Fixed‑asset amortization

What amortization is

Amortization spreads the cost of a fixed asset or intangible asset over time. Instead of one‑off expense, the cost is recognized gradually as tax‑deductible expense.

What can be amortized

Most commonly:

• fixed assets (equipment, machines, vehicles, real estate),
• intangible assets (licenses, software).

The asset must be complete, fit for use and used longer than one year.

What is usually not amortized

Land is generally not amortized. With real estate, it is typically the building or premises that are depreciated, not the land itself. If in doubt, verify the classification under PIT/CIT rules.

Initial value and start date

Amortization is based on the initial value, usually the purchase price plus costs required to make the asset usable. It starts after the asset is accepted into use and recorded in the register.

Amortization methods

Typical methods:

• straight‑line — constant rate each period,
• declining — higher deductions at the start,
• one‑off — only in specific cases and limits.

The method affects the timing of tax costs. Before choosing, verify whether changes are allowed later.

One‑off and low‑value assets

Tax law allows one‑off amortization and simplified treatment for low‑value assets, but the limits and exclusions can change. Always check current thresholds before applying this option.

Intangibles — specific rules

Intangible assets (licenses, know‑how, IP rights) have separate rules and often minimum amortization periods. Some rights must be amortized over a statutory minimum time.

Rates and KŚT schedule

Rates come from official schedules and the KŚT classification. Choosing the wrong group can distort costs.

Improvements and value changes

If the asset is improved (e.g., modernization), the initial value may increase. Then the amortization plan changes accordingly. Document all improvements.

Amortization and tax costs

Amortization deductions are tax‑deductible. If an asset is partly private, the tax cost should be proportional.

Amortization vs leasing and renting

In operating lease, instalments are typically the tax cost, not amortization. In finance lease, the asset may be on the lessee’s side and amortization can apply. When you rent or lease someone else’s asset, you generally do not amortize it unless specific rules allow it.

Documents and records

You typically need:

• proof of purchase,
• acceptance into use (OT),
• fixed‑asset register,
• amortization plan.

Example

A business purchase with an assigned rate allows the cost to be spread over months. A higher rate accelerates deductions, but only within legal limits.

Step‑by‑step scenario

1. Verify the asset meets the fixed‑asset / intangible definition.
2. Set the initial value and collect purchase evidence.
3. Choose the method and rate from the proper KŚT group.
4. Record the asset and start deductions in the next period.

Checklist before you start

• Does the item meet the fixed asset / intangible definition?
• Do you have purchase evidence and acceptance documents?
• Is the rate aligned with the KŚT classification?
• Are there any limits or exclusions for one‑off amortization?

Common mistakes

• amortizing assets that don’t qualify,
• missing OT or register,
• incorrect rate,
• no proportional split for mixed use,
• ignoring improvements and value changes.

See also: Tax‑deductible costs and Lump‑sum tax.