Depreciation: How to Deduct Your Investments Year by Year Without Overdoing It

When you buy a computer, a van or machinery for your business, you generally can’t deduct the full amount in the year of purchase. The tax authorities recognize that the asset will serve you over several years, so they let you spread its cost over time. That is depreciation: the loss in value of the asset, recorded as an expense in your accounts and, within certain limits, in your tax return.

Doing it right legally lowers what you pay in personal income tax or corporate income tax. Doing it wrong can leave you with disallowed expenses in a tax audit. This guide explains how it works, without unnecessary jargon.

What gets depreciated and how it’s calculated: the tax tables

What you depreciate is fixed assets: items you use in your business for more than a year, such as furniture, computer equipment, vehicles, machinery or premises. Land is not depreciated, because it doesn’t wear out. If you buy a property, you must separate the value of the land from that of the building and depreciate only the latter.

Corporate income tax rules include a table of straight-line depreciation coefficients, with a maximum annual percentage and a maximum period for each type of asset. In practice, it is also the benchmark used for self-employed people under the direct estimation method. You don’t need to memorize it: what matters is knowing that it exists, that it sets maximums, and that you should check the table currently in force in the regulations for each type of asset (computer equipment, transport elements, furniture, buildings…).

The most common method is straight-line: you divide the asset’s value by its useful life or apply the coefficient you have chosen. Example with round numbers: you buy office furniture for €10,000 and apply 10% a year. Each year you depreciate €1,000. If you acquire it mid-year, the reasonable approach is to prorate the first year according to actual time in use.

Besides straight-line, there are other methods (for example, the sum-of-the-years’-digits method) and the option of justifying your own plan if your case requires it. Any criterion other than the maximum coefficient in the table must be justifiable.

Free depreciation and benefits for SMEs

The law provides incentives for small companies, that is, those that do not exceed a certain turnover. They include free depreciation linked to job creation or the option to freely depreciate certain low-value items up to an annual limit. An accelerated coefficient (multiplying the table maximum by a factor) is also allowed for certain new assets.

These benefits are subject to specific requirements: type of asset, deadline for putting it into operation, quantitative limits and, where applicable, maintaining headcount. The figures and conditions have changed over time, so before applying them, check the rules in force in 2026 or consult your advisor. An illustrative example: a low-cost item can be expensed in full in the year, while a higher-value machine is depreciated according to the table.

Watch out for the difference between the accounting expense and the tax expense: if you depreciate more in your books than the rules allow, the excess won’t be deductible and must be adjusted in your tax return.

Typical mistakes in the books

These are the errors we see most often when reviewing accounts:

• Depreciating the land along with the building, or failing to separate the value of the land when buying a property.
• Not registering the asset in the fixed asset register: the invoice is booked as an expense and you lose track of what remains to be depreciated.
• Starting to depreciate before the asset is in operation, or never starting at all because you forgot.
• Exceeding the maximum coefficient without justification, or continuing to depreciate an asset that is already fully depreciated.
• Not writing off assets that were sold, stolen or are unusable, so they keep appearing on the balance sheet and generating depreciation charges.
• Mismatches between the fixed asset record, the annual depreciation charge and the journal entries (the year’s expense and the accumulated depreciation should agree).
• Mixing private and business assets: only the portion used for the business is deductible, and for vehicles the business-use requirement is especially strict.

A good practice is to keep the investment asset register with the purchase date, value, coefficient applied and accumulated depreciation, and review it at the close of each year.

At Zythos Business we manage the fixed assets of freelancers and SMEs: we register each asset, calculate the annual charge using the most advantageous method within the rules, and check that records, entries and tax return all match. That way you make the most of every deduction you’re entitled to, with no surprises in an audit.