Colored iron for a low price

It's nothing new. You have to keep up, keep your company up-to-date and continue to develop in order to be able to face the future. Only for 2023 has the Tax Authorities made it more fun! It has a new temporary scheme that makes investing more financially attractive. Partial arbitrary depreciation is possible on new items, provided that the investment obligation is entered into in 2023.

Normally you write off material in several years, at least in five and can go up to fifteen years. This is determined, among other things, by the expected lifespan. For 2023 partial arbitrary depreciation applies. The possibility of arbitrary depreciation for investments in new equipment in 2023 means that you can charge a maximum of 50% of the investment (purchase value minus residual value) directly to your profit. The second 50% is normally depreciated. The scheme is for all entrepreneurs, whether you pay income tax or corporation tax. The condition is of course that your company makes a profit, but that does not only apply to this scheme. Without or with too little profit you have other challenges.

This extra 'gift' from the tax authorities is only for new items. Well-used can therefore be more expensive this year on balance than brand new. Still, it seems more fun than it is, because quite a few things have been excluded. Please note that not all business assets are eligible for the scheme. Excluded are buildings, means of transport and passenger cars that are not intended for professional road transport, with the exception of electric passenger cars. Rights, quotas, animals and equipment that are mainly intended for rental are also not eligible for this scheme. Material and items that can be written off arbitrarily for any other reason do not fit here.

The option of partial arbitrary depreciation only applies to investment commitments entered into in 2023 or for which the production costs are incurred in 2023. This concerns, for example, the signing of an order confirmation or quotation.

I think it is important to know exactly how the scheme works and whether it will be really interesting for your company. What does it mean for you fiscally? Of course you also have to pay for that machine first and you will notice this from the balance on the current account.

As far as I'm concerned, you owe it to yourself to get a good picture of this first. You may be familiar with the saying 'men remain children, only the toys become more expensive'. Funny, but I think what's really interesting is that you ultimately buy the latest and best colored iron at the best price. That helps your company move further in the desired direction. And if you can play with it, that's fine with me. And you?

Farmers Funding & Advice unburdens you in the field of business administration, business economics, tax-legal matters and realizes the most suitable financing.

Jasper Carpenter

Jasper Timmerman is a senior advisor at Farmers Funding & Advice. He specializes in tax optimisations, restructuring, business transfer, family business and financial guidance.