Software costs as an operating output: What you need to know

Software costs as an operating output: What you need to know

*March 2026 *

In today's digital business world, software solutions are the backbone of efficient processes and innovations. However, with the implementation of new technologies, the key question for many companies is: how are the costs of software tax-treated? The good news is that software costs can usually be claimed as operating expenses, which can lead to considerable tax advantages. In this article, we examine the various aspects of the tax deductibility of software and give you a comprehensive overview of the possibilities of Software Financing.

The tax treatment of software

In principle, the tax office distinguishes between the purchase of standard software, the development of individual software and the rent of software (Software as a Service, SaaS). The type of acquisition has a direct impact on tax treatment.

Purchased software

The purchase of standard software, such as an office package or a accounting software, is the acquisition of an intangible economic asset. The costs for this can not be deducted immediately as an operating output, but must be written over the operating period. According to the AfA tables (delay for wear) of the Federal Ministry of Finance, the service life for software is usually three years.

Low-quality goods (GWG)

An exception to the regular depreciation is the so-called low-quality goods. If the purchase costs for a software are below a certain limit, they can be deposited immediately and in full as an operating output. Since 2018, this limit has been around 800 euros net. This offers an attractive opportunity for smaller companies and freelancers to quickly reduce the tax burden.

Rented software (SaaS)

More and more companies rely on cloud-based software solutions that are rented under a subscription model (Software as a Service). The monthly or annual fees for SaaS solutions shall be deemed to be operating expenses and may immediately be exercised in full tax terms. This ensures a uniform distribution of costs and high flexibility.

Developed software

If a company can develop an individual software solution, development costs can also be offset as operating expenses. However, it should be noted here that the activation obligation for self-created intangible assets of investment assets in tax law is dispensed with. This means that the costs can be booked directly as expenses.

Comparison of financing models

The decision between buying, renting or leasing of software depends on various factors. The following Tabel