Depreciation - Key Concepts

Running a business may require fixed assets — items used over several years. These are not inventory or purchases, but long-term assets that support the delivery of services or the production of goods:

• Tangible: buildings, machinery, vehicles, furniture, equipment.
• Intangible: licenses, permits, rights that lose value over time (e.g., software licenses for a specific period, operating permits, patents, copyrights, franchises).

Since such assets serve for multiple years, the full cost cannot be written off at once. You need to spread expenses over several years and write off a portion of the value annually as costs. This is depreciation. Exception: If an asset costs less than €450, the full amount can be written off immediately — no depreciation needed.

For calculating depreciation you need:

• Purchase cost (aanschafkosten):
• Purchase price

• Additional costs: notary fees, installation, preparation for use

• Minus: discounts and subsidies (even if received later)

Residual value (restwaarde) - the approximate value the asset will have when it is no longer used in the business.

Expected useful life (gebruikstermijn):

• Technical: until the asset breaks down, or

• Economic: as long as it has business value

Depreciation formula (straight-line method): Annual depreciation = (Purchase cost − Residual value) / Number of years of use

Example: Machine costs €30,000 Residual value after 10 years — €5,000 Useful life — 10 years Annual depreciation: (30,000−5,000) ÷ 10 = €2,500

If the asset is used for only part of the year — depreciation is proportional. For example, bought on 1 October → 3/12 × €2,500 = €625

The maximum depreciation is 20% per year of the cost (for goodwill — maximum 10% per year).