Ask a tax advisor on the topic of Other questions to tax advisors

Current assets are not deductible.

November 27, 2009 | 30,00 EUR | answered by Irmingard Huber-Stempfel

Good day,

We are a small company in the used machinery trade. Due to an increase in sales, I expect to soon be required to prepare a balance sheet. I have heard that for companies that prepare a balance sheet, newly acquired machines (current assets intended for resale) do not reduce taxable profit at all. What about the numerous additional costs incurred when purchasing, processing, and selling a machine? In our industry, the additional costs are much higher than the actual purchase price of the machine.
Additional costs of machine acquisition: disassembly costs, cranes, rental of space at the previous owner's location, consulting costs, transportation costs, etc. These additional costs are partially incurred by external service providers, but also sometimes by the seller of the machine. It happens that we buy a machine and the seller offers us additional services at a low cost, such as forklift rental, employee assistance, etc. Are all of these costs immediately deductible or not? Thank you very much.

Irmingard Huber-Stempfel

Dear inquirer,
I would be happy to answer your question as part of the initial consultation.
Activation-obligated acquisition costs are all costs incurred to acquire an item and put it into a working condition. This includes all incidental costs of acquisition that need to be capitalized as acquisition costs. Incidental costs include transportation costs, dismantling costs, forklift rental, labor costs, etc. that are incurred for the acquisition of a specific asset.
Therefore, they are not immediately deductible as operating expenses. They only have an effect on reducing profits through cost of goods sold.
The advice is based on the presented facts. Changes in the facts may result in legal changes to the answer.
Sincerely,

Huber-Stempfel
Lawyer and Tax Advisor