With the end of each year, the question arises as to whether and when to invest as a company in new tools: for painter’s a new paint sprayer would be such an investment. The first decision criterion should, of course, be the necessity and the need. However, the tax effectiveness of investments and the timing of acquisition are also not unimportant. For this reason, painters should always keep an eye on the tax reduction for planned expenditures when purchasing new airless paint sprayers.
When is an airless paint sprayer tax-deductible?
The basis for determining depreciation periods is the local tax code. Different countries have different regulation on the matter, although within the boundaries of the EU the law is pretty much the same. Your company’s expenses for tools and equipment will affect the tax bill.
Here in Germany, for the paint and varnishing industry, under the category “equipment” airless devices, high-pressure and low-pressure sprayers are also indicated. The amortization period for tools in this category is 5 years or 20% of the purchase price.
How does tax reduction work?
To illustrate the tax reduction rules, here is an example: Mr Meyer has his own painting company, Painter Meyer OK, let’s say, The business is growing and there are increasingly larger orders for renovation of facades and also in the field of filler. Therefore, Mr. Meyer would like to buy a large airless device for the processing of filler.
As an example a Graco Mark VII for the price of 6.499,99 € incl. VAT
Purchase (gross) incl. 19% VAT – 6.499,99 €
Purchase (net) excl. 19% VAT – € 5,462.18
The amortization of the acquisition sum (net) of € 5,462.18 takes place over 5 years. Mr Meyer bought his new paint sprayer in December 2016. So this how the tax reduction is calculated:
Depreciation in 2016: € 1,092.43
Depreciation in 2017: € 1,092.43
Depreciation in 2018: € 1,092.43
Depreciation in 2019: € 1,092.43
Depreciation in 2020: € 1,092.43
The sum of € 1,092.43 is deducted annually from the taxable profit of the Meyer painting company and the tax payment is waived. The individual tax benefit then depends on the respective tax rate. Considering the highest rate of income tax is 42%, tax savings of € 2,294.12 would result.
When should I buy a paint sprayer from a tax perspective?
When acquiring a paint sprayer, several factors should be taken into account. Here is a brief overview:
- return to investment
- tax reduction
- other factors
1. Profitability when purchasing an airless unit
In the first place, a paint sprayer should be purchased when there are sufficient orders. In this way, an economic added value can be achieved and the purchase of an airless paint spraying machine is justified from an entrepreneurial point of view. For the exact calculation one can take into account the number of days of use of a sprayer, the savings due to faster working and the handling of larger projects.
2. Tax depreciation
The example of the painter Meyer was used to calculate the tax savings. Assuming the maximum tax rate, a tax savings of up to 42% is possible. However, with a lower profit for the painter, the tax savings are also lower.
3. Other factors
There are other factors that speak for the purchase of a new paint sprayer. These factors are particularly important when you use a paint sprayer that is 5 years or older. 5 years after the purchase, a paint spraying machine is fully tax-deductible. In order to use the tax advantage, the acquisition of a new device would be sensible after 5 years. Other factors to consider are the following:
- maintenance and repair costs
- guarantee
- effect on the customer
- reliability and performance
Older spraying equipment, like cars, has a higher maintenance and repair effort. In addition to the tax advantage, the ongoing costs of maintenance and repair for the purchase of a new spraying unit after 5 years also need to be taken into account. The external and advertising effect on the customer with a new and modern spraying device is also not negligible. In addition, newer paint sprayers naturally also have a lower risk of malfunctioning. Note: for detailed tax advice, you should consult a tax consultant. This information is provided without warranty and serves as a first general note on the subject. For other question regarding airless paint spraying, you can send us a message using our contact form.
