Business asset depreciation in the Netherlands

What is business asset depreciation?

Depreciation spreads the cost of a business asset across the years you use it. Spend more than €450 on something you will use for over a year?⁴ That is a bedrijfsmiddel, a business asset. A part of its cost comes off your profit each year instead of all of it at once.

This page covers the two rules that run together on one purchase. The first is the yearly depreciation. The second is the small-scale investment deduction. In Dutch that is the kleinschaligheidsinvesteringsaftrek. Everyone shortens it to KIA.

Two things sit outside this page. Business premises depreciate under their own regime. And the ondernemersaftrek is a different family altogether. That is the entrepreneur’s own set of deductions, such as the zelfstandigenaftrek (self-employed deduction).

Luca edits video for a living, works from home in Utrecht and files his own return. In January he bought a laptop and a camera. Both purchases run through the rest of this page.

When is a purchase an investment and not a cost?

Anything over €450 that lasts more than a year is an investment.⁴ You then spread its cost across its useful life. Everything at or below that line stays an ordinary business cost, deducted in full in the year you pay it.

Whether you measure that €450 with or without VAT depends on your own VAT position. Confirm which side you are on before you decide.

Luca’s laptop cost €2,000 and his camera €1,200. Both sit above the line and both last well beyond a year. That makes them business assets, so neither comes off his profit in one go.

The table below sets out what applies once a purchase crosses the line. Costs below the line are covered on our page about deductible business costs.

How do you work out the yearly depreciation?

Take the purchase cost, subtract the residual value and divide by the useful life. That is the straight-line method. Almost every asset follows it.

The purchase cost is more than the price on the invoice. Delivery, installation and anything else you paid to get the asset working count too. Discounts and subsidies come off, including one that arrives later.

Residual value is what the asset will still be worth when you stop using it. Your book value may never fall below it.² Useful life runs in whole years. Take the economic life when that is shorter than the technical one.

In the year you buy, you depreciate only the months the asset was in use. Start using it halfway through the year and you take half of the yearly amount.

Luca expects his laptop to last five years and to be worth about €200 at the end. That gives €2,000 minus €200, divided by five, so €360 a year. So he takes the full €360 this year. That €360 also stays within the 20% cap, the fastest the law allows. His book value is now €1,640, the cost minus that €360.

What is the small-scale investment deduction?

The KIA is an extra deduction from your profit in the year you invest. It does not replace the depreciation. It comes on top of it.

Two conditions decide whether you get it. Each asset has to cross the same €450 line.³ And your qualifying investment for the whole year has to land inside a band.¹

That band starts at €2,901. Below it there is no KIA at all, however much a single asset cost. You also have to keep the asset in use for a minimum period. Sell it too soon and part of the deduction comes back into your profit.

The band you land in decides what the deduction is worth.

What do depreciation and the KIA add up to in one year?

Luca takes €1,476 off his profit in year one. That is €580 of depreciation and €896 of KIA. The two come from different sums.

The depreciation is the two yearly amounts added together. The laptop gives €360. The camera cost €1,200 and runs five years too. It will be worth about €100 at the end, so it gives €220.

The KIA looks at the year as a whole. His two purchases come to €3,200 together, which lands in the 28% band. That makes the deduction 28% of €3,200, so €896.

The KIA happens once, in the year of the investment. The depreciation keeps running for four more years after that.

Our reviewer starts an entrepreneur’s year at the second sum.

What if you buy just one thing?

A year with only that €2,000 laptop gives no KIA. The floor looks at your whole year, not at the single purchase. Your qualifying investment stays under €2,901, so only the depreciation runs.

There is a second route for starters. Meet the startersaftrek (starter's deduction) conditions? Then you may depreciate the asset freely. That is called willekeurige afschrijving, free depreciation. It means as fast or as slowly as you want, down to the residual value.

The KIA floor does not apply there, so Luca could write that laptop down to its residual value in one year. The route is open to a sole trader and to a vof (general partnership). It also covers a maatschap (professional partnership) and a cv (limited partnership). It applies to assets you bought in your starter-deduction years or in the run-up year before them.

There is an environmental route as well. The Milieulijst is the government’s environmental investment list. Assets on it can carry the MIA (environmental investment deduction) or the VAMIL (free depreciation for environmental investments). Both are separate schemes with their own conditions. We check whether anything you bought is on the list.

One older route no longer helps.

What does this mean for your own purchases?

Add your year together first, then work out each asset separately. The KIA looks at the total. The depreciation looks at each asset on its own. Reading it the other way round is where the deduction goes missing.

Three things are worth checking before you file. Did each purchase really cross the €450 line? Did your year of qualifying investment reach the floor? And was an earlier year worked out the same way?

Costs that stay below the line are a different question. Our page about deductible business costs walks through which ones come off your profit. Meals, conferences and business gifts follow their own limit. We cover that on the page about limited deductible business costs.

In your first year, the tax checklist for starting a business sets out the order to work in. The page about the self-employed tax return shows where all of this lands. And if you would rather have someone read the whole year with you, start with tax advice for entrepreneurs. Luca added his year up first, so his €1,476 ends up in his return.