Ordering Low-Value Assets (GWG): When Process Costs Exceed the Value

At a glance

• Low-value assets (GWG) up to €800 net may be written off in full in the year of acquisition. For items between 250 and €1,000, a pooled item is available as an alternative. These rules affect accounting; the ordering route stays the same.
• Pedlar works with around €500 in process costs per order. For a measuring device costing €400, processing the order costs more than the goods.
• In the Single Creditor Model, all one-off requirements run through one creditor that is already in the system.

What are low-value assets (GWG)?

Low-value assets are movable, depreciable items of fixed assets that a company can use on their own. They cost so little that German tax law simplifies their depreciation. Typical examples are a cordless screwdriver for maintenance, a measuring device for quality assurance or an office chair for a new workstation in administration.

The rules are set out in Section 6(2) and (2a) of the German Income Tax Act (EStG), with the details in R 6.13 of the Income Tax Guidelines in the Federal Ministry of Finance's Official Income Tax Handbook 2025. What counts is the acquisition cost excluding any input VAT it contains, even if that input VAT is not deductible.

The GWG thresholds: 250, 800 and €1,000

For an immediate write-off above €250, the acquisition date and acquisition cost must be recorded, unless they are already evident from the accounts. If you choose the pooled item, you must apply it uniformly in that financial year to all assets over 250 up to €1,000 acquired in that year. Your tax advisor can tell you which option fits.

When process costs exceed the value of the goods

A measuring device for €400 goes through at least the same basic procurement steps as a machine for €40,000. If the vendor is new, the master data team first sets it up as a supplier. Then the responsible approver approves the requirement, procurement places the order, and finally accounts payable reviews the invoice and releases the payment.

The effort per transaction therefore stays almost the same. The value of the goods, on the other hand, drops with every smaller purchase, until at some point processing costs more than the goods.

Where that threshold lies depends on your process costs. The formula is simple: steps involved times time per step times hourly rate, plus system costs. For a single order, Pedlar works with around €500. Pedlar explains the formula and the figure on its page Reducing process costs.

At that figure, every purchase under roughly €500 net costs more to process than the goods themselves. That covers everything up to the €250 immediate-deduction limit and the lower part of the GWG range up to €800. These are precisely the items that are easiest to book for tax purposes and, relative to their value, the most expensive to order.

This is Pedlar's benchmark, not an industry statistic. Your own figure depends on how many approval levels an order goes through in your company, who is involved at each step and what hourly rates apply to those people.

The article Measuring process costs per order shows how to determine your own figure. How to handle small orders more leanly in general is covered in the article Handling small orders under €500 properly.

A GWG order step by step

Here is a worked example. Maintenance needs a digital measuring device for €400 net, and the right vendor has never worked with your company before. The order then goes through four steps.

1. Supplier onboarding: Before anyone is allowed to order, the master data team sets up the vendor with master data and bank details and checks it.
2. Approval: The requirement goes to the responsible approver as a purchase requisition, and procurement only orders once it has been approved.
3. Invoice review: Accounts payable matches the invoice against the order and goods receipt and resolves any discrepancies with the supplier.
4. Payment: The new creditor gets a separate payment in the next payment run.

The first step only arises because the vendor is new.

Here is how the numbers add up:

More than half of the total cost therefore goes into processing. The roughly €500 is a total figure. Use this template with your own minutes and hourly rates to work out how it splits across the four steps in your company.

The cost per row is minutes divided by 60 times the hourly rate. The total gives you your figure. A fully worked example with minutes, hourly rate and system costs is in the article on measuring process costs linked above.

After the order, the vendor stays in the creditor master data. If no second order follows, its record keeps being maintained and is never used again. Anyone who wants to avoid the effort orders with the company credit card and bypasses the process. A separate article describes how to prevent this maverick buying.

One creditor for all GWG orders

There are two compliant ways to handle a small individual order. Either every new supplier gets its own creditor, or you use the Single Creditor Model, in which all one-off requirements run through a single creditor.

In the single creditor model, a central service provider handles every individual order. It is the only creditor in the system, while the actual suppliers, from specialist dealers to manufacturers, stay in the background as far as your accounting is concerned. For this to work, the processing party must be set up once and be able to take on every order in full. That processing party is Pedlar. Pedlar runs this model as a Managed Service.

Pedlar is set up once as a creditor in your ERP system. Every subsequent purchase then follows the same process, whether it is a GWG, a spare part or consumables, and whichever supplier you order from.

1. You order: You choose the items and suppliers and send the order to Pedlar.
2. Pedlar buys: Pedlar orders from the supplier in its own name and pays the supplier.
3. Delivered direct: The goods go straight from the supplier to your site.
4. Invoice from Pedlar: You receive one invoice from Pedlar per order.

Your order goes out by email as usual, just to bestellungen@pedlar.de. Attach the quote or product link. The supplier behind it needs no master data on your side.

For the measuring device in the worked example, supplier onboarding is no longer needed, because the vendor never appears as a creditor on your side. Invoice review and payment run against Pedlar, a creditor your accounting team already knows and for which no new master data is required. Pedlar is your service provider, including for returns and warranty.

Side by side, the same order looks like this:

We charge a service fee that depends on order volume. Use the template above to work out whether switching pays off: set the cost of the rows that disappear or shrink against this fee.

When your own supplier remains the better choice

The model is designed for one-off requirements. If you order from a supplier regularly, for example under a framework agreement, the effort of setting it up is spread across many orders, and then a creditor of its own makes sense. Your catalog remains in place for standard demand. More on this in the article on Tail Spend Management.

Frequently asked questions about GWG and one-off requirements

Up to what amount does an asset count as a GWG?

A movable, depreciable fixed asset that can be used on its own may be written off in full in the year of acquisition if it costs up to €800 net. The basis is Section 6(2) EStG. The immediate write-off is an option there, not an obligation.

Does the GWG threshold reduce the cost of an order?

No. The threshold only governs the bookkeeping. The steps of the order stay the same regardless of the value of the goods, and it gets most expensive when a new supplier has to be set up, checked and paid separately.

How can I tell whether a single creditor for one-off requirements pays off?

A look at your creditor master data is enough. Check there, for example for the last two financial years, how many suppliers have received only a single order since they were set up. If that is a significant share, your small purchases are causing more master data maintenance, invoice review and payment runs than necessary.

The ordering route determines the cost

What a small purchase ultimately costs depends not only on the price but on the route the order takes through procurement, approval and accounting. The GWG rules only simplify the bookkeeping. A single creditor for all one-off requirements takes supplier onboarding out of that route.

Find out how the Single Creditor Model handles your GWG purchases without new supplier onboarding: Schedule a call →