Depreciation under HGB: planmäßige Abschreibung and AfA explained

What § 253 Abs. 3 HGB requires

Fixed assets (Anlagevermögen) with a limited useful life must be depreciated systematically over that life. § 253 Abs. 3 HGB obliges you to draw up a depreciation plan up front that spreads the acquisition or production cost (Anschaffungs- oder Herstellungskosten) across the years the asset is expected to serve the business. The plan fixes the depreciable base, the method and the useful life at the point the asset is capitalised.

This planmäßige (planned, systematic) depreciation is distinct from an außerplanmäßige Abschreibung, the extraordinary write-down you take when an asset loses value for a specific reason. Land, financial investments held long term and other assets without a limited useful life are not depreciated on a plan; they are only written down when impaired.

Depreciation methods

The method must reflect how the asset actually gives up its value.

Setting the useful life

HGB asks for the estimated economic useful life (betriebsgewöhnliche Nutzungsdauer). In practice most companies lean on the official tax depreciation tables (AfA-Tabellen) published by the Federal Ministry of Finance, because aligning the two ledgers avoids deferred taxes and is rarely challenged. Typical lives run to around 33 years for buildings, roughly 13 years for machinery, 13 years for office furniture and 3 years for computer hardware.

Since a 2021 administrative rule, tax practice allows a one-year write-off for many computers and standard software, and companies commonly follow it commercially as well. Whatever life you choose, it should be a genuine estimate for that asset and applied consistently; a materially wrong life distorts the Bilanz and the GuV.

Low-value assets (GWG)

Small items do not have to be depreciated over years.

• Assets with net cost up to €800 (geringwertige Wirtschaftsgüter, § 6 Abs. 2 EStG) may be expensed in full in the year of acquisition.
• Items between €250 and €1,000 net can instead go into a pooled asset (Sammelposten, § 6 Abs. 2a EStG) written off over five years.
• These are tax rules, but on materiality grounds HGB tolerates an immediate write-off of such minor assets, so most companies apply the GWG treatment in both ledgers.
• The choice is made per asset class and year and must be applied consistently within it.

Commercial vs tax depreciation

Handelsbilanz depreciation (HGB) and Steuerbilanz depreciation (AfA under the EStG) start from the same idea but do not have to match. The principle of Maßgeblichkeit (§ 5 EStG) means the commercial accounts guide the tax base, yet tax law overrides it in places — for instance when it permits or forbids a declining-balance method, or prescribes a fixed rate.

Where the two diverge — a different method, a different useful life, an extraordinary write-down recognised commercially but not for tax — a temporary difference arises that can trigger deferred taxes (§ 274 HGB). Keeping commercial and tax depreciation aligned is the simplest way to avoid that complexity, which is why smaller companies usually follow the AfA tables in both.

Frequently asked questions

What is the difference between Abschreibung and AfA?

Abschreibung is the general HGB term for writing down an asset's carrying value; AfA (Absetzung für Abnutzung) is the tax-law term for depreciation of a wearing asset. They describe the same economic process but are governed by different rules — § 253 HGB commercially and the EStG for tax — so the amounts can differ.

Is declining-balance depreciation allowed under HGB?

Yes, if it reflects how the asset actually loses value. HGB does not prescribe a single method; declining-balance (degressive Abschreibung) is acceptable where the pattern of value consumption is front-loaded. Tax law has allowed it only in certain periods, so a company may end up with a commercial method that differs from its tax method.

How are low-value assets (GWG) treated?

Assets costing up to €800 net can be expensed immediately under § 6 Abs. 2 EStG, and items from €250 to €1,000 can be pooled and written off over five years. HGB permits the same immediate write-off on materiality grounds, so most companies apply GWG rules in both the commercial and the tax accounts.

Which useful lives should I use?

Use the genuine expected economic useful life of the asset. In practice German companies rely on the Federal Ministry of Finance's AfA tables — for example about 13 years for machinery and 3 years for computers — because matching commercial and tax lives avoids deferred taxes and is rarely disputed.

Can I depreciate land?

No. Land has an unlimited useful life, so it is not subject to planned depreciation. Only the buildings and structures on it are depreciated. Land is written down only through an extraordinary write-down (außerplanmäßige Abschreibung) if its value is permanently impaired.