Tools: deduct at once or capitalise? The € 450 threshold
Written by Ilias Aarrass5 min read · Published on · Last reviewed on 
In short
Tools under € 450 excluding VAT are deducted at once as a cost; at € 450 or more and lasting over a year you capitalise them and usually depreciate over five years.
- The € 450 threshold applies per item, not per receipt, so four € 300 machines on one day are four separate costs.
- Only assets above € 450 count towards the small-scale investment deduction, which sometimes makes bundling purchases into one year worthwhile.
- VAT is always reclaimed in one go in the period of purchase; VAT does not follow the depreciation.
- Private tools you contribute are depreciated on their current value, with no VAT refund and no investment deduction.
A € 180 cordless drill is a cost. A € 1,400 saw table is a business asset. The difference is not what it is, but what it costs and how long it lasts. Those two questions decide whether you take the amount off your profit at once or spread it over several years, and whether you get investment deduction for it.
The two questions that decide it
Does it last longer than a year and cost € 450 or more excluding VAT? Then it is a business asset: you put it on the balance sheet and depreciate it. If either is not the case, it is simply a cost in the year of purchase. The same consideration as with capitalising or deducting at once for other purchases.
That € 450 applies per item purchased, not per receipt. If you buy four € 300 machines on one day, those are four separate costs and not a € 1,200 investment.
Depreciation in practice
Tools are usually depreciated over five years, so 20% a year. You first deduct the residual value: what the item is still worth after those five years. For hand tools that is often zero; for heavier machinery it is not. How to depreciate on a straight-line or reducing basis is covered separately.
| Purchase price | Treatment | Investment deduction? |
|---|---|---|
| Under € 450 | Fully deductible at once | No |
| € 450 or more | Capitalise and depreciate | Yes, it counts |
| Consumables, any amount | Deductible at once | No |
Worked example: a € 1,400 saw table
- Purchase price excluding VAT
- € 1,400
- Residual value after 5 years
- € 200
- Amount to depreciate
- € 1,200
- Depreciation per year
- € 240
Result: You take € 240 off your profit for five years. The € 294 of VAT, however, you reclaim in one go in the period of purchase, because VAT does not follow the depreciation.
Adding the investment deduction
If in one year you invest more than the threshold amount in business assets, you also get the small-scale investment deduction. It comes on top of your depreciation: you deduct an extra percentage of the invested amount in the year of purchase. The current threshold and rates are in investment deduction (KIA).
Only assets above € 450 count towards that deduction. That is exactly why it is sometimes worth making larger purchases deliberately in the same year rather than spreading them over two. See also steering profit around the year-end.
Tools you already owned
If you bring private tools into your business at the start, you may depreciate them, but on their current value and not on what you once paid. You cannot reclaim VAT on them and you get no investment deduction. Substantiate that value with a comparable second-hand price and keep the evidence. More on this in contributing private belongings.
Frequently asked questions
May I choose a shorter depreciation period myself?
Only if the actual useful life is shorter and you can substantiate it. Five years is the usual term for tools.
What if the tool breaks sooner?
Then you write off the remaining book value as a loss in that year. Keep proof that it was disposed of or traded in.
Does VAT count towards the € 450 threshold?
No, you look at the amount excluding VAT. Unless you fall under the small business scheme, in which case the VAT is part of your cost.
What about consumables like sandpaper and drill bits?
Those do not last a year and are therefore always an immediate cost, whatever the amount on the receipt.
Sources
- Depreciating business assetsOverheid.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.
