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Deducting costs from your tax return: amortisation

This information is provided by:Tax and Customs Administration, BelastingdienstTax and Customs Administration, BelastingdienstNederlandse versie

When you file your income tax return with the Dutch Tax and Customs Administration you can deduct the costs of certain company assets. But when assets last for a number of years, you may not deduct all costs in the year of purchase. Instead, you have to write off and deduct part of the costs each year.

What are company assets?

Company assets are investments that you use to run your company, and that are not meant for sale. You need company assets to make your products or provide your services. Examples of company assets are:

  • Buildings, machines, vehicles, and inventory such as computers, desks, equipment and tools
  • goodwill, permits and licences

What is goodwill?

A company's goodwill is a unique brand, patent, recipe, or product, that increases the value of a company. For instance, if you have a unique recipe for bread, and the bread sells so well that it increases your company profit, that recipe is company goodwill. It is difficult to put a precise price on goodwill. Ask a financial advisor for help, if you want to determine your business goodwill.

What is amortisation?

When you calculate your profits, you take into account the purchasing costs of your company assets: you deduct those costs from your earnings.

When you acquire a company asset, you are not allowed to deduct the entire cost in the year of purchase. Instead, you must amortise your investment. Amortisation, or depreciation, means that you spread the cost of purchase over the years in which you use the asset. You can deduct a part of the costs in your income or corporate tax return over a number of years.

Is the cost of acquiring your company asset €450 or less? Then you are allowed to deduct the entire amount from your earnings in your tax return.

Different amortisation percentages

  • Most investments have a maximum depreciation rate of 20%. The amortisation of the asset takes a minimum of 5 years.
  • Goodwill is depreciated by a maximum of 10% per year.
  • There are different rules for the depreciation of business premises (in Dutch).

Calculation methods for amortisation

There are different methods for depreciating investments. Ask your accountant or tax consultant which method yields the maximum tax advantage for your company.

Linear calculation

The method used most often is linear calculation. When you use this method, you write off a fixed percentage of the difference between the purchase cost and the residual value annually. The formula for linear calculation is: amortisation per year = (cost of purchase – residual value) / expected duration of use

Example: calculating the amortisation on a laptop

Cost of purchase

You buy a laptop for €1,000. This is the cost of purchase.

Expected duration of use

A minimal duration of use of 5 years is common for amortisations. In 5 years’ time, your laptop will be outdated, compared to the laptops for sale at that time. Therefore, the expected duration of use for your laptop is 5 years.

Residual value

A 5 year-old laptop is outdated, and its economic value reduced to nothing. Your laptop’s residual value is €0.

Amortisation calculation

( €1.000 - €0) / 5 = €200 per year

You can find more information on how to calculate the depreciation of your assets on the Dutch Tax and Customs Administration website (in Dutch).

Calculate amortisation for part of the year

Are you buying the laptop later in the year, say on 1 October? Or do you use the laptop for the first time on that date? Then you may only calculate the depreciation for October, November and December that year. So 3/12*€200 = €50. You divide the depreciation over 60 months, from the time you start using the asset. In this case, 1 October.

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