Use

The legal regulations for special tax depreciation in Germany change frequently, depending on the economic and political situation. Sometimes they are open to interpretation. SAP makes every effort to provide the depreciation keys needed for the most commonly used procedures.

Most of these tax regulations allow for distributing the special depreciation over a tax concession period. The standard depreciation keys provided by SAP allow for claiming the maximum amount of special depreciation as early as possible.

Features

User-Specified Claiming of Special Depreciation

If you do not want to claim special depreciation at the earliest possible point in time, then you have to define your own depreciation key, or post the special depreciation manually. Follow these steps if you want to define your own depreciation key:

The following example shows the level definition of a depreciation key. It depreciates 50% within the first five years, regardless of the acquisition year. The entire special depreciation is claimed at the end of the tax concession period.

Law Regarding Subsidy of Development Areas

The use of special depreciation in a tax concession period can be explained using the example of the German law regarding subsidy of development areas. The benefits of this law are frequently claimed in Germany for new assets in specific geographic areas (former East Germany). The law permits a given favorable percentage of the asset to be depreciated in the five years following its acquisition. The investment must have been acquired in the time period between December 31 1990 and January 1, 1997.

Internal Calculation Key

There are three types of asset investment allowed under the German law regarding subsidy of development areas. Different depreciation keys are required for each of these three cases. These depreciation keys are a combination of calculation key 5050 (for the 50% special depreciation) and another user-defined calculation key (for the straight-line depreciation allowed in addition to the special depreciation).

Calculation key 5050 is defined with depreciation method G (total percentage during tax concession period), and a percentage of 50%. This definition ensures that special depreciation consisting of 50% of the APC is calculated within the tax concession period. The system plans this depreciation immediately for all acquisitions during this time period (that is, as early as possible). In some years, the full amount of special depreciation cannot be claimed, for example, due to manual adjustments. When this occurs, depreciation method G makes sure that the missing amount is automatically made up in the following year. The calculation of special depreciation stops when the tax concession period comes to an end.

Depreciation Key

The depreciation keys that can be used are listed below:

SNFG - for APC and Subsequent APC of Movable Goods, as Well as APC of Immovable Goods that are Not Buildings or Independent Parts of Buildings

Calculation key 5060 is used for the 50% special depreciation. Internal calculation key 1140 is used for the straight-line depreciation in addition to the special depreciation. During the tax concession period, the system calculates straight-line depreciation according to the formula APC/total useful life. After the tax concession period ends, the system calculates according to the formula net book value/remaining useful life.

In the acquisition year, the system calculates straight-line depreciation according to the first year convention of a half year. The system always calculates the duration of the tax concession period after the start of special depreciation. The start of special depreciation is always set to the start of the fiscal year, in accordance with the annual rule. Acquisitions after the planned useful life has expired are immediately depreciated in full.

SNFB for Subsequent APC of Immovable Goods per Paragraph 4, Section 3

Calculation key 5060 is used for the 50% special depreciation. According to the law, net book value should be depreciated uniformly, from the year in which special depreciation can no longer be claimed, up to the end of the 9th year after the original acquisition, regardless of how long the original useful life was. When using depreciation key SNFB, therefore, you must choose the useful life so that it always ends at the end of the 9th year after the acquisition.

Internal calculation key 1178 is used for the straight-line depreciation in addition to the special depreciation. This calculation key assumes an original useful life of 50 years. In the acquisition year, it depreciates an additional 2% of APC. In the following years, it calculates according to the formula net book value/remaining useful life. The 2% is based on an assumed useful life of 50 years. If the original useful is not 50 years, then you have to define your own calculation key that corresponds to 1178. Copy and change 1178 to meet your needs, and enter it in a new depreciation key that corresponds to SNFB. You make the changeover to declining-value depreciation by using changeover key 1010 and a changeover percentage rate of 50%.

In the acquisition year, straight-line depreciation is calculated based on the date of the initial acquisition, using pro rata temporis. The law is open to interpretation here to some degree, so that it is possible the first year convention of a half year could be used here as well. If you use the first year convention, you have to change key 1178 accordingly.

SFGW, SFGX, SFGY, SFGZ for APC for Buildings or Independent Parts of Buildings

For this type of special depreciation, you have to use one of the following depreciation keys, depending on the acquisition year.

Calculation key 5050 is always used for the 50% special depreciation.

The calculation keys below are used for the straight-line depreciation during the tax concession period.

When the expected useful life is 50 years, calculation keys 1174 to 1177 depreciate an additional 2% of APC annually during the tax concession period. After the end of the tax concession period, changeover key 0015 is used to depreciate the asset for 50 years using depreciation method U (percentage rate from remaining useful life + changeover date - depreciation start date). At the end of the tax concession period, the net book value of the asset is distributed linearly over the entire useful life of the asset, whereby the percentage rate determined at the outset (2%) now applies to the net book value of the asset (after the tax concession period).

If you have useful lives of different lengths, then you have to create your own similar calculation keys (for example, 4% over 25 years) by copying and changing keys 1174 - 1177.

The system carries out the changeover to declining balance depreciation with changeover key 0015 using the following changeover percentage rates:

When you create your own calculation keys based on keys 1174 - 1177, you have to replace the 2% here (related to the useful life of 50 years) with the appropriate percentage rate (such as, 4% over 25 years). Calculation keys 1174 - 1177 use the pro rata temporis method in the acquisition year. If the originally planned depreciation method uses a different period control, you have to enter it in the calculation keys you change.

A special situation also arises when you have a non-calendar fiscal year that allows you to still claim special depreciation in 1995. If this is the case, you also have to copy and modify calculation keys 1174 - 1177. You also have to create an additional calculation key for the year 1995: Proceed as follows:

45.9% = 50% - (1+1)*2% - 0.1%

Enter a useful life of 50 years in the master record. Calculation key 1476, however, ensures that the net book value is distributed over the full 50 years again after the end of the tax concession period