2016 German Law Changes And Administrative Outlook Part 1

Various changes in German law scheduled for 2016 will affect your company's legal, accounting, administrative obligations, and how your business operates.

German law saw various changes in 2015, and this will continue over the next 12 months. Some of these changes will result in fewer legal, accounting and administrative obligations while others will increase the responsibility for businesses.

Changes affecting corporate secretarial, administrative and accounting requirements

New Act to facilitate the administrative and accounting burden for SMEs and start ups

The so-called "Bürokratieentlastungsgesetz" (BüroKrEntlG) was implemented on 1 January 2016. It affects small and medium-sized companies (SMEs) in Germany, including start-ups, pursuant to its new definition and understanding based upon the new Act.

A company is now qualified as a SME if its annual profit does not exceed €60,000 (previously, €50,000) and if annual turnover amounts to less than €600,000 (previously, €500,000). The BüroKrEntlG exempts SMEs and start-ups from certain accounting and reporting requirements and reduces the storage or archiving rules.

This means that qualified SMEs are exempt from ongoing requirements and interim reporting. Preliminary VAT returns, annual tax returns and statutory financial statements still need to be prepared within the legal time frames; however, less information is required. Archive rules have been relaxed, and SMEs are only required to archive mandatory (not all) information for up to 10 years.

Start-up companies will benefit from the new rules. Aside from accounting facilitations, start-ups will be exempt from providing information on certain statistics/the economic environment in the first year. Statistical information must be provided in years two and three only where annual turnover exceeds €800,000. From year four, all formal statistic requests from the authorities must be followed.

To verify whether a company qualifies as an SME pursuant to the BüroKrEntlG, a special SME test will be implemented, and details are still pending.

Payment processes/bank accounts

It has been mandatory for companies to use an IBAN for any and all payments since 2014. Private persons will now have to follow this rule, as payments without a valid IBAN will not be executed. Since 1 February 2016, a BIC code is no longer been required for any payments within the European Economic Region (EU, Island, Liechtenstein and Norway).

As per the EU Payment Account...