Germany shares many practices with the other nations in the Euro Zone, including Value Added Tax (VAT). If your company is new to EU accounting practices, check out some of our prior blog series on the Czech Republic, Hungary, France, Italy, and the U.K., which all contain some information about EU accounting practices. If your company has some EU experience, keep the following in mind.
Step #3: Be aware of local German accounting practices. While German accounting practices are mostly similar to those in other EU countries, there are some essential differences, such as certain reports for fixed assets, data transfer to tax authorities etc. Above all, GAS rules and tax rules needs to be taken into account. For example, unlike countries that require companies to follow International Financial Reporting Standard (IFRS), Germany requires a chart of accounts defined by GAS. Usually German companies use a general ledger and sub ledgers for fixed assets, accounts receivables/payables. (Coda Financials offers a single ledger, which is a simpler way to get the appropriate information.)
Step #4: Get software that makes it easy to compile a tax book. Tax books are the basis for tax audits. You can either have a full tax book for an audit or use your local GAAP books and reconcile the differences between local GAAP and tax books. For the purposes of profit distribution and taxation, enterprises have to prepare financial statements in compliance with the German Tax Code and the Commercial Code (Handelsgesetzbuch or HGB).
Tomorrow, we ‘ll look at some other important differences between Germany and EU processes, including IFRS.
Like what you read? Join other like-minded business professionals and subscribe to our blog. Keep up-to-date with the latest business, financial management and IT topics and trends.
Enter your email in the Subscribe to Blog box to the top right and receive the latest posts in your inbox.