Preparation of annual commercial and tax law financial statements


Germany

A balance sheet prepared in accordance with commercial law is the commercial balance sheet. The legal basis for the annual financial statements prepared in accordance with commercial law can be found in §§ 242 to 256a HGB [German Commercial Code], where the principles of proper accounting, as well as the recognition, structure and measurement provisions are set out.

A balance sheet created in accordance with tax law regulations is the tax balance sheet. Fundamentally relevant here is § 5 EstG [German Income Tax Act], which makes reference to commercial law regulations but also provides for special tax-related provisions. Assessment of taxable profit is the basis for tax returns.

Before the adoption of the so-called German Accounting Law Modernisation Act (BilMoG) in 2009, the year-end accounts under commercial and tax law were generally identical, since the reverse authoritativeness principle of § 5 EStG in its old form provided that tax accounting options could only be exercised if the approach was also adopted in the commercial balance sheet. Until then, different approaches to balance sheets in medium-sized companies tended to be the exception.

Since the end of the 2010 year, an individual tax balance sheet or a fiscal transition statement has, among other items, been necessary in the following situations:

  • Pension provisions (§ 6a EStG) have different measurement rules. Extraordinary depreciation, e.g. in accordance with § 7g EStG, may not be included in the commercial balance sheet. 
  • Provisions for impending losses from pending transactions are not permitted under tax law (§ 5, paragraph 4a EStG). 
  • The inclusion under assets of self-created intangible assets is prohibited under tax law (§ 5 para. 2 EStG).

The divergence between the tax and the commercial balance sheet also provides an opportunity to better deal with the conflict between looking good to banks or business partners while also striving to minimise the tax burden. The expert tax consultants and lawyers at Viehbacher law firm have everything at their fingertips to optimise the preparation of annual commercial and tax law financial statements alike, according to your specifications and needs. Do you have any more questions? We look forward to hearing from you!


Austria – preparation of annual financial statements

Pursuant to §§ 222 f. of the Austrian Commercial Code (UGB), companies in Austria with a duty of compulsory reporting have an obligation to draw up financial statements for the previous year within the first nine months of the company's financial year. Corporations such as GmbH, AG or SE, as well as concealed companies or corporations (GmbH & Co KG) and private foundations must present these annual financial statements for the previous year within the first five months of the new fiscal year. In accordance with § 236 et. seq. UGB, an annex from a management report, possibly a corporate governance report and, where relevant, a report on payments to government agencies, is also required for such companies. These financial statements are presented to members of the Supervisory Board together with the annex where appropriate. Large public companies are obliged to publish their annual accounts in the Official Gazette of the Wiener Zeitung.

Which regulations are applicable for your Austrian business, and which requirements your financial statements need to meet are all covered by the comprehensive and competent advice we will give you, as well as other matters relating to the annual financial statement and the balance sheet. Get in touch!


Liechtenstein

Liechtenstein companies are required to draw up commercial financial statements. Notes must be attached to the financial statements. The corresponding legislation concerning the principles of proper accounting, as well as the recognition, structure and measurement provisions are set out for legal persons in the general regulations on accounts to be presented, Article 1045 et. seq. PGR. The financial statements are drawn up in the German language and can be prepared in Swiss francs, euros or US dollars. Exceptions apply to legal persons who do not operate a business on commercial lines. These are able to prepare the annual financial statements in other languages and in any freely convertible foreign currency. Tax legislation also follows this regulation. For this reason, the financial statements drawn up in accordance with commercial law serve as the basis for the preparation of tax returns (decisiveness of the commercial balance sheet in tax law). For sole proprietorships, simple and silent partnerships, as well as collective or incorporated partnerships, proper accounting practices are to be completed from a turnover of more than CHF 10,000.00.

With the new tax law that came into force in January 2011, Liechtenstein has a tax law that is internationally compatible and compliant with European law. The tax liability is limited for legal persons to 12.5% of the taxable net return with a minimum income tax of CHF 1,200.00 and, from 2017, CHF 1,800.00 per year.

Commercial law-compliant annual financial statements will be used as the basis for the annual financial statements for tax purposes. Tax adjustments according to tax law are based on this.

Not included in the tax assessment base and thus exempt from income tax are:

  • Dividend income from investments in domestic or foreign legal persons 
  • Capital gains income from investments in domestic or foreign legal persons
  • Foreign company results 
  • Rental and lease income from land abroad
  • Profits from property
  • Capital increase from inheritance, bequest or donation 
  • Capital contributions including à fonds perdu services

In order to determine the tax balance sheet, a nominal deduction of shareholders' equity of currently 4% can also be deducted from the modified equity of the commercial balance sheet. This reduces the taxable base. The interest rate is determined every year by the state legislature in the Finance Act.

