Capital gain
If you sell for more than the remaining undepreciated value, the difference is a positive income item.
VAT numbers · Multi-year costs
Business assets and depreciation
An €800 computer is deducted in the year; a €15,000 installation is spread over several years. The difference is not the amount itself but how long the asset stays useful, and the law turns that into precise rules.
01 · The rule
Why some costs are not deducted at once
Business assets are those meant to be used in the activity over time: they are not used up in a single year, so their cost is spread over the years in which they are useful.
Depreciation is exactly that: deducting the cost in annual instalments, according to the useful life of the asset.
- Consumables (stationery, materials, services) are deducted in full in the year.
- Business assets are depreciated using the coefficients set by category and sector.
- Assets with a low unit cost, within the set threshold, can be deducted in full in the year.
- Land is not depreciated: its usefulness does not run out.
- Intangible assets (software, trademarks, goodwill) have their own rules.
- Under the flat-rate scheme nothing is deducted item by item: costs are already built into the coefficient.
The threshold for full deduction refers to the unit cost of each asset, not to the purchase as a whole: ten chairs under the threshold are all deducted in the year, even if together they cost more than one asset above the threshold that has to be depreciated.
02 · The calculation
How the depreciation charge is worked out
The annual charge is found by applying to the cost of the asset a coefficient set by decree, which varies by asset category and by business sector.
The depreciable cost
Purchase price plus directly attributable ancillary costs: transport, installation, testing. Non-deductible VAT is included.
The coefficient
Set by type of asset and sector. It determines how long the schedule runs: a higher coefficient means faster depreciation.
The first year
The charge is halved, except in the special cases provided for.
The end
Depreciation continues until the cost is fully used up, unless the asset is sold or disposed of earlier.
Where mistakes are made
Almost always in working out the cost.
- Forgetting ancillary costs, which are part of the cost
- Including costs that are really maintenance expenses for the year
- Applying a coefficient from a different category
- Not halving the charge in the first year
03 · Exceptions
Assets with their own rules
Some categories have quantitative limits that reduce deductibility regardless of the coefficient.
- Separating out the land from buildings is compulsory: the part referring to the land is not depreciated.
- Leasing deducts the lease payments but requires a minimum contract length for full deductibility.
- Ordinary maintenance is deducted in the year, up to a percentage limit on the cost of the assets.
- Extraordinary maintenance that increases the value of the asset is capitalised and depreciated.
- Assets that revert free of charge to the grantor have their own financial depreciation.
| Asset | Treatment |
|---|---|
| Vehicles for mixed business and private use | Partial deductibility and a cap on cost. See cars and deductible expenses |
| Phones | Partial deductibility of the cost and running expenses |
| Business property | Depreciation at its own coefficient, separating out the value of the land |
| Low unit cost assets | Full deduction in the year, by choice |
| Intangible assets | Depreciation in instalments set by specific rules for each type |
| Leased assets | Deduction of lease payments, with a minimum contract length for tax purposes |
04 · The records
The register of depreciable assets
It is the document that tracks every business asset and how far it has been depreciated. For many taxpayers the obligation is met through the accounting records, but the information itself is still needed.
- For each asset: purchase date, cost, coefficient applied, instalments deducted, remaining value.
- It must be updated at every purchase, sale or disposal.
- For property, the separation of the land value must be shown.
- It is the document that supports the deduction in the event of an inspection.
- It is used to work out the capital gain or loss when an asset is sold.
- It feeds into the ISA variables: a register that is out of line produces a lower score.
A badly kept fixed asset register is one of the most frequent causes of a low ISA score (the tax reliability index): the value of business assets is one of the indicators, and if it does not reflect reality the inconsistency shows up in the calculation. It is something you can fix in an afternoon and that then stays correct for years.
05 · The exit
What happens when the asset leaves the business
Selling a business asset produces a capital gain or loss, found by comparing the price received with the remaining value.
Spreading the gain
Gains on assets held for at least a minimum period can be spread over several years.
Capital loss
If you sell for less than the remaining value, the difference is deductible.
Disposal
Scrapping or disposing of an asset that is not yet fully depreciated produces a loss, which must be documented.
Own use
An asset put to purposes outside the business is valued at normal value, with a self-invoice issued.
Assets with limited deductibility
For cars and similar assets, gains and losses count in the same proportion as the deductibility.
06 · Investment incentives
Incentives on investment
Over time a series of measures have increased the deduction or granted a tax credit on investment in business assets.
- Tax credits for investment in new business assets, at rates that vary by type.
- Measures for assets with a high technological and digital content, with interconnection requirements.
- A technical appraisal is often a condition for the benefits on technological assets above a threshold.
- The invoice must state the legal reference for the incentive: without it, the credit is disallowed.
- The credit is used by offsetting it through the F24 (the Italian tax payment form), with dedicated tax codes.
- The measures change from year to year: they must be checked at the time of the investment, not afterwards.
The wording on the invoice with the legal reference for the incentive is the formal requirement that loses the most credits. Ask the supplier for it before the invoice is issued: adding it afterwards is possible in some cases, but it is a correction, not standard practice.
Frequently asked
The questions that keep coming up
I bought a computer for €800. Do I deduct it straight away?
Yes, if the unit cost is within the threshold for full deduction you can deduct it entirely in the year, without depreciating it.
It is an option, not an obligation: you can also choose to depreciate it. Full deduction almost always pays off, except where the year is already showing a loss.
Is leasing better than buying?
For tax purposes, leasing deducts the lease payments, but it requires a minimum contract length for full deductibility: shorter contracts mean the excess part is added back.
The comparison has to look at length, implicit interest rate, buyout and the overall financial effect, not only deductibility. For assets with limited deductibility, such as cars, the set caps apply in any case.
I sold a machine that was not yet fully depreciated.
You compare the price received with the remaining undepreciated value: the difference is a capital gain if positive, a capital loss if negative.
Gains on assets held for at least a minimum period can be spread over several years, which lets you distribute the tax burden instead of concentrating it in one year.
I am on the flat-rate scheme. Do I need to keep the asset register?
Under the flat-rate scheme costs are not deducted item by item, so there is no depreciation to calculate for income purposes.
It still makes sense to keep track of your business assets: you need it for the scheme's spending limit on business assets, for any move to the ordinary regime, and to know what you own.
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The fixed asset register is the business's memory
Kept well, it tells you what you own, how much you have already deducted and what happens if you sell. Kept badly, it takes real effort to rebuild years later.