is possible to arbitrarily depreciate new business assets that are purchased in 2023. This temporary scheme applies to businesses that pay income tax or corporate tax.

Currently, you are required to depreciate all business assets (i.e. laptops, phones) with a purchase value of over €450 over the course of a five-year period in equal amounts. The temporary scheme allows you to depreciate a chosen amount on an asset.

Note, that arbitrary depreciation will implicate a lower amount to depreciate in the years that follow 2023. This can be disadvantageous if you expect to make a lot of profit in those years. Without the additional depreciation, your depreciation will remain the same every year.

Conditions arbitrary depreciation 2023

You are eligible for the temporary scheme if you meet the following conditions:

  • The asset has been purchased or produced in 2023;
  • The asset is new and has never been used before;
  • The asset will be taken into use before 1 January 2026; and
  • The asset is not exempt (see below)

Exempted assets

Some assets are not covered by the temporary arbitrary depreciation scheme. These assets do not fall under the new scheme:

  • Buildings;
  • The following means of transportation: ships, aircraft, mopeds, motorcycles, and passenger cars for private transportation (unless they are private cars with no CO2 emissions);
  • Intangible assets such as goodwill, licenses, permits, and software;
  • Animals;
  • Public roads and some objects attached to them, such as bridges and tunnels;
  • Business assets that you lease to the same party for an extended time; and
  • Assets you already depreciate arbitrarily through another arrangement.

Example of arbitrary depreciation

The additional depreciation for 2023 is up to 50% of the purchase or production value of the new asset. This is in addition to your normal annual depreciation.

Below, you can find an example of an investment that costs €100,000, has a residual value of €10,000, and has an economic life of five years:
  • The amount you depreciate in total: €100,000 (purchase value) - €10,000 (residual value) = €90,000;
  • The amount that you depreciate arbitrarily in 2023: maximum 50% of €90,000 = €45,000; and
  • The amount you are legally obliged to depreciate per year: €45,000 (the other 50%) / 5 years of economic life = €9,000 per year.
As you can see below, in the first year you will depreciate the arbitrary amount + the yearly obliged amount. For the remaining years, you can depreciate the legally obliged amount.

2023               EUR 54,000
2024               EUR 9,000
2025               EUR 9,000
2026               EUR 9,000
2027               EUR 9,000

Total                EUR 90,000