What is an investment good?
An investment good is something you buy for using in your business with a useful life of more than one year and a value of more than 300€. The Tax Agency does not allow you to deduct an expense in full in the same period of purchase. You have to deduce it little by little as the good "depreciates" and loses value.
An investment good is therefore an asset that you have not purchased for sale to your client, but for use in carrying out your business. For example, the computer you use to work as a freelancer or entrepreneur.
Tangible fixed assets
It is a durable physical good.
Intangible fixed assets
When you buy software that you use on your computer, it is an intangible asset because it is not physical.
Real estate investment
In the case of buildings, the value of the land is not depreciable, but the construction and rehabilitation are.
How is an investment good deducted?
The deduction for investment goods costs is different from VAT (the portion of VAT borne on your purchase invoice) and personal income tax (the taxable base of your purchase invoice).
You can recover the amount of VAT incurred on your purchase invoice in the same year in which you purchased it. Taxable contributions will only be 100% deductible if the assets acquired are fully affected by the activity.
The minimum amount to be considered an investment good for VAT purposes is a taxable base of 3005.06€.
Personal income tax deduction
Investment goods, in contrast to current expenses, depreciate over time; so we have to deduct personal income tax expense gradually over several periods according to the amortization rules.
An investment good whose value does not exceed 300€ (up to a limit of 25,000€ in the same year) can be freely depreciated as long as it is tangible and new.
How is an investment good accounted for and amortized?