Depreciation Calculator
Germany

IAS 16 depreciation in Germany: IAS 16 (EU-endorsed) / HGB §253 (German GAAP)

Germany applies IAS 16 through EU endorsement for publicly listed companies (kapitalmarktorientierte Unternehmen) and their consolidated groups. Non-listed German entities report under HGB (Handelsgesetzbuch), where depreciation follows §253 HGB based on the concept of planmäßige Abschreibungen (systematic depreciation). German tax depreciation (steuerliche Absetzung für Abnutzung — AfA) follows yet another set of rules, creating a three-tier system for many German groups: IFRS consolidated, HGB individual, and tax depreciation.

Regulatory context: BaFin / Deutsche Prüfstelle für Rechnungslegung (DPR/FREP)

The Deutsche Prüfstelle für Rechnungslegung (DPR/FREP) has examined IAS 16 application in its enforcement reviews. Key findings include: inconsistent useful life estimates across group entities, insufficient documentation of the basis for residual value estimates, failure to apply component depreciation to material property assets (particularly industrial facilities), and inadequate disclosure of changes in estimates under IAS 8. BaFin supervisory expectations for financial institutions add additional requirements around PP&E reporting.

Practical guidance for Germany

For German IFRS reporters, the most important practical issue is the separation between IFRS depreciation (IAS 16), HGB depreciation (§253 HGB), and tax depreciation (AfA). The German tax authorities publish official depreciation tables (AfA-Tabellen) that specify useful lives for virtually every type of asset. While these tables are authoritative for tax purposes, they should NOT be used as the basis for IAS 16 useful lives — IAS 16 requires entity-specific estimates based on expected use, not standardised tax tables. However, in practice, many German entities default to AfA-Tabelle lives for convenience, which may not comply with IAS 16.51's requirement for entity-specific assessment.

Audit expectations

German audit firms (Wirtschaftsprüfungsgesellschaften) follow ISA as adopted in Germany plus IDW auditing standards. The audit of depreciation estimates requires specific attention to: whether IAS 16 useful lives differ appropriately from AfA-Tabelle rates (blind adoption of tax rates is a red flag), whether component depreciation is applied to industrial and real estate assets, whether the annual review of estimates is performed and documented, and whether changes in estimates are properly disclosed. APAS (Abschlussprüferaufsichtsstelle) inspections have focused on the quality of auditor challenge for PP&E estimates.

Germany-specific considerations

German-specific considerations include: the Investitionsabzugsbetrag (investment deduction) that allows small and medium-sized entities to deduct up to 50% of planned investment in advance for tax purposes — this has no IFRS impact but affects tax planning around asset acquisitions. The Sonderabschreibung (special depreciation) for small entities allows 20% additional first-year depreciation for tax purposes — again, no IFRS impact. For Gewerbesteuer (trade tax), depreciation is a deductible expense, creating an incentive for higher depreciation rates in tax accounts that should not influence IFRS estimates.

Common inspection findings

AfA-Tabelle rates used for IAS 16 without entity-specific justification

Component depreciation not applied to industrial plant and real estate assets

Annual review of residual values and useful lives not documented or evidenced

Changes in depreciation estimates not properly disclosed as IAS 8 changes

Inconsistent useful life estimates across group entities without adequate justification