The glossary to understand and take action

Depreciation

Depreciation allocates the depreciable amount of an asset over its estimated useful life, in accordance with the applicable rules.

Notion comptable, fiscale ou juridique · Luxembourg Fiduciaries Editorial Team · Reviewed on

Understand the scope

Definition and points to distinguish

The purchase and its payment are distinct from the annual depreciation expense. The useful life, calculation method and date of entry into service must be substantiated; impairment addresses a different issue.

In your file

What this changes in practice

Depreciation reflects the expected consumption of the benefits of a fixed asset over time. To establish the schedule, the depreciable base, useful life, method and entry into service are documented, among other matters. The supplier may be paid in a single instalment without the entire expenditure becoming an expense of the same financial year. A change in use or a loss in value may lead to a reassessment of the treatment, distinguishing between accounting and tax.

A scenario to help you understand

Educational example

Equipment is paid for in cash and used for several years. The depreciation schedule allocates its consumption over that period; the cash outflow, meanwhile, appears when payment is made. These two pieces of information answer different questions.

Fictitious situation, presented to illustrate the concept.

Prepare for what comes next

Points to check

  • Conserver la facture et la date de mise en service
  • Justifier la durée retenue
  • Suivre sorties et cessions dans le tableau des immobilisations

The practical question

Find out more

Quelle différence entre amortissement et remboursement d’un emprunt ?

L’amortissement répartit le coût d’un actif sur sa durée d’utilisation selon les règles comptables. Le remboursement du capital d’un emprunt réduit une dette. Les deux calendriers peuvent être différents. Dans un prévisionnel, la charge d’amortissement influence le résultat tandis que les remboursements influencent les sorties de trésorerie ; les intérêts ont leur propre traitement.

Connecting concepts

Terms to know as well

Continue with the concepts, contacts and procedures related to this topic.

Fixed assetAn item intended for long-term use in the business, whose classification and measurement must be assessed under the applicable accounting framework.ImpairmentA value adjustment considered when an asset has suffered a loss in value that must be taken into account under the applicable rules.Income statementThe income statement, also called the profit and loss account in Luxembourg accounts, matches income and expenses for a period.Capital gainA capital gain is a gain determined in a transaction by comparison with a reference value under the relevant rules.Permanent establishmentA permanent establishment is a concept linking an activity to a territory, assessed under the relevant tax framework.Working capital requirement (WCR)The working capital requirement (WCR) measures the financing absorbed by the operating cycle, notably inventory and receivables, less operating liabilities.

Put it into practice

Explore further with our guides

Practical guideReal estate investment: preparing the accounting and tax filePractical guideBusiness expenses: checking their deductibility in LuxembourgPractical guideFixed assets: maintain a register and prepare depreciation

Sources and verification

References consulted on 20 September 2026. Official procedures specify the applicable conditions and exceptions.

This guide explains a general process. The applicable rules depend on your situation; it does not constitute personalised advice. Report a correction.

A definition gives you a reference point. To examine your situation, clarify your question with a professional.