Accounting Directive Implementation Act makes moderate changes to German accounting law

The most re­cent com­pre­hen­sive over­haul of Ger­man ac­coun­ting law oc­cur­red in 2009, with the Ac­coun­ting Law Re­form Act (Bil­MoG). The new Ac­coun­ting Di­rec­tive Im­ple­men­ta­tion Act (Bil­RUG) is the first re­vi­sion of ac­coun­ting prin­ci­ples since that time to go beyond ma­king a few chan­ges here and there.

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The Ac­coun­ting Di­rec­tive Im­ple­men­ta­tion Act (Bil­RUG) is pri­ma­rily me­ant to bring Ger­man ac­coun­ting law into har­mony with the EU Ac­coun­ting Di­rec­tive (2013/34/EU) of 26 June 2013, the pro­vi­si­ons of which must be trans­po­sed in na­tio­nal law by 20 July 2015. Long­stan­ding Ger­man ac­coun­ting law is to be amen­ded only to the ex­tent ne­cessary to bring it into line with the Di­rec­tive. The lee­way gran­ted by the Di­rec­tive to Mem­ber Sta­tes to al­low them to re­duce the bur­den on small, mid-si­zed and large com­pa­nies was ta­ken ad­van­tage of to the grea­test ex­tent pos­si­ble.
The Ac­coun­ting Di­rec­tive Im­ple­men­ta­tion Act pri­ma­rily amends or adds pro­vi­si­ons to the Ger­man Com­mer­cial Code, the Ger­man Dis­clo­sure Act and the Ger­man Stock Cor­po­ra­tion Act, as well as their re­la­ted im­ple­men­ta­ting acts. New pro­vi­si­ons with prac­tical si­gni­fi­cance in­clude the fol­lo­wing:
  • To the ex­tent that the in­di­vi­dual an­ti­ci­pa­ted us­eful life of an in­ter­nally crea­ted in­tan­gi­ble as­set or of good­will ac­qui­red for va­luable con­side­ra­tion can­not be re­li­ably esti­ma­ted, the cost of this as­set is to be amor­ti­zed over a ty­pi­fied pe­riod of ten years.
  • For a sub­si­di­ary to be re­leased from the ac­coun­ting ob­li­ga­tion un­der the pro­vi­si­ons of sec­tion 264 ff. of the Ger­man Com­mer­cial Code and the ob­li­ga­tion to au­dit and dis­close an­nual fi­nan­cial state­ments, from now on the EU/EEA pa­rent com­pany that pre­pa­res the ex­empting con­so­li­da­ted fi­nan­cial state­ments and the ex­empting group ma­nage­ment re­port must state that in the fol­lo­wing fi­nan­cial year, it is wil­ling to as­sume re­spon­si­bi­lity for the ob­li­ga­ti­ons en­te­red into by the sub­si­di­ary up to the date of such ex­empting fi­nan­cial state­ments. The grounds for the re­com­men­ded re­so­lu­tion by the Bun­des­tag Com­mit­tee for Law and Con­su­mer Pro­tec­tion state that to meet this re­qui­re­ment "as a rule, a sta­tutory as­sump­tion of los­ses pur­su­ant to a ma­nage­ment con­trol or pro­fit trans­fer agree­ment un­der sec­tion 302 of the Stock Cor­po­ra­tion Act and the fact that the com­pa­nies in the group are all af­fi­lia­tes […] will con­ti­nue to be suf­fi­ci­ent evi­dence of this duty to as­sume re­spon­si­bi­lity"  and that "the eli­mi­na­tion of the re­fe­rence to sec­tion 302 of the Stock Cor­po­ra­tion Act does not make it ne­cessary to change cur­rent prac­tice".
  • The mo­ne­tary th­res­holds for the de­ter­mi­na­tion of the si­zes un­der § 267 of the Ger­man Com­mer­cial Code or the ex­emp­tion from the duty to pre­pare con­so­li­da­ted fi­nan­cial state­ments un­der § 293 of the Ger­man Com­mer­cial Code are rai­sed bet­ween ap­pro­xi­mately 4% and 24%.
  • From now on, fi­nan­cial hol­ding com­pa­nies will no lon­ger be able to take ad­van­tage of the re­lief for mi­cro­en­ter­pri­ses.
  • The de­fi­ni­tion of re­ve­nues is ex­pan­ded such that the re­co­gni­tion of in­come un­der re­ve­nues no lon­ger re­qui­res that the in­come re­sult from sa­les of the pro­ducts and goods or from the pro­vi­sion of ser­vices that are ty­pi­cal of the com­pany's line of busi­ness. On the other hand, from now on, ta­xes di­rectly re­la­ted to sa­les (such as en­ergy tax) must be de­duc­ted from in­come along with sa­les de­duc­tions and reba­tes and VAT.
  • Ex­tra­or­di­nary in­come and ex­pense is no lon­ger per­mit­ted to be re­co­gnized in se­pa­rate items on the in­come state­ment. In­stead, com­pa­nies that are at least mid-si­zed must make dis­clo­sures in the No­tes on the in­di­vi­dual in­come and ex­pense items of ex­cep­tio­nal size or si­gni­fi­cance, un­less the amounts are of mi­nor im­port­ance.
  • In con­nec­tion with the eli­mi­na­tion of se­pa­rate re­co­gni­tion of ex­tra­or­di­nary in­come and ex­pense in the in­come state­ment, re­co­gni­tion of the re­sult from or­di­nary ac­tivi­ties has also been eli­mi­na­ted. From now on, the line item "in­come tax" is to be fol­lo­wed by "earnings be­fore ta­xes".
  • From now on, com­pa­nies that are at least mid-si­zed and re­co­gnize de­fer­red tax lia­bi­li­ties must make quan­ti­ta­tive dis­clo­sures in the No­tes re­gar­ding the de­fer­red tax ba­lan­ces and how they have chan­ged from the pre­vious year.
  • The re­port on post-ba­lance sheet event, which has thus far been in­clu­ded in the Ma­nage­ment Re­port, will now be in­clu­ded in the No­tes. Ma­te­rial dif­fe­ren­ces re­sult from the eli­mi­na­tion of the re­qui­re­ment to dis­close events of spe­cial si­gni­fi­cance that were al­re­ady dis­clo­sed in the ba­lance sheet or the in­come state­ment and the eli­mi­na­tion of the dis­clo­sure of the fi­nan­cial ef­fects of events of spe­cial im­port­ance.
All amen­ded pro­vi­si­ons are ap­plica­ble to fi­nan­cial state­ments and ma­nage­ment re­ports for the fi­nan­cial year be­gin­ning af­ter 31 De­cem­ber 2015, so if the fi­nan­cial year is the ca­len­dar year, they will be ap­plica­ble to 2016. Howe­ver, it is still pos­si­ble to ap­ply the th­res­holds and amen­ded de­fi­ni­ti­ons of re­ve­nues to fi­nan­cial state­ments and ma­nage­ment re­ports for the fi­nan­cial year be­gin­ning af­ter 31 De­cem­ber 2013.
Ex­perts from Eb­ner Stolz dis­cuss the chan­ges made by the Act in de­tail in the com­men­tary on the Act to be publis­hed in the near fu­ture by IDW Ver­lag.
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