All German companies soon will be required to file an electronic tax balance sheet and an electronic profit-and-loss-account (“E-Tax Balance Sheet”) as an appendix to their annual company tax returns. These new requirements for companies with book/tax differences, which are likely to apply for all fiscal years starting after 31 December 2011, may necessitate fundamental changes to software, accounting systems, charts of accounts and internal processes.
As from fiscal year 2011, all company income tax returns also will have to be submitted electronically. No changes are planned for tax assessments, which will still be issued only in hard copy.
In a circular dated 19 January 2010, the Federal Ministry of Finance (BMF) defined eXtensible Business Reporting Language (XBRL) as the mandatory technical format for all data transmissions by companies related to the E-Tax Balance Sheet.
On 31 August 2010, the BMF released a first draft of the general taxonomy that will apply for most companies, followed by a hearing on the draft. The BMF reportedly is planning to publish first drafts of special taxonomies (e.g. for banks and insurances) and complementary taxonomies (e.g. for industries subject to special accounting rules and regimes) by 31 December 2010. The draft general taxonomy requires detailed new tax information, which is currently not available in standard charts of accounts used by most German companies for financial accounting purposes.
Special E-Tax Balance Sheet issues arise for all German companies that do not maintain German GAAP accounting books (and do not control their chart of accounts), but conduct all their financial accounting in accordance with US GAAP or IFRS with a one-time annual adjustment or conversion to German GAAP. This group of German taxpayers includes many foreign-owned companies.
Even though the BMF taxonomy drafts have not yet been finalized and the exact implementation dates are not yet clear, all companies should use 2011 to review their readiness for the E-Tax Balance Sheet and should plan to address changes to software, accounting systems, charts of accounts, and internal processes. Deloitte Germany can advise on all E-Tax Balance Sheet questions and can offer you practical solutions for all E-Tax Balance Sheet issues.
Please contact us (tax-news@deloitte.de) if you wish to receive a more detailed E-Tax Balance Sheet flyer.
