Farm micros may tie depreciation to farm-tax maxima

Small and micro limited companies that carry on farming may align their planned depreciation with the maximum tax depreciation of the Farm Income Tax ActKirjanpitolautakunta — not only with the Business Income Tax Act maxima the guidance discusses. The Accounting Board (Kirjanpitolautakunta) has now confirmed that the simplification for small and micro entities in its 3 December 2024 general guidance applies equally to farming companies taxed under the Farm Income Tax ActKirjanpitolautakunta (Maatilatalouden tuloverolaki, MVL, 543/1967).

The background is a mismatch the applicant described: the guidance lets small and micro entities use the maximum depreciation of the Act on the Taxation of Business Income (Laki elinkeinotulon verottamisesta, EVL, 360/1968) as their planned depreciation, but farming limited companies are taxed under the MVL rather than the EVLKirjanpitolautakunta. The question was whether the guidance can be applied so that the depreciation plan is reconciled with MVL depreciation instead.

The Board said yes, with one hard condition. The starting point is the Accounting Act (Kirjanpitolaki, KPL, 1336/1997) 5:5: the acquisition cost of a long-lived tangible asset is depreciated as planned over its useful lifeKirjanpitolautakunta. Established practice among small entities has been to fit that plan to tax depreciation, and the small/micro-entity decree (Valtioneuvoston asetus pien- ja mikroyritysten tilinpäätöksessä esitettävistä tiedoista, PMA, 1753/2015) 3:1.3(2) reflects it: where planned depreciation on machinery, buildings and other tangible assets matches the tax-allowable maxima, the notes need not disclose the valuation and accrual principles applied. The Board reads the decree's reference to tax maxima genericallyKirjanpitolautakunta — its wording covers maxima allowable in taxation and is not confined to EVL depreciationKirjanpitolautakunta.

The same reading extends the guidance itself. The 3 December 2024 guidance treats planned depreciation as allocating cost over useful life irrespective of the period's result, and lets small and micro entities fit it to tax depreciation — discussed in EVL terms (maximum declining-balance, straight-line or substance-based depreciation). Since a farming company's agricultural-source income is taxed under the MVLKirjanpitolautakunta, and the MVL sets that company's allowable depreciationKirjanpitolautakunta — machinery and equipment under section 8 (at most 25 per cent of the expenditure residue), buildings under section 9 (at most 10, 6, 20 or 25 per cent of undepreciated cost depending on building type), drainage, bridges, dams and similar assets under section 10 — the Board holds the guidance's option of fitting planned depreciation to allowable tax depreciation available to a small or micro farming limited company as well, using the MVL maximaKirjanpitolautakunta.

The condition is non-negotiable: the depreciation must still be sufficient under KPL 5:5 to write the asset's cost off over its useful lifeKirjanpitolautakunta. As the guidance itself states, where the simplification would leave the statements without a true and fair view, it may not be usedKirjanpitolautakunta — depreciation must then be charged large enough to spread the cost over the economic holding period. The Board also recalls its earlier opinion KILA 1999/2020: references to tax maxima mean the ordinary, standing provisions, not accelerated depreciation under a temporary relief actKirjanpitolautakunta.

Farming companies using the small/micro regime should therefore document the depreciation plan against the MVL sections and test sufficiency over useful life rather than copying the EVL figuresKirjanpitolautakunta.

Legal basis: Kirjanpitolaki (1336/1997) 5:5; Maatilatalouden tuloverolaki (543/1967) 8–10 §; PMA (1753/2015) 3:1.3(2); Kirjanpitolautakunta opinion 2153 of 22 September 2026Kirjanpitolautakunta.