Many employees own a tax-deductible computer and in this article, we'll explain how you can benefit from it. Whether it’s a desktop, laptop, or other computer, the rules are the same: if you want to deduct your computer from your taxes, it must be used for professional purposes. This happens more often than one may initially think.
For example, checking work related e-mails is considered professional use. Some employees also use their personal computers to prepare texts, presentations, or calculations. Teachers often prepare lessons on their private computers and even those applying for jobs are using their computer professionally. This also includes students that need their laptop or PC to study, download documents, and write assignments.
Requirements to claim your computer
Purchase price determines the duration of depreciation
The amount you can claim for a computer per year varies depending on its puchase price price. Work equipment (Arbeitsmittel) that doesn’t exceed 952 euros (including VAT) can be fully deducted in the same year that it was purchased, but a more expensive laptop or PC must be written off gradually over the course of three years. Only the months following the date of purchase are counted.
Computers purchased in the second half of 2020 cannot exceed a slightly lower limit (928 instead of 952) as VAT was temporarily lowered from 19% to 16%.
Example calculation for a business computer: In April 2020,Mr. Arnold bought a notebook for 1,200 euros to work remotely and apply for jobs. He is able to show the tax office (Finanzamt) that he doesn’t use the notebook privately and must depreciate the notebook over the course of three years – resulting in a depreciation of 400 euros per full year. As he purchased the notebook in April, the notebook can only be written off for April-December of the first calendar year. Therefore, Mr. Arnold will write off 300 euros in 2020, 400 euros in 2021 and 2022, and the remaining 100 euros in 2023.
Filing your tax return online will help guide you to write off your computer in your tax return.
Using your computer professionally/personally
The tax office (Finanzamt) typically makes the assumption that employee computers are used for both professional and private purposes. If a computer is used privately, only half of the price can be written off. In the case of Mr. Arnold from our example, he would have only been able to deduct 200 euros per year instead of 400; however, he would still have to inform the tax office how he uses the computer for professionally and what tasks he fulfills with it.
If the computer is used more than 50% of the time for work and job applications, credible evidence must be provided. Private use less than 10% of the time is considered insignificant and the full amount can still be deducted.
We suggest you track your computer use by keeping a log listing the times and dates the computer is used and for what reasons – this could then be provided to the tax office. This can, of course, be time consuming and requires a bit of effort, but it would be sufficient to keep such a log for three months to represent the full year.
Rapid wear and tear: shorter depreciation period
Laptops that need to be replaced in less than three years due to a heavy workload can be written off during a shorter time period in individual cases. The circumstances leading to accelerated depreciation must naturally be explained to and accepted by the tax office. Keep in mind that there are limited benefits from accelerated depreciation and the longer depreciation period of three years doesn’t lead to any lost money.
Other important technology when working remotely
Professional technical equipment such as printers, monitors, keyboards, mouses, desks, etc. can also be written off on your tax return. As keyboard and mouses only work when combined with a computer, their purchase prices must be added to the computer price. As mentioned before, the costs must be written off over a course of three years if it adds up to more than 952 euros. Depreciation over the course of multiple years is referred to as Absetzung für Abnutzung (deduction for wear and tear) in German tax law, AfA for short.
If a new keyboard or mouse is purchased separately from the computer (because the old one broke or is defective), the purchase can be written off individually. Devices that can provide services individually without the help of a computer can also be written off in the same year that they were purchased. This includes work desks, smartphones, printers/copiers, etc.
A second hard drive, new graphics card, or additional RAM can not be used independently, these are subsequent acquisition costs and must be added to the computer’s residual value (the amount that hasn’t yet been depreciated) and written off along with it. For example, if Mr. Arnold from our previous example uses his 1,200-euro notebook 90% of the time for professional purposes, the full amount can be written off. After 12 months, 400 of the 1,200 euros has already been written off, leaving a residual value of 800 euros. If he purchases and installs a new graphics card for 530 euros, the residual value increases to 1,330 euros which will be written off over the remaining 24 months.
If the computer was already completely written off in the year of purchase, the subsequent purchase of the graphics card can also be written off in one fell swoop provided that it doesn’t exceed 952 euros.
Where can computer costs be entered on a tax return?
Employees, civil servants, and students can enter their computer costs as income-related expenses (Werbungskosten) on Form N (Anlage N), line 42 of their tax return (previously line 41). If the cost must be written off over the course of multiple years, the partial amount must be entered. Paper tax returns can be really frustrating and aren’t very environmentally friendly – so why not file quickly and easily online and help protect the environment?
Don’t forget to inform the tax office about the professional activities performed on the computer!
Ensure that you hold on to your receipts for at least one year after receiving your tax assessment notice (Steuerbescheid) just in case the tax office requests proof or invoices. Freelancers should hold on to these documents for 10 years.
Landlords can also claim their computer expenses
Landlords generally need computers to communicate with their tenants and create business cost statements (Betriebskostenabrechnungen); so naturally, they can also deduct the costs of their computer as income-related expenses on Form V (Anlage V). Just like before, if their computer is also used privately, half of the expenses for it can be claimed.
Freelancers & tradespeople can deduct their computer, too!
Freelancers can write off their computer (as income-related expenses) on Form S (Anlage S) and tradespeople on Form G (Anlage G). Just like for traditional employees, the computer (incl. accessories and sales tax) must be written off over a course of 3 years if it exceeds the 952 euro limit. If new computers must be frequently purchased, it may be worth it to apply for a shorter “asset depreciation range (betriebsgewöhnliche Nutzungsdauer)” – for example, only two years instead of three. Naturally, your reasoning for this must be explained to the tax office.
If you are a freelancer, try to only use your computer that you wish to deduct up to 10% privately, otherwise, only a portion of the costs can be written off which could be very disadvantageous. Freelancers also have unique possibilities for claiming work equipment: typically, 20% of the cost can be written off as “special depreciation (Sonderabschreibung).”
How students can deduct their computers
Students with jobs can deduct their computer used for their work or studies as income-related expenses and pay less taxes – however, this is only worthwhile if their income exceeds the basic tax-free allowance (for single people: 9,408 euros in 2020 and 9,744 in 2021).
Students pursuing a second degree (including master’s, doctorate, or bachelor completed after vocational training) can apply for a loss carryforward (Verlustvortrag) if they spend more money on their studies than they earn back through employment. Their computers can be taken into account in their expenses as part of the loss carryforward, which works as a tax credit that can be redeemed in later stores. The tax office stores the loss carryforward, but keep in mind that once applied for, a tax return should be filed for all subsequent years or else the loss carryforward will expire. It is not possible to apply for a loss carryforward during your first degree.