Capitalise or deduct directly from profit?
Written by Ilias Aarrass7 min read · Published on · Last reviewed on 
In short
An asset of € 450 or more is capitalised and depreciated; anything below that is booked as a cost at once, and the threshold applies per independently usable asset.
- The threshold is excluding VAT if you can deduct VAT, and including VAT under the small business scheme or with exempt turnover.
- Whatever forms one whole in use counts as one asset, such as a camera body with a fixed lens.
- Capitalised assets count towards the 28 per cent small-scale investment deduction above € 2,900 of investment a year.
- Splitting a purchase into smaller invoices to stay below the threshold gets corrected in an audit.
With every larger purchase for your business there's a question: may I deduct this directly as costs, or must I capitalise and depreciate it? The answer determines when you get the tax benefit. This article explains how to make the distinction.
What does capitalising mean?
Capitalising means putting a purchase on your balance sheet as a business asset, and spreading the cost via depreciation over several years. You then don't deduct the whole amount at once, but a part each year. This applies to things you use for a longer time, such as equipment and inventory.
What does deducting directly from profit mean?
Deducting directly from profit means you deduct the costs fully in the year of purchase. This applies to ordinary costs you consume, such as office supplies, and to business assets under 450 euros. The advantage is that you get the tax benefit immediately.
How do you make the distinction?
The rule of thumb is: if you use something for longer than a year and it costs more than 450 euros, you capitalise and depreciate it, whether that is a machine or having your website built. If you consume something quickly or it's cheaper, you deduct it directly. It's about the useful life and the value of the asset.
Why does it matter?
The distinction determines when you get the tax benefit. Deducting directly gives a lower profit this year and so less tax; capitalising spreads the benefit. Which approach is favourable depends on your profit and your plans. When in doubt about larger purchases, it's wise to coordinate this with your bookkeeper.
The € 450 threshold in practice
The threshold works per independent asset, and that is exactly where it goes wrong. A € 1,200 laptop is capitalised; a € 40 mouse is not. But what about a desk, chair and lamp bought together?
| Purchase | Treatment |
|---|---|
| A € 300 phone | Deduct at once |
| A € 1,200 laptop | Capitalise, depreciate over 5 years |
| Desk € 350, chair € 250, lamp € 80 (usable separately) | Each below the threshold: deduct at once |
| Camera body € 400 plus fixed lens € 300 (one unit) | Together one asset: capitalise |
| Refurbishing your business premises | Capitalise, whatever each invoice says |
Frequently asked questions
Where is the line between cost and investment?
At € 450 excluding VAT per independent asset. Below it you book the purchase as a cost at once; above it you capitalise and depreciate over its useful life, and the same goes for an intangible right such as a franchise entry fee.
Is the threshold including or excluding VAT?
Excluding VAT if you can deduct the VAT. Under the small business scheme or with exempt turnover you count including VAT, since it is then part of your costs.
What counts as one asset?
Whatever forms one whole in use. A desk and a separate chair are two assets; a camera body with a fixed lens is one. Decisive is whether the part is usable on its own.
Which is better: deducting at once or capitalising?
Deducting at once brings the benefit sooner; capitalising spreads it and counts for the investment deduction. Below the threshold there is no choice anyway: it is a cost.
May I split a large purchase into smaller invoices?
No. It is the asset that counts, not the invoice. Artificially splitting a purchase to stay below € 450 gets corrected in an audit.
How do I depreciate once capitalised?
Usually straight-line over five years, with a residual value, and at most 20 per cent of cost per year. As a starter you may choose the timing with arbitrary depreciation. See also depreciation and the investment deduction.
Sources
- Depreciation and the € 450 thresholdOverheid.nl · ondernemersplein.overheid.nl
- Small-scale investment deduction 2026Belastingdienst · belastingdienst.nl
Sources checked on
This article provides general information based on the rules known for 2026 and does not replace personal tax advice. For your specific situation, we're happy to take a look with you.
