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Recognition for tax purposes of TSS costs for cash register systems

The planned introduction on 1.1.2020 has already been postponed several times, initially, on account of technical impossibility and, subsequently, because of the coronavirus pandemic. As things stand at the moment, by 31.3.2021 at the very latest, every electronic cash register will have to have a certified technical security system (TSS) or have been retrofitted with such a system. For the recognition for tax purposes of the costs related to this the Federal Ministry of Finance (Bundesministerium der Finanzen, BMF) has provided for the application of a simplification rule.

Retrofitting costs

A TSS consists of a security module, a storage medium and a standardised digital interface. The versions available on the market are very different. In some cases, each cash register gets its own TSS as an external storage medium (e.g. a USB stick), or so-called cloud solutions are used.

In the BMF circular from 21.8.2020 (case reference: IV A 4 – S 0316-a), the fiscal authority expressed its view on the tax treatment of various expenditures for the implementation of these TSS setups. Firstly, it has been clarified that the TSS in conjunction with a connector or as a USB stick, SD card, or similar, constitutes an asset. However, as a TSS cannot be used on a standalone basis it will have to be capitalised and depreciated over a normal period of useful life of three years. Including the TSS in a compound item or immediately writing it off as a low-value asset have thus been ruled out.

However, if the TSS is permanently integrated into the cash register as hardware then this would be deemed to be a subsequent acquisition cost for the cash register asset. The TSS costs would have to be capitalised and depreciated over the remaining useful life of the cash register.

The cost of setting up a single digital interface including connecting the TSS to the electronic record-keeping system of the cash register as well as the interface for the fiscal authority would constitute ancillary costs for the TSS asset and would have to be capitalised along with it.

The simplification rule

According to the above-mentioned BMF circular, in the context of the simplification rule, there will be no objection if the full amount of the costs for subsequently upgrading existing cash register systems for the first time with a TSS and of the costs for setting up an interface for the first time are immediately deducted as operating expenses.

Ongoing charges

The charges incurred for servicing and maintaining the TSS or for supporting the cloud normally have to be taken into account as regular business expenses.

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