Relief measures for small corporations
The New Law Is Intended to Provide Financial Relief to Micro-Corporations
On December 27, 2012, the Act on Relief for Micro-Corporations (KKap) was passed. The aim is to relieve these entities of accounting requirements.
Micro-enterprises organized as corporations (GmbH, UG, AG) or partnerships without a fully liable natural person (GmbH & Co KG, UG & Co KG, AG & Co KG) will be subject to less stringent accounting requirements in the future. The amendment applies to KKaps that, on two consecutive balance sheet dates, do not exceed two of the following three criteria:
- 1. Revenue up to €700,000
- 2. Total assets up to €350,000, and
- 3. an average of 10 employees
WHAT THE LAW MEANS FOR SMALL CORPORATIONS
Affected companies may then omit the preparation of notes to the financial statements if any contingent liabilities are disclosed below the balance sheet total. The income statement may group various items under the collective headings “other income” or “other expenses.” And they may choose whether to fulfill the disclosure requirement by publishing or filing the condensed balance sheet.
Regardless of the method of disclosure, the data must be submitted electronically as before.
In the case of filing, third parties can no longer view the balance sheet on the Internet, but may only obtain a copy of the balance sheet data upon request and for a fee. The new regulation applies to all fiscal years with a closing date after December 30, 2012. If the fiscal year corresponds to the calendar year, the simplifications are therefore to be applied for the first time to the 2012 annual financial statements.
Conclusion:
The reform brings little cost relief. This is because, for tax purposes, the aggregate items must still be recorded in detail as before. However, the filing of balance sheet data is likely to result in third parties bearing the costs of inspection only when they have a business interest, rather than simply looking out of curiosity to see what a competitor’s balance sheet looks like.
