Depreciation (AfA) in Germany: how to deduct business purchases over several years

What is AfA and when do you have to depreciate?

AfA stands for „Absetzung für Abnutzung“ (deduction for wear and tear). It spreads the acquisition or production cost of an asset (Wirtschaftsgut) over the years in which it is used (§ 7 EStG). This applies to depreciable fixed assets (Anlagevermögen) – things that serve the business for the long term: car, furniture, machines, camera, software, buildings. Consumables such as paper or printer cartridges are business expenses (Betriebsausgaben) straight away.

Whether you have to depreciate depends on the net price (even as a small business (Kleinunternehmer) the net value is the threshold, but you then depreciate the gross amount). Acquisition costs also include incidental costs such as delivery, installation or registration; discounts and early-payment discounts (Skonto) reduce them.

Straight-line AfA and AfA tables

With straight-line AfA (lineare AfA) you write off the same amount every year: acquisition cost divided by the normal useful life (betriebsgewöhnliche Nutzungsdauer). You take the useful life from the official AfA tables of the Federal Ministry of Finance – the „AfA-Tabelle für die allgemein verwendbaren Anlagegüter“ (AV, table for generally usable fixed assets) applies to all sectors, and there are also sector-specific tables. The tables are not binding, but the tax office (Finanzamt) accepts their values without discussion; you have to justify a shorter period.

Pro rata temporis: to the month in the first year

In the year of acquisition you may only depreciate for the months from the acquisition onwards (§ 7 Abs. 1 Satz 4 EStG). The month of acquisition counts in full. What matters is delivery, not the order or the payment. The same applies in the year of sale: you depreciate up to the month of disposal, and the remaining book value is booked as a business expense.

Example: on 20 September 2026 you buy a conference table for €2,600 net. A useful life of 13 years gives €200 AfA per year. In 2026, September to December count, i.e. 4 months: €200 × 4/12 = €66.67. From 2027 to 2038 you write off €200 each year, and in 2039 the remaining €133.33.

Computers and software: depreciation in one year

Since 2021 you may use a useful life of one year for computer hardware and software (BMF letter of 26 February 2021, replaced by the BMF letter of 22 February 2022). The tax office does not object if you deduct the full cost in the year of acquisition – without a monthly reduction. This is an option; you can also use the previous useful life of three years.

Computer hardware includes desktop computers, notebooks, workstations, docking stations, small servers and peripherals such as monitors, printers, scanners, keyboards and mice. Software includes operating and application software for data processing, including ERP or inventory management programs. You still have to record the notebook in the fixed asset register (Anlagenverzeichnis).

Example: a notebook for €2,100 net, bought on 3 December 2026, can be deducted in full at €2,100 in 2026 – with straight-line AfA over three years it would be only €58.33 in 2026.

Declining-balance AfA: up to 30 % for purchases from 2025 to 2027

With declining-balance AfA (degressive AfA) you write off a fixed percentage of the remaining book value every year – a lot at the beginning, less later. For movable assets acquired or produced after 30 June 2025 and before 1 January 2028 it is allowed again: at most three times the straight-line rate and at most 30 % (§ 7 Abs. 2 EStG as amended by the immediate investment programme, Investitionssofortprogramm). Buildings and intangible assets such as software are excluded. You may switch to straight-line AfA at any time; this makes sense as soon as the straight-line amount on the remaining value is higher.

Earlier windows: 25 % for purchases from 2020 to 2022, 20 % for purchases from 1 April to 31 December 2024. There was no declining-balance AfA for purchases in 2023, early 2024 and the first half of 2025. The pro rata rule applies here too.

Electric cars: 75 % in the first year

For pure electric vehicles (not hybrids) held as business assets and acquired from 1 July 2025 to 31 December 2027, there is a special declining-balance AfA under § 7 Abs. 2a EStG: 75 % in the year of acquisition, then 10 %, 5 %, 5 %, 3 % and 2 %. The monthly reduction explicitly does not apply; even an electric car delivered in December gives you 75 % in the first year. You may not additionally use a special depreciation under § 7g for it.

Example: electric car for €48,000 net, acquired in November 2026 → AfA 2026: €36,000, 2027: €4,800, 2028 and 2029 €2,400 each, 2030: €1,440, 2031: €960. If you also use the vehicle privately, you still pay tax on the private use – for electric cars with a gross list price of up to €100,000 only at 0.25 % instead of 1 % per month (see company car and the 1 % rule).

Investment deduction and special depreciation under § 7g EStG

Small and medium-sized businesses can bring depreciation forward. The condition is a profit of at most €200,000 in the year of the deduction (for the special depreciation, in the year before the acquisition) and that the asset is used almost exclusively for business, i.e. at least 90 %, in a German permanent establishment in the year of acquisition and the following year. With a car that is also used privately, this usually fails. How much tax you defer depends on your marginal tax rate – see income tax for the self-employed.

• Investment deduction (Investitionsabzugsbetrag, IAB): you deduct up to 50 % of the expected acquisition cost already in a year before the investment, at most €200,000 per business in total. You must invest within three years, otherwise the deduction is reversed retroactively and interest is charged on the tax.
• On acquisition you add the IAB back and may reduce the acquisition cost by up to 50 %; you then calculate the normal AfA from the reduced amount.
• Special depreciation (Sonderabschreibung): in addition to normal AfA, up to 40 % of the acquisition cost (for purchases from 2024), freely spread over the year of acquisition and the four following years. It can be combined with the IAB.
• In the Anlage EÜR 2025 the IAB goes in line 88, the add-backs in lines 84–86, the reduction in line 35 and the special depreciation in line 34 (see how to fill in the Anlage EÜR).

Worked example: IAB, special AfA and straight-line AfA combined

A photographer with a profit of €60,000 plans camera equipment for €10,000 net in 2025 (useful life 7 years) and buys it in January 2026. Assuming a marginal tax rate of 35 %, she defers a large part of the tax to later years:

Buildings and home office

Buildings held as business assets that are not used for residential purposes are depreciated straight-line at 3 % per year (§ 7 Abs. 4 EStG). Residential buildings completed after 31 December 2022 also at 3 %, older ones at 2 %, or 2.5 % if completed before 1925. For new rental residential buildings with construction starting between 1 October 2023 and 30 September 2029 there is a declining-balance AfA of 5 %. Land (Grund und Boden) is never depreciated, which is why you split the purchase price.

If your home office (Arbeitszimmer) is in your own house and is the centre of your work, the proportional building value counts as part of the home office costs – as AfA based on floor area. Many self-employed people use the annual flat rate of €1,260 or the daily flat rate instead (see home office and Arbeitszimmer).

Depreciation with Kontelio

Kontelio keeps your fixed asset register: you create a fixed asset from an expense with one click, Kontelio suggests the useful life from the AfA table, calculates straight-line AfA to the month, writes off computer hardware and software in full in the year of acquisition if you wish, and handles GWG up to €800. It takes the private-use share into account in the AfA. You manage investment deductions in the IAB register with deadlines and remaining amounts. The values flow into the Anlage EÜR and the Anlage AVEÜR. Kontelio currently does not offer declining-balance AfA or pool items for new fixed assets. More on the page EÜR and depreciation.

Frequently asked questions