The situation
Development costs capitalised in the statutory accounts
A software company in Munich, with a Dutch subsidiary in Eindhoven, builds its own billing platform. Both entities capitalise development costs in their statutory accounts, EUR 2.4 million this year between them, and amortise the costs over five years. The auditor has asked for a note on how the costs are treated for tax.
The finance team knows the accounts. The tax side differs by country: whether the costs can be capitalised for tax at all, whether they are deducted as incurred, what that means for deferred tax, and what restrictions the accounting choice brings with it. The note has to reconcile the two for each entity.
What the research has to settle
The rules behind the answer
- Germany: optional in the accounts, barred for tax
- German commercial law allows a company to capitalise development costs of self-created intangible assets. German tax law does not allow self-created intangible fixed assets to be capitalised, so the costs are deducted as incurred and a timing difference arises.
- Capitalised amounts limit distributions
- Where German accounts capitalise self-created intangibles, an equivalent amount, net of the related deferred tax, is generally blocked from distribution.
- Netherlands: the accounts need a legal reserve
- Dutch company law requires a legal reserve for capitalised development costs. How the costs are treated for corporate income tax is a separate question of Dutch tax law, and the research confirms the options.
- R&D incentives sit alongside
- Both countries offer incentives for development work, such as Germany’s research allowance and the Dutch WBSO, each with its own conditions. Check them in the same note, because they interact with how the costs are recorded.
How it runs in azta
From the question to the document
The question, as you would type it
German GmbH and its Dutch BV both capitalise internal software development costs in their statutory accounts and amortise them over five years. How is each treated for corporate income tax, what deferred tax arises, and what restrictions on distributions follow from the capitalisation?
You start with
Development costs capitalised in the statutory accounts
- 01
Describe the costs and the policy
Give the costs capitalised, the amortisation policy and the entities. azta searches German and Dutch commercial and tax law.
Cited research· Free - 02
Read the provisions side by side
Open the commercial-law and tax-law provisions in the reader, in German and Dutch, with their in-force status.
Atlas statute reader - 03
Draft the year-end note
Ask for a note per entity: accounting treatment, tax treatment, difference and restrictions. Edit it in Canvas.
Canvas · Ask azta· Pro - 04
Send it to the auditor
Export to Word and add it to the year-end file. The research stays with it.
Word export· Pro You send
A year-end note on the tax treatment, the differences and the follow-on effects
What you get
A year-end note on the tax treatment, the differences and the follow-on effects
Year-end note · draft
Capitalised development costs: tax treatment 2026
Germany. The GmbH capitalised EUR 1.7 million of development costs in its accounts. For tax, self-created intangible fixed assets cannot be capitalised, so the costs are deducted in 2026. The difference gives rise to a deferred tax liability in the accounts, and an equivalent amount of reserves is blocked from distribution.
Netherlands. The BV capitalised EUR 0.7 million and holds a legal reserve for it. The tax treatment follows the analysis in the annex, which sets out whether the costs are deducted as incurred or amortised for tax, with the provisions relied on.
Incentives. Wage costs of development staff in the Netherlands are covered by WBSO declarations. A German research allowance claim for 2026 is being assessed separately and does not change the treatment above.
Outcomes on your numbers
What azta is worth on this task
Pro pays for itself after
18 minutes a month
At €90 an hour, that is all the time Pro (€27 a month) has to take off your desk to cover its price.
Example figures. Replace them with your own.
- Hours back a year
- 18
- Capacity at your rate
- €1,620
- More year-end tax notes a quarter
- 0.8
- Return on Pro
- 5×
- Research
- Drafting
- Your review
A scenario you set, not a promise. The hours that come back go to another client, or deeper into this one.
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Book a demoSources azta searches here
- Gesetze im Internet
- Rechtsprechung im Internet
- wetten.overheid.nl
- Rechtspraak.nl
What stays with you
- The accounting policy and the amounts capitalised.
- The deferred tax calculation.
- Agreeing the note with the auditor.
Frequently asked questions
- Does azta cover IFRS?
- IFRS as adopted in the EU is published as EU law, so azta can cite it. The tax treatment remains a question of national law.
- Does it calculate the deferred tax?
- No. It sets out the rules and drafts the note. The calculation stays in your year-end model.
- Can I ask about the law as it stood last year?
- Yes. Give the date and azta focuses on the law in force then.
