The map shows the weighted‑average capital‑allowance rates for three asset types—machinery (44 % of capital stock), industrial buildings (41 %) and intangibles such as patents and know‑how (15 %). A capital‑allowance rate of 100 % means a business can fully deduct the present‑value cost of an asset, either through immediate expensing or a neutral cost‑recovery system.
European averages (2025)
- Overall weighted average: 72.1 % of the present‑value cost can be written off.
- By asset class:
- Machinery – 87 %
- Intangibles – 82.6 %
- Industrial buildings – 52.3 %
- Machinery – 87 %
- Intangibles – 82.6 %
- Industrial buildings – 52.3 %
Top and bottom performers
- Full‑deduction (100 %): Estonia, Georgia, Latvia – these jurisdictions tax only distributed profits, leaving reinvested earnings untaxed.
- High rates (distribution‑based): Lithuania (88.2 %), Croatia (87.2 %), Italy (76.3 %).
- Lowest rates: Norway (60.7 %), Poland (59.3 %), Hungary (58.3 %).
United States comparison (2025)
- Average allowance: 94.5 % of investment cost.
- Permanent full expensing reinstated after the phase‑out of the 2017 bonus‑depreciation.
- Temporary 100 % expensing for qualifying structures built between 19 Jan 2025 and 1 Jan 2029 and placed in service before 1 Jan 2031 (covers roughly 10–15 % of U.S. buildings).
Notable policy changes in Europe
Implications Source article: taxfoundation.org
Country
Change
Period
Finland
Declining‑balance depreciation rate for machinery doubled (temporarily) and extended to 2025.
2020‑2025
Germany
Accelerated depreciation for machinery (2020‑2022) expired 2022, partially renewed for 2024, and extended to 2027; accelerated depreciation for dwellings extended to 2029.
2020‑2027
United Kingdom
Full expensing for machinery/equipment introduced Apr 2023; 50 % first‑year deduction for long‑life assets; corporate tax rate raised from 19 % to 25 %. Initially set to expire 31 Mar 2026, made permanent by the 2023 Autumn Statement.
2023‑present
Lithuania
Permanent full expensing for machinery, equipment, software and acquired rights effective 1 Jan 2026.
2026 onward
