Annual financial statements for tax purposes
The above mentioned BMF circular provides for the possibility of taking an average useful life of just one year as a basis for specific hardware and software – this is an option. In practice, this will result in an instant write-off for new purchases of such assets that is permissible under tax law.
The ‘tax dictates financial accounting’ principle ceased to apply as a result of the German Accounting Law Modernisation Act, in 2009. Against this background, the FAB of the IDW takes the view that, in financial accounting, an average useful life of just one year cannot readily be used as the basis for calculating the scheduled depreciation/amortisation of digital assets. In the context of financial accounts, the estimate of the useful life should continue to be oriented towards operational realities. This will normally amount to more than one year. An instant write-off in the financial accounts, too, would only be possible if the pre-conditions for a low-cost asset within the meaning of Section 6(2) of the German Income Tax Act have been satisfied.
Please note: If the tax-related option is exercised then the financial accounts would differ from the tax accounts. This would mean that this difference in amount would have to be taken into account when calculating deferred taxes.