How Germany Taxes a Website: Subscription vs One-Off Build

A website you commission once and pay for outright is, for German tax purposes, a fixed asset: it gets capitalised and written off over several years. A website you pay for monthly through a subscription is usually an ongoing service, deductible in full in the year you pay it. The difference is not about price - it is about how the contract is structured, and it plays out very differently for cash flow and for the profit and loss account.

Capitalise or deduct immediately: the difference in one sentence

German tax law does not care what the invoice calls the work - it cares what you are actually paying for. Pay once for a finished piece of work handed over to you, and you have acquired an asset whose cost spreads across its useful life: capitalised on the balance sheet, then written down through depreciation (AfA) under section 7 EStG. Pay on an ongoing basis for a continuing service, with no separable asset coming into existence, and that is a current operating expense, deductible in the year paid under section 4(4) EStG - the same logic separating a bought company car from a leased one.

The commissioned website: an asset that gets capitalised

When a business has a website built externally - typically under a contract for work (Werkvertrag) per section 631 of the German Civil Code, with formal acceptance of the finished piece - that payment creates acquisition costs for an intangible fixed asset. Haufe's accounting guidance on homepage costs confirms this spend must be capitalised once the site is built by an outside provider, whether the invoice reads 1,500 euros or 12,000 euros (realistic price ranges are set out in what a website costs). Capitalising means the amount does not reduce profit in full straight away - it spreads across the site's useful life instead.

The line that matters is not "one-off" versus "recurring" but who builds the site. If an employee builds it in-house, section 5(2) EStG expressly prohibits capitalising self-created intangible fixed assets, so the cost is fully deductible at once - even though it is still a one-off project. The boundary runs between outsourcing and building it yourself, not between paying once and paying monthly.

Three years is practice, not law

How long a commissioned website gets depreciated over is not written into any official depreciation table - there is no dedicated line item for websites. Tax authorities fill the gap by analogy: the Frankfurt am Main regional tax office ruled on 22 March 2023 (S 2190 A-031-St 214) that homepage creation costs sit outside the federal ministry's guidance on computer hardware and software, and that the useful life applied to software - three years - is the reference point instead. Most tax offices depreciate a commissioned website straight-line over three years.

That figure is an administrative position, not a statute. Where the actual useful life differs - a relaunch already contracted for after two years, say - a different useful life can be justified. This is where the article stops and your Steuerberater starts: they know your accounts, your legal form and how your local tax office applies the rules, and only they can say what holds in your specific case. This piece maps the mechanism; it is not tax advice.

The subscription: an ongoing service, not an asset

A genuine website subscription differs from a contract for work at the contract level: it is a continuing obligation (Dauerschuldverhältnis), comparable to a rental agreement or a software-as-a-service contract. You pay not for a finished piece of work handed over once, but for an ongoing service - hosting, maintenance, continuous changes, often the initial build itself folded into the monthly fee rather than invoiced separately. Haufe's accounting literature on software-as-a-service arrangements makes the comparable point for pure software: a SaaS contract generally creates no asset of its own, since no permanent right to specific program code is acquired, only time-limited access. The monthly payment is current expenditure, fully deductible under section 4(4) EStG - no capitalisation, no depreciation, no carrying value on the balance sheet.

That holds as long as the contract is genuinely structured as an ongoing service, rather than functioning economically as disguised instalments for work that is already finished - a question of how the specific contract is written, not of the word "subscription" on the invoice. How the two models compare commercially over their full term, separate from the tax question, is worked through in website subscription or one-off.

Cash today, profit spread over years

The two effects land on different numbers, and in practice they get conflated. Cash flow is not affected by the tax classification at all: with a one-off project the money leaves the account in full immediately, whatever the bookkeeping treatment - capitalising it changes the accounting, not the bank balance. With a subscription, the outflow simply spreads over time because you pay monthly instead of once - a payment-timing effect, not a tax effect.

The profit and loss account is where the tax treatment bites directly. The acquisition cost of a commissioned website reduces profit only proportionally, across the depreciation period - a straight third per year over three years - while a subscription fee reduces profit immediately and in full, in the year it is paid. A business with high profit this year lowers its tax bill faster through a genuine ongoing service. Over the full useful life, the effect on cumulative tax is usually small to neutral - what mainly shifts is timing, not the total.

For businesses using cash-basis accounting under section 4(3) EStG - the usual method for freelancers, practices and smaller trades businesses - the simple cash in, cash out principle otherwise applies: expenses count in the year paid. For depreciable fixed assets, that simplification is expressly switched off (section 4(3) sentence 3 EStG): even a cash-basis business must depreciate a commissioned website over its useful life, not deduct it in the year paid. With a genuine subscription, the cash principle applies as normal - paid, deducted, done.

What to do in the next 90 days

• Days 1-30: establish whether the website will be built externally or in-house - that decides whether it must be capitalised
• Days 31-60: if commissioned externally, check whether contract and invoice describe a finished piece of work or an ongoing service - that decides how it gets booked
• Days 61-90: agree the useful life and booking treatment for your case with your Steuerberater before the first invoice is recorded

Conclusion

Both routes end up with the same working website, but they spread cash outflow and profit effect differently over time. A commissioned website is a fixed asset, depreciated in practice over three years, though not automatically. A genuine subscription is an ongoing service, deductible immediately, provided the contract reflects that. The overall cost comparison, separate from the tax question, is worked through in website subscription or one-off; how our own model is structured is set out on the website as a service page.