Accounting Law Reform Act, Bilanzrechtsreformgesetz – Bil-ReG
In 2004, an amendment to the German Commercial Code
(Accounting Law Reform Act, Bilanzrechtsreformgesetz – Bil-
ReG) accompanied the introduction of the EU IAS Regulation,
implementing several EU Directives (Modernization Directive,
Threshold Directive, and Fair Value Directive). The BilReG led
to a further alignment of German accounting law to EU legal
standards and addressed such matters as size criteria, the
management report, and the information to be presented in the
notes. On May 25 2009, the German Accounting Law Modern-
ization Act (Bilanzrechtsmodernisierungsgesetz – BilMoG) was
enacted with the objective to make German accounting law a
fully adequate, yet more economical and simpler alternative to
International Financial Reporting Standards (IFRS).
The elimination of various tax elections with regard to capitaliza-
tion, recognition, and valuation brings German accounting law
closer to IFRS while retaining the existing accounting principles of
the German Commercial Code. To enhance the informational con-
tent of the financial statements, the so-called principle of reverse
linkage (umgekehrte Maßgeblichkeit), which means that elections
exercised for tax purposes must also be refected by the com-
mercial balance sheet to become tax-effective, was abandoned.
Therefore, future tax elections can be exercised independently
of the commercial balance sheet. Nonetheless, the balance
sheet according to German Commercial Code remains the basis
for determining the limits of permissible dividend distributions as
well as for determining taxable income.
Tent of the financial statements, the so-called principle of reverse
linkage (umgekehrte Maßgeblichkeit), which means that elections
exercised for tax purposes must also be refected by the com-
mercial balance sheet to become tax-effective, was abandoned.
Therefore, future tax elections can be exercised independently
of the commercial balance sheet. Nonetheless, the balance
sheet according to German Commercial Code remains the basis
for determining the limits of permissible dividend distributions as
well as for determining taxable income.
EU Forecast
euf:ba18f:99/nws-01