Disclosed payment flows 2021

Participating companies and sector coverage

A total of 17 companies or groups of companies out of the 33 companies and/or consolidated group companies identified by the Independent Administrator in accordance with the requirements of the MSG (cf. Selection of companies) participated in the reporting process during the preparation of this EITI report.

It should be noted that the identification of companies or groups of companies was based on an estimate of the companies likely to be subject to the statutory requirements (cf. Selection of payment flows for details). Following the expiry of the deadlines for publication of the payment reports for the period from 1 January 2021 to 31 December 2021 and the experience gained from the publication of the payment reports for previous years, it has become apparent that the number of payment reports actually published is lagging behind the number of companies or consolidated groups that have been identified. An estimation or assessment of the number of companies or groups of companies participating in the EITI reporting process should therefore also be made against the background of the actually published payment reports. Considering the high coverage in the lignite, natural gas, crude oil, potash and salt sectors with regard to the production volume and the reported mining and extraction royalties, the participation rate seems positive.

All payment reports submitted by companies pursuant to §§ 341 q et seq. HGB are publicly available and can be inspected in the company register.¹ While drawing up the first D-EITI report, the MSG, at the suggestion of the civil society, made a list of the companies identified that did not participate in the reporting for the first report of the D-EITI or in the reporting for the supplementary report. In view of the public availability of the payment reports and the legal objections that the government has raised against naming these companies, the MSG has refrained from naming the non-participating companies for this 6th D-EITI report, as it did for the previous D-EITI reports. The legal concerns which, from the government’s point of view, oppose the naming of the companies are set out as follows:

On the one hand, data protection law applies in cases where the company name allows conclusions to be drawn about a specific natural person, such as when a company is named as a sole trader (possibly with further details such as the registered office). This is true for at least two companies that have not reported under D-EITI, so that they may not be named for reasons of data protection.

On the other hand, there are concerns that the publication of company names in the D-EITI report without sufficient legal basis could interfere with the fundamental right of companies to freely exercise their profession (Article 12 GG). There is no legal obligation to name the companies.

Protected property in art. 12 GG includes free entrepreneurial activity serving profit purposes. The publication of the company names in the D-EITI report would intervene in the protected property as an act of state economic control, because the publication of all those company names that did not participate in the reconciliation could result in a certain pillory effect which could lead in turn to the fact that the companies feel compelled to agree to a reconciliation. This problem is exacerbated by the fact that the data to be transmitted by the companies (including payment flows such as corporate income tax, extraction and mine site royalties, trade tax etc.) are actually trade, business and tax secrets.

Besides, publishing the names of these companies would not be compatible with the decisions of the BVerfG (Federal Constitutional Court) in the so-called Glykol² or Scientology³ cases. In the cases in question, the Federal Constitutional Court decided that the Federal Government could fulfil its warning and information obligations even without a legal basis, especially if (as in the case of glycol) there are interests worth protecting on the part of consumers which are in favour of a warning (consumer health). However, there are no comparable interests among the companies, which did not report under the D-EITI.

 

Participating companies and/or groups of companies per sector

The following overview shows the distribution of the participating companies and/or consolidated companies throughout the various sectors for the current D-EITI report:

The recording of government revenues from the extractive sector is difficult in Germany for various reasons. First of all, it should be noted that in Germany only the mine site and extraction royalties are a specific levy for the extractive sector. Moreover, companies in the extractive sector, like companies in other sectors, contribute to tax revenue, in particular in the form of corporate tax and trade tax or, depending on their legal form, income tax. The total corporate income tax and trade tax payments made by the commodities sector are not recorded statistically or are not recorded promptly and irregularly – they can only be extrapolated from other data.

Furthermore, German tax law has special features that make it difficult to record the tax revenues of the sector as a whole. The most important of these is the fiscal unity, which results in subsidiaries operating in the extractive