Tax tips for the turn of the year: What online retailers should keep in mind until the end of the year

To ensure you are well prepared for the turn of the year, we have some valuable tax tips for you.

Tip 1: Depreciate assets optimally

Machinery, operating and office equipment, hardware and software, and vehicles are subject to wear and tear. This loss in value is recognized as a business expense for tax purposes via depreciation (AfA). Investments made before the end of the year can also influence your profits for 2025. However, the full cost of the purchase is only deductible under certain conditions.

The principle is: depreciation must be calculated on a pro rata basis.

As a rule, assets must be depreciated over their useful life, e.g., company cars over 6 years or office equipment over 10 years. It should be noted that for 2025, only pro-rata depreciation of 2/12 or 1/12, i.e., for November and December or for December only, is permitted.

Declining balance depreciation possible again

Depreciation in decreasing annual amounts (degressive) allows for higher depreciation amounts in the early years. For movable fixed assets acquired or manufactured between July 1, 2025, and December 31, 2027, the option of linear or degressive depreciation has once again been made available for a limited period.

The declining balance depreciation is three times the straight-line depreciation and is capped at 30 percent. However, declining balance depreciation will only be permitted on a pro rata basis in 2025.

Depreciation of up to 75 percent possible for new electric cars

A new arithmetic declining balance depreciation method has been introduced for newly purchased (pure) electric vehicles that are part of business assets in the period from July 2025 to December 2027. The following graduated rates apply:

75 percent in the year of purchase, 10 percent in the first subsequent year, 5 percent in the second, 5 percent in the third, 3 percent in the fourth, and 2 percent in the fifth year.

This type of depreciation can only be applied if no special depreciation allowances are claimed and covers all vehicles, regardless of their vehicle class.

For purchases made during the year, pro rata depreciation does not apply here. This means that you can still deduct the full 75 percent depreciation from your profits when purchasing/commissioning until December 31 of the current year.

Note:
In the case of leasing, there must be an actual transfer of ownership. If the economic ownership was already attributable to the lessee during the term of the lease, there is no new acquisition when the asset is subsequently taken over, meaning that the 75 percent depreciation allowance does not apply.

Special depreciation allows for higher depreciation amounts

Small and medium-sized enterprises can claim a special depreciation allowance of 40 percent in addition to straight-line or declining balance depreciation in the year of purchase and the following four years. This full 40 percent can also be applied to assets acquired in November or December of the year. The prerequisite for this is that the asset is used almost exclusively (at least 90 percent) for business purposes. In addition, your profit must not exceed €200,000.

Write off hardware and software immediately

For various hardware and software, e.g., tablets, laptops, or docking stations (but not cell phones!), the tax authorities have reduced the depreciation period to one year. This means that hardware and software purchased this year can be written off in full to a nominal book value of €1. This is even permitted for hardware and software purchased at the end of the year. The amount of the acquisition costs is irrelevant, so even high-value technology can be recorded in full as an expense.

Low-value assets

Other assets (except hardware and software) can only be claimed immediately as business expenses if their acquisition costs (excluding sales tax) do not exceed €800 and the acquired depreciable asset can also be used independently.

investment deduction

Even if you only want to invest in the next three years, you can already claim profit-reducing deductions in 2025 – with the help of an investment deduction (IAB). You can claim this deduction in the amount of 50 percent of the expected acquisition or production costs of the asset. The maximum amount of the IAB is €200,000. However, this is subject to the condition that your company's profit does not exceed €200,000.

Note:
IABs formed in 2022 must be invested in by the end of 2025. Otherwise, the IABs must be dissolved retroactively. You should therefore check whether an investment in 2025 makes sense from a business and tax perspective.

Tip 2: Follow the 10-day rule and make the most of it for yourself

Small businesses and freelancers may determine their profits using a simplified cash basis accounting method. For profits in 2025, the decisive factors are therefore whether operating income has already been credited to the bank account or collected in the cash register and whether payments for operating expenses have already been made. Taxable business profits can be reduced by deferring inflows to the following year and/or bringing forward cash expenditures to December 2025. To manage this, you can, for example, agree on different payment terms with customers or suppliers.

However, the so-called 10-day rule provides an important exception to the accrual principle. This applies to regularly recurring income and expenses that accrue or are paid shortly before or after the end of the year. The rule states that these income and expenses are considered to have been received in the fiscal year in which they were incurred if they are also due during this period. A short period is defined as 10 days, i.e., payments between December 22 and January 10 of the following year.

On the expenditure side, this includes, for example, monthly sales tax prepayments, rent, insurance premiums, and loan interest. On the income side, regularly recurring income such as annual payments for warranty contracts or regular advance payments for maintenance contracts are subject to the 10-day rule if the payments are also due within this period. The sales tax prepayment for the month of December is only subject to the 10-day rule if no extension of the deadline has been requested.

Note:
However, if, for example, the annual premium for business liability insurance for 2026 is paid on December 10, the entire amount can be recognized as an expense in 2025, because outside the 10-day period, even in the case of regularly recurring income or expenses, it is not the due date that counts, but only the inflow or outflow.

Tip 3: Is it art or can it go?

In the spirit of reducing bureaucracy, it has been legally stipulated that merchants are only required to retain accounting documents for eight years instead of ten, in accordance with commercial and tax law provisions. Books and records, inventories, annual financial statements, management reports, opening balance sheets, and customs code documents must be retained for ten years, accounting documents for eight years, and other documents (commercial and business letters) for six years. Similarly, the VAT retention period for invoices, including e-invoices, has been adjusted to the changed retention period.

Note:
The obligation to retain tax-related documents begins at the end of the calendar year in which the last entry was made in the respective business records or the accounting document was created. In exceptional cases, however, documents must be retained for longer, e.g., if the taxation procedure has not yet been completed due to a tax audit. In addition, documents of lasting importance should be archived for as long as they may be relevant for tax purposes (e.g., rental agreements, loan agreements, partnership agreements). And in the case of all coronavirus aid, it is necessary to check carefully which retention periods apply to the notices and thus also to the underlying documents.