For legal entities, which are established exclusively for asset management and do not exercise any economic activity, in association with the Luxembourg Société de Gestion de Patrimoine Familial (SPF), a tax privilege – the so-called private asset structures (PVS) – has been prescribed instead of the specific company tax. The PVS restrictions derive from the statutes. PVS status must be requested from the tax administration and approved by them. PVS are subject to only the minimum income tax of CHF 1,200.00 and, from 2017, CHF 1,800.00 per year.

Do you have any more questions? Our Liechtenstein tax consultants are looking forward to hearing from you!


Switzerland

A balance sheet prepared in accordance with commercial law is the commercial balance sheet. The legal basis for the annual financial statements under commercial law can be found in the 32nd Title of the Swiss Code of Obligations (OR) (Article 957 et. seq. OR), where the principles of proper accounting, as well as the recognition, structure and measurement provisions are set out.

Assessment of capital and taxable profit is the basis for tax returns.

Since 2015, a new accounting law has been applicable in Switzerland. In application of the new rules, it is not the legal form of the company, but turnover and the size of the company that is decisive. The new regulation concerns all companies who have annual sales from CHF 500,000.00, regardless of their legal form, be it sole proprietorship, partnership or corporation. After the entry into force of the reform, the provisions of Article 959a OR set out the mandatory structure of the chart of accounts.

Notes must be attached to the financial statements. The structure has changed: the notes now include information on direct and indirect investments, information on the measurement of the company's assets and third-party financing. Any deviations from the usual underlying conditions must be proven by reference to supporting documents.

Further important differences from the old accounting law concern the prohibition of the apportionment of hidden reserves, and the recognition of assets at current or market prices as of the balance sheet date.

Under the new regulations, the accounts can be drawn up in a foreign currency, and in one of the official languages of the country or in English.

Any divergence between the tax and the commercial balance sheet also provides an opportunity to better deal with the conflict between looking good to banks or business partners while also striving to minimise the tax burden. The expert tax consultants and lawyers at Viehbacher law firm have everything at their fingertips to optimise the preparation of annual commercial and tax law financial statements alike, according to your specifications and needs. Do you have any more questions? Our Swiss tax consultants are looking forward to hearing from you!


Italy

Our information in the English language concerning preparation of annual financial statements pertaining to commercial trade and tax law in Italy is currently still being developed. We kindlg ask for your understanding. Therefore, please do not hesitate to contact us directly with your queries and concerns. For over ten years now, we have been preparing annual financial statements pertaining to commercial trade and tax law for clients in five different countries. With us you are always competently advised and well represented. We look forward to receiving your message or call!

Your contact persons

Uwe Bruckner, Dipl.-Kfm., Steuerberater, Fachberater für Internationales Steuerrecht

» Uwe Bruckner

Dipl.-Kfm., Tax Consultant, Specialist Advisor for International Tax Law

email: u.bruckner@viehbacher.com

Siegrid Rosenauer, Dipl.-Kffr., Steuerberaterin Österreich, Steuerberaterin Deutschland, Fachberaterin für Internationales Steuerrecht, Wirtschaftstreuhänderin

» Siegrid Rosenauer

Dipl.-Kffr., German and Austrian Tax Consultant, Specialist Advisor for International Tax Law, Commercial Trustee

email: s.rosenauer@viehbacher.com

Your contact person

Siegrid Rosenauer, Dipl.-Kffr., Steuerberaterin Österreich, Steuerberaterin Deutschland, Fachberaterin für Internationales Steuerrecht, Wirtschaftstreuhänderin

» Siegrid Rosenauer

Dipl.-Kffr., German and Austrian Tax Consultant, Specialist Advisor for International Tax Law, Commercial Trustee

email: s.rosenauer@viehbacher.com

Your contact persons

Michaela Berger, Steuerexpertin, Treuhänderin mit eidg. Fachausweis

» Michaela Berger

LL.M., Certified Trustee and Tax Consultant

email: m.berger@viehbacher.com

Max Gross, LL.M., zugelassener Treuhänder und Steuerexperte

» Max Gross

Tax Consultant and Trustee with Federal Professional Certification

email: m.gross@viehbacher.com

Your contact person

Peter Fröhlich, Rechtsanwalt und Dipl. Steuerexperte

» Peter Fröhlich

Lawyer and Certified Tax Expert

email: p.froehlich@viehbacher.com

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