Treatment of acquired usage rights for creative work
April 14, 2012 | 15,00 EUR | answered by Dr. Yanqiong Bolik
At the beginning of the year, we had drawings created by a graphic designer. We received an invoice for 1,200.00 EUR plus 7% VAT, totaling 1,284.00 EUR.
As part of the invoice, we were granted an unrestricted right to use (including resale) in terms of time and space.
We do our accounting as part of the income/expenditure calculation.
Our question: How should the invoice be classified in terms of accounting? As an expense? As an intangible asset? What about depreciation?
Thank you and best regards.
Dear inquirer,
Thank you for your inquiry, which I will gladly answer taking into consideration your input and the rules of this platform.
Please note that my explanation is based on the facts presented, and that adding, omitting, changing information, or the ambiguity of information can alter the tax result.
Expenses in tax law arise from the depreciation through the consumption of goods and the use of services. Based on the description provided, by paying the invoice amount, at least the economic ownership of the drawing by the graphic designer has been transferred to you, as the actual control over the drawings is exercised in a way that economically excludes the graphic designer from influencing the drawings for the ordinary useful life. Therefore, a transaction of acquiring the drawings is taking place. The amount paid is then considered the acquisition cost for the drawings.
Intangible assets may include: rights, rights-like values, and other benefits. Drawings do not fall under this category and are therefore classified as tangible assets. Whether the drawings are depreciable depends on the duration of their usability. If the use of the drawing is not limited in time and the drawings are not subject to wear and tear, then they are considered non-depreciable assets. According to § 4 para. 3 EStG, the acquisition costs of a non-depreciable asset are not to be considered as expenses at the time of acquisition, but only at the time of sale or withdrawal. If you can prove to the tax authorities a limited useful life of the drawings, then you can depreciate the drawings over the ordinary operational useful life.
I hope I could be of assistance to you.
If there are still uncertainties, please feel free to use the follow-up function.
Best regards,
Dr. Yanqiong Bolik
Tax consultant
Bildstöckle 6, 70567 Stuttgart
Tel: +49 (0)711 / 2132 1815
Email: steuer@zdbz.de
www.steuerberatung.zdbz.de
