If you buy work equipment yourself (such as tools, machines, various pieces of equipment) or if you repair and maintain them yourself, you can deduct the costs.
You can deduct
- the acquisition cost of the equipment
- maintenance costs
- repair costs.
How to report tools as expenses for the production of income
The purchase and maintenance costs can be deducted as expenses for the production of income
If you have bought tools for work, you can deduct the costs as expenses for the production of income.
You can also deduct the maintenance and repair costs for tools, in addition to their acquisition prices.
The purchase price of a tool is under €1,200
If the purchase price of a tool you have bought is under €1,200, you can deduct the entire price in the tax assessment of the purchase year. Maintenance expenses are also deducted in the year when they were paid.
The purchase price of a tool is over €1,200
If the purchase price of a tool is over €1,200 (and its economic life is over three years), the purchase price is deducted in the form of annual depreciations. The depreciation is made separately for each tool, and the maximum depreciation is 25%. In the first year, you can deduct 25% from the purchase price and after that 25% from the undepreciated acquisition cost.
Example: You buy a machine you need for work, paying € 2,000 for it.
Year 1: 25% deduction based on annual depreciation × €2,000 = €500. The tax rules allow €500 as your deduction in year 1.
Calculate the following year’s depreciation from the remaining undepreciated acquisition cost, which is: €2,000 – €500, which makes €1,500 remaining.
Year 2: 25% × €1,500 = €375
Year 3: now the remaining undepreciated acquisition cost is less than €1,200 (2,000 – €500 – €375 = €1,125), so you can deduct it entirely in year 3.
Reimbursement for tools paid by the employer
It may be that your employer pays a reimbursement to you because you use your own tools for work. Although the employer can pay you the entire reimbursement without withholding any tax from it, it is still an item of taxable earned income for you. You can deduct the actual expenses you have had to pay for the use of your tools when you fill in the pre-completed tax return. Report the expenses under “Expenses for the production of income”.
Example: Peter has bought some work tools for €500 and received a €800 reimbursement from his employer for the tools. The €800 reimbursement will now be taxed as part of Peter’s earned income, because under the tax rules, the reimbursement is not specifically defined as tax-exempt income. Peter reports his actual tool cost (amounting to €500) on his income tax return as an expense for the production of income.