The rates are fixed
Unlike business expenses, there is nothing to weigh up here. The rate follows from the category, not from a view on the useful life.
| Asset | Rate a year |
|---|---|
| Commercial buildings | 3 % |
| Industrial, agricultural and hotel buildings | 4 % |
| Machinery and plant | 10 % |
| Furniture and fittings | 10 % |
| Agricultural machinery | 15 % |
| Computers, hardware, operating software | 20 % |
| Application software up to €1,709 | 100 %, immediately |
| Application software above €1,709 | 33⅓ % |
Allowances are straight-line, that is, in equal annual amounts.
Software is the most interesting case
For a software company or a service business this is the category that comes up most often, and it has three parts:
| Case | Treatment |
|---|---|
| Operating software | 20 %, like hardware |
| Application software up to €1,709 | 100 % in the year of acquisition |
| Application software above that | 33⅓ % |
The €1,709 limit comes from a conversion from pounds and has stood unchanged for years.
In practice: a licence costing €1,500 works in full immediately, one costing €2,500 over three years.
What a deduction is worth
The deduction reduces taxable profit, on which 15 % has been charged since 2026.
Example: a laptop for €2,000 at 20 %:
| Year | Allowance | Tax saved at 15 % |
|---|---|---|
| 1 to 5 | €400 each | €60 each |
| Total | €2,000 | €300 |
The same amount as an immediately deductible business expense would have given €300 in the first year. So the difference is not in the total but in the timing. On the rate, see the guide to corporate tax.
Increased rates for energy efficiency
A 2023 amendment introduced a regime that according to one source was extended to 2030:
| Investment | Instead of | Increased to |
|---|---|---|
| Energy-efficient building work | 3 % | 7 % |
| Machinery for renewable energy or efficiency systems | 10 % | 20 % |
For a company investing anyway, that doubles the annual deduction without anything changing about the investment.
Distinguishing from running costs
Two separate systems, and the allocation is made when you post:
- Running costs work in the year they arise, see the guide to business expenses
- Acquisitions work spread through capital allowances
Between the two sits the question of when something counts as an acquisition. On that we found no general value threshold in the sources we checked, apart from the special rule for application software.
What we could not substantiate
- The rates for second-hand buildings. That they differ is stated in one source. Which rates apply we could not establish, and it has effects over decades.
- The 2026 change for agriculture and livestock. An accelerated rate of 25 % is quoted, and so is an additional deduction of 20 % after deducting grants. The sources contradict each other.
- A general value threshold above which an item counts as an acquisition. Apart from the rule for application software we found none.
- The official source of the rates. They appear consistently in several overviews from audit firms. We did not inspect the wording of the law and the related regulation, and two presentations differ on individual lines.
Before a larger acquisition the question is worth asking, because the allocation fixes the deduction for years: Cyprus setup from one place.
Bookkeeping: an acquisition works over years
A business expense is posted once and done with. An acquisition has to be picked up every year, at the same rate, until it is written off.
That is exactly where spreadsheet bookkeeping fails: the fixed asset register is set up in year one and forgotten in year three. In Volk Accountant the acquisitions carry forward, and the reports show their contribution to the result. The receipt sits with the transaction through receipt capture, which matters because it has to be available six years after the last return, see the guide to keeping records.