What is writing off a laptop?
Depreciation means that you cannot deduct the costs of your laptop in one go, but must spread them over several years. This is because the tax authorities consider a laptop to be an asset: something you use for your business for longer than one year. By depreciating, you process part of the purchase price as expenses each year.
This will ensure that your records are more in line with the actual life of the laptop. This way, you don't pay much less tax in one go by deducting everything in one year, but spread the costs neatly over the period you use the laptop. Exactly how much you can write off per year depends on the rules for business assets and the estimated life span of the laptop.
Operating assets
A laptop is considered a business asset because you use it for your business for more than a year. Business assets are durable goods that you need for your work and that are not easily consumed or resold. Because they last for several years, you may not deduct the costs in one go, but you must depreciate them annually so that your records match the actual useful life.
Investment or cost threshold of €450
Whether you have to write off a laptop depends on the amount of the purchase and the time you use it. If the laptop is cheaper than 450 euros excluding VAT, you may write it off as an expense at once. The expense will then be charged in full to the year of purchase. If the laptop costs more than 450 euros and you use it for more than a year, it becomes an investment. You must then capitalise the laptop on the balance sheet and depreciate it over the years you use it. In this way, you process the costs in a spread way and according to the rules that apply to investments.
What are costs?
Expenses are expenses that belong entirely to the year in which you incur them. They do not last for several years and you may charge them directly to profit. A laptop below the threshold amount falls under this category and therefore does not appear on the balance sheet.
Depreciation of laptop in 3 or 5 years
For most laptops, you write them off in five years because you are allowed to write off a maximum of 20 per cent per year. Three years is too short in practice because you would exceed the allowed percentage. Only under special arrangements are you allowed to depreciate faster.
How much depreciation per year
You divide the purchase price minus the residual value by the number of years you use the laptop. The result is the amount you write off each year. If you buy in the middle of the year, you only write off the part that corresponds to the months of use that year.
VAT directly deductible
You may reclaim the VAT on the purchase of the laptop directly in the VAT return for the period in which you buy it. You enter the laptop in your accounts at the price excluding VAT if you are allowed to deduct it. In case of mixed use, you only deduct the business part or make an adjustment for the private part at the end of the year. If you use the KOR or do you have exempt turnover then you cannot deduct VAT and process the laptop including VAT.
Small-scale investment deduction
If you invest more than €2,900 in business assets in one year, you are eligible for the small-scale investment deduction. The laptop counts if the purchase price is above this limit. This deduction reduces your profit extra on top of the normal depreciation. How much deduction you get depends on the total investments in that year and only applies to assets that meet the conditions.
Books in your administration
A laptop above the threshold enters the balance sheet as an investment. You record the purchase and reduce the value each year by the amount of depreciation. You include the depreciation in your profit and loss so your profit will be lower in the years you use the laptop. If you sell or remove the laptop from the business, you compare the book value with the proceeds and recognise the difference as profit or loss. For sales within five years, a reversal may apply if you have previously received investment deductions.
Choosing best business laptop
The best business laptop suits the type of work you do and how intensively you use the device. Consider software requirements, mobility and how much reliability you need. That way, you will make a choice that fits your day-to-day and can last for years without any problems.
What to look out for when choosing:
- Performance such as processor, memory and storage
- Weight and battery life for mobile use
- Robustness and reliability in intensive use
- Securing your business data
- Manufacturer's warranty and service
Frequently Asked Questions
What if I sell my laptop before it depreciates?
On sale, you compare the selling price with the book value and recognise the difference as profit or loss. With previous investment deductions, a portion may come back.
What happens if I buy a new one?
A new laptop becomes a new investment with its own depreciation. You process the old laptop through sale or private use and the difference with the book value counts in your result.
