Accounting under German rules — readable at head office.

No. Germany has no official chart of accounts. Two standards have become established in practice — SKR03, arranged along the flow of business, and SKR04, arranged along the structure of the annual accounts. Both are voluntary. What is binding is only the structure of the accounts themselves: § 266 HGB for the balance sheet and § 275 HGB for the profit and loss account.

Companies used to a statutory uniform chart of accounts — the French plan comptable général, for instance, where account classes and number ranges are prescribed — are usually surprised by this.

Two further features are noticeable in day-to-day work:

• The prudence principle carries more weight in German commercial law than in most other systems.
• The commercial and the tax balance sheet are linked by the authoritativeness principle (§ 5 Abs. 1 EStG). The commercial accounts are therefore the starting point for taxation.

For head office we take care of the mapping to your group chart of accounts and of the reconciliation.

There are two separate deadlines:

• Preparation — corporations prepare the annual accounts within the first three months of the following year; small companies may take six months where the ordinary course of business requires it (§ 264 Abs. 1 HGB).
• Filing — at the latest one year after the balance sheet date, with the Unternehmensregister, the German company register (§ 325 Abs. 1a HGB).

If the filing deadline is missed, the Bundesamt für Justiz opens an administrative fine procedure; it starts with a formal warning and a further six weeks to comply.

How much has to be filed depends on the size class: small companies file only the balance sheet and the notes, without the profit and loss disclosures. We take care of preparation and filing; the formal adoption of the accounts remains with the shareholders.

§ 267 HGB distinguishes by three criteria — balance sheet total, revenue and the average number of employees over the year. What matters is whether at least two of the three are exceeded or fallen below, and that on two consecutive balance sheet dates.

Below the small companies sits the micro-entity under § 267a HGB, with further relief.

The classification governs how extensive the notes and the management report have to be, whether an audit is required (from medium-sized upwards) and how much is filed.

Decisive here are the figures of the individual company, not those of the group — a German subsidiary can therefore be small even though the group is large. We review the classification each year.

Either is possible.

• In your system — we work in your ERP, for instance SAP, Microsoft Dynamics or Business Central. That keeps one set of data for the group and the German entity.
• In ours — we post here and deliver the data in your format. This requires no system access for us and allows a faster start.

In either case the chart of accounts has to be settled: German accounts have to follow the structure of § 266 HGB. If the bookkeeping runs on the group chart of accounts, a mapping is needed; we build it once and maintain it.

Just as important are the document routes — who approves incoming invoices, where they are held and how they reach us. We agree that at the outset.

A reporting package is what the German entity contributes to the group consolidation, prepared to head office specifications.

It typically contains the balances on the group chart of accounts, the intercompany balances for reconciliation, the fixed asset movement schedule and the movement in provisions, together with the reconciliation from the HGB to the group standard — IFRS or French GAAP.

The HGB accounts and the reporting package are two separate sets of figures drawn from the same bookkeeping: the accounts follow German law, the package follows group policy.

We deliver in your format and to your calendar — monthly, quarterly or annually — and in German, French or English.

It is the machine-readable extract of the bookkeeping for a tax audit. § 147 Abs. 6 AO gives the tax authorities three routes of access to the data: directly on the system, indirectly through an evaluation carried out by the company, or the handing over of a data medium. For the third route the file is produced in the description standard of the tax authorities.

The data medium has the advantage that access stays limited to the audit period and to the data relevant to the audit, and that the live system is left untouched.

If the French parent company needs the same extract from the German accounting data, we produce it as an FEC file. Both are possible from books that are not kept by us.

In either case the condition is bookkeeping that is kept in line with the GoBD and retained unalterably.