Publishing a Balance Sheet — Explanation & Deadlines

A balance sheet requires defined parameters in order to be comparable with previous balance sheets: namely, an identical time period over which movements in value are recorded, and a closing date — the balance sheet date (Stichtag). Each financial year has its own balance sheet; annual financial statements are not complete without one.

It is also called the closing balance sheet (Schlussbilanz), to distinguish it from the opening balance sheet (Eröffnungsbilanz) that is intended to mark the start of a new financial year. When the opening balance sheet is identical to the preceding year's closing balance sheet, we have balance sheet continuity — something that companies strive for in the interests of transparency.

The profit and loss account is a core element within the balance sheet, but there are further items that may be included. For a freelancer or self-employed person whose profit and loss account remains straightforward, this may not be relevant — but here we wish to cover all sizes of balance sheets, up to and including those of large corporate groups.

Balance sheets are not confidential documents; on the contrary, they are intended for the public, or at least for the tax authorities, which require insight into a company's financial transactions and status in order to levy taxation correctly. This is why we speak of "publishing a balance sheet".

An accountant distinguishes between assets (Aktiva) and liabilities (Passiva). Assets include fixed assets (intangible assets, tangible fixed assets, financial assets), current assets (inventories, receivables, securities, cash holdings, bank account balances), and deferred tax assets. Liabilities include equity (as subscribed capital, reserves, retained earnings, profit/loss carried forward, and the annual surplus), provisions, payables, and deferred tax liabilities.

Accruals and deferrals (Rechnungsabgrenzungsposten) can appear on either side. The total of both sides in this double-entry bookkeeping system should be equal. Total assets therefore equal total capital (liabilities and equity).

These structures are prescribed by the provisions of § 266 of the German Commercial Code (HGB). Your accountant should know them well; if you do not have one, you could outsource these matters and have your financial affairs put in order by Guhr Steuerberatung. Since balance sheets are in any case subject to deadlines that a tax advisory firm knows well, delegating the task to Guhr Steuerberatung would be doubly advisable.

Publishing a balance sheet is mandatory for companies above a certain size. This is also governed by the HGB. Registration in the commercial register (Handelsregister) already gives rise to an obligation to submit a recurring annual balance sheet; otherwise, the level of turnover and profit is the criterion for determining who must present a balance sheet and who need not. Anyone taxed under the small-business (Kleinunternehmer) scheme pursuant to § 19 of the VAT Act (UStG) should find that a cash-basis income statement (EUER — Einnahmenüberschussrechnung) suffices.

This is a simplified form of the balance sheet that makes do with setting income against expenditure and showing a surplus (as profit) — with no distinction between assets and liabilities whatsoever.

If your annual profit is less than 17,500 euros, you are not even required to submit an EUER, though the tax office may wish to see one in order to confirm your status. As a small-business operator (Kleinunternehmer) with turnover below 22,000 euros, you do not need to remit VAT, and your invoices do not need to show VAT.

However, if your expected turnover for the following year rises above 50,000 euros, you must leave the small-business (Kleinunternehmer) scheme behind. For any questions in this regard, Guhr Steuerberatung will be on hand to advise you. As you can see, being classified in the correct business category has implications for balance sheet preparation.

Where is an annual balance sheet published and who can view it?

A balance sheet can be published in the Bundesanzeiger (Federal Gazette), the electronic official publication platform of the federal authorities. The Bundesanzeiger then forwards it to the company register (Unternehmensregister), where it is published and accessible to everyone. This satisfies the disclosure obligation. Other companies, as well as customers and investors, will consult the company register and use it to inform decisions relating to the company in question.

A clean balance sheet is therefore very important for a company's public image and for its future prospects, such as the availability of credit or the establishment of partnerships. It contributes significantly to transparency and is part of the fight against corruption. There may still be items in a balance sheet that are falsified, but it is the job of the audit profession to find them. Without publicly accessible balance sheets, combating such practices would be far more difficult.

How much time do you have?

The deadline for filing with the Bundesanzeiger is one year after the balance sheet date to which the annual balance sheet relates. For a listed limited company, the deadline is even shorter, at a maximum of four months from the balance sheet date. Should there be any failures to comply, penalty notices demanding submission of the annual financial statements are possible, starting at approximately 2,500 euros. If the documents for the balance sheet publication are incomplete, the Bundesanzeiger does not grant an extension.

Who must publish their annual balance sheet in the Bundesanzeiger?

For limited companies (Kapitalgesellschaften) as defined under § 325 of the German Commercial Code (HGB), there is no way around submitting the annual balance sheet. A commercial partnership (Personenhandelsgesellschaft) that has no personally liable partner would likewise be required to do so.

As regards the company size threshold at which the obligation arises, § 1 of the Disclosure Act (Publikationsgesetz) establishes an obligation when two of the following three criteria are met within a period of three consecutive financial years: the balance sheet total exceeds 65 million euros, turnover exceeds 130 million euros, and/or the company employs an annual average of more than 5,000 employees.

This means that even partnerships or sole traders are required to make their balance sheets public once they reach a certain size. All these filings are publicly accessible to anyone, with the exception of the balance sheets of micro-entities, which may deposit their balance sheets — in abridged form — rather than making them fully public. Their balance sheet total is below 350,000 euros, turnover is below 700,000 euros, and they employ an annual average of no more than ten employees. They are not obliged to do so, unlike small companies with a balance sheet total still below 6 million euros, turnover below 12 million euros, and an annual average of no more than 50 employees.

These companies are required to publish an abridged balance sheet and abridged notes. Medium-sized companies are subject to the full disclosure obligation, with an abridged balance sheet including a profit and loss account, notes, and a management report. Further reports may be required depending on the legal form. Their balance sheet total remains below 20 million euros and their turnover below 40 million euros, while they employ an annual average of 250 employees.

If you are unclear about which category you fall into, a consultation with Guhr Steuerberatung will be able to provide clarification. A free initial consultation can be arranged via the website. It is convenient that it makes no difference whether the company itself or its tax adviser submits the balance sheet documents electronically to the Bundesanzeiger — you can therefore delegate the entire process.

It should be noted, however, that a tax advisory firm requires a separate engagement for this purpose, as the standard advisory mandate does not cover it. While larger companies use the standard file formats for a submission to the Bundesanzeiger, micro-entities and small companies may simply complete a web form that the Bundesanzeiger makes available to them.

All public data can then be retrieved via the platform www.unternehmensregister.de, not just for the preceding year but for several years. If the balance sheet has merely been deposited rather than made fully public — as is permitted for micro-entities — it can only be viewed upon application by third parties and subject to a fee. Incidentally, certain types of companies are always required to publish their balance sheets, regardless of their turnover or number of staff: credit institutions, pension funds, insurance companies, investment and holding companies, and co-operatives. Since August 2022, the Bundesanzeiger platform has also required mandatory electronic identity verification; however, this need only be carried out once, after which one is considered authorised for future transactions.

You can also have questions such as these answered via the contact form on the Guhr Steuerberatung website, in the form of a free initial consultation.