Accounting Obligation in Germany

What is the accounting obligation in Germany for all merchants? This article presents a general description and interpretation of Sections 238 and 239 of the German Commercial Code. Are you planning to start a business in Germany? Familiarize yourself with the legal accounting obligations applied in the German jurisdiction.

Accounting Obligation – Section 238 German Commercial Code

According to Section 238 of the German Commercial Code, all merchants have an accounting obligation in Germany. That means every merchant must keep books of account. The books of account should show all their commercial transactions. It should also show the status of the merchants’ assets according to general principles of accounting. For more details, see Section 238 (1) German Commercial Code.

The commercial code further obliges the merchants to provide organized accounts. Therefore, the merchant must neatly do his bookkeeping to allow an experienced third party to overview all the business transactions within a reasonable period. Additionally, all business transactions must be traceable in their origin and processing. Lastly, Section 238 (2) obliges the merchant to retain a reproduction of the commercial letters sent consistent with the original, e.g., copies, imprints, transcripts, or other reproduction of the contents on a written, visual, or other data carriers.

Administration of Commercial Books – Section 239 German Commercial Code

First, Section 239 (1) demands that the merchant use authentic language while keeping the commercial books and other required records. If the merchant uses abbreviations, numbers, letters, or symbols, they must establish their meaning in each specific case. Secondly, Section 239 (1) requires that the entries in books and the otherwise required records be complete, correct, timely, and orderly.

Section 239 (3) obliges that the merchant should not change an entry or a record such that the original content is not recognizable. It also requires that such changes not be made, whose nature makes it uncertain whether the merchant made them initially or only later.

Section 239 (4) rules that the commercial books and records may also consist of the orderly filing of vouchers. Otherwise, the merchant can keep his accounting records on data carriers. The requirement is that these other forms of bookkeeping, including the procedure used, comply with the general principles of accounting. Consequently, the merchant must ensure that the data are available for the duration of the retention period. The data should also be made readable at any time within a reasonable period. Finally, sections 239 (1) to (3) shall apply analogously.

Starting your Business in Germany

Before starting your business in Germany, make sure you have informed yourself about all legal obligations concerning your type of business. The German Commercial Code, among other tax and commercial laws, governs how you can set up your business in Germany. We are happy to help you understand the procedures and connect you with our network of experts to help you start your business in Germany.