How does amortization work? In how many years will you deduct your investment? At what rate? with or without VAT? Should you opt for linear or degressive amortization? Here we clarify all these questions that arise once you have an investment to depreciate!<\/p>\n\n\n\n
A self-employed natural person recovers VAT if possible via the quarterly VAT return. The VAT that you cannot reclaim is added to the net value excluding VAT of the investment: the amount that you depreciate, which you deduct a little each year. The rate of depreciation for non-recovered VAT will be the same as for the investment (linear or degressive).<\/p>\n\n\n\n
Companies will have to choose between writing off non-deductible VAT and other accessory costs of investment (registration fees on the purchase of a building, etc.) in one go or at the rate at which the investment is depreciated – necessarily on a linear basis.<\/p>\n\n\n\n
You are depreciating an asset that is intended to last several years, in which you are investing on a long-term basis, and for a relatively high amount.<\/p>\n\n\n\n
The minimum amount from which to depreciate an asset is mainly relevant for the VAT return.
Remember this: from \u20ac1,000 (excl. VAT), you have to depreciate the property. In a purchase of 950 euros excluding VAT, the purchase can still be encoded as an investment and its VAT in “services and miscellaneous goods”. This exempts you from having to carry out a VAT review if the good is resold, sold, stolen, or broken within five years of purchase.<\/p>\n\n\n\n
Once you depreciate a good, you deduct its purchase amount over the different years of its use and not in one single year of purchase.<\/p>\n\n\n\n
Once you have determined the amount to be depreciated, you still have to determine the rate at which you will depreciate your property. Will you deduct 3% of the purchase value each year for 33 years? Or 10% each year for 10 years?<\/p>\n\n\n\n
Investments must be depreciated according to the likely period of use of the property. Does your purchase have a useful life of ten years? You will depreciate it at a rate of 10% per year. Unfortunately, once again, there is no official table indicating over what period a given investment should be amortized.<\/p>\n\n\n\n
There are, of course, certain generally accepted periods: an investment in a building can be amortized over about 30 years, one generation, at a rate of about 3% per year. The depreciation period for computer equipment would be more like 3 years.<\/p>\n\n\n\n
\ud83d\udca1 When you enter an expense in the “investment” category with Accountable, you will see a suggested depreciation period and the depreciation rate that goes with that period.<\/p>\n\n\n\n
Do you amortize at the same rate each year, i.e., on a linear basis? Or do you depreciate at a higher rate at the beginning, which then decreases over the useful life of the asset, i.e. degressive amortization?<\/p>\n\n\n\n
If you are a company<\/strong>, you don’t even have to ask yourself this question since the corporate tax reform:<\/p>\n\n\n\n Only linear depreciation is now authorized.<\/p>\n\n\n\n Another important change for companies: <\/strong>since 1 January 2020, you are no longer able to depreciate your investment for a full year, regardless of the time of year in which you purchased it. You are required to calculate depreciation pro rata temporis: if you buy an asset to be depreciated on 1 December, only one month out of twelve will count towards depreciation in that year.<\/p>\n\n\n\n The opinion of our partner accountant: “You may therefore have fewer costs to deduct in the year of acquisition. This can be compensated for by deducting the accessory costs at once. At the end of the day, you always depreciate the same amount, simply over a longer period of time”<\/p>\n<\/blockquote>\n\n\n\n \u26a0\ufe0f Accessory costs relating to a car (e.g. non-recoverable VAT) must always be depreciated at the same rate as the car itself.<\/p>\n\n\n\n\n