Deduction for purchase expenses
When you purchase tangible fixed assets for the enterprise (machinery, equipment, cars, buildings, etc.), you must enter this in the balance sheet and recognise the expenses (depreciate) over several years.
Fixed assets, as a main rule, must be entered in the balance sheet without deductions if the value is not reduced due to wear and tear or age. Examples of fixed assets where the value is not reduced due to wear and tear or age include land/plots, roads, residential properties, works of art and the like. The accounting and tax-related methods for depreciation are very different. Enterprises that do not have an accounting obligation need only follow the tax rules for depreciation.
Purchases under NOK 15,000 (NOK 30,000 in 2024)
The main rule is that if the cost is NOK 15,000 or less (NOK 30,000 in 2024) and is connected to the enterprise, the entire amount can be deducted in the year it was purchased.
The same applies if the cost exceeds NOK 15,000 (NOK 30,000 in 2024) and the expected duration is less than 3 years.
Purchases of NOK 15,000 (NOK 30,000 in 2024) or more
The main rule is that if the cost is NOK 15,000 (NOK 30,000 in 2024) or more and the anticipated remaining duration is at least 3 years, the fixed assets must be deducted in the balance. This is called depreciation. Depreciation means that you get a gradual deduction for the expense of the item you bought as it wears and tears over time. In other words, you do not get a deduction for the entire expense in the accounts the same year of acquisition, but, instead, you get the deduction over time. The condition is that the fixed asset is mainly used for income-generating activity and that its value is reduced as a result of wear and tear or age.
Improvements
Improvements on an existing fixed asset must always be entered into the balance sheet, even if the improvement costs less than NOK 15,000 (NOK 30,000 in 2024) or has a duration of less than 3 years. This applies even if the fixed asset is depreciated to zero or is entered in a negative balance.
If the fixed asset was deducted in its entirety upon acquisition, the cost must only be entered in the balance sheet if the operating asset - has a duration of at least 3 years and the year's cost is NOK 15,000 (NOK 30,000 in 2024) or more.
How to enter this in your tax return
See how to register tax-related depreciations of fixed assets in the business information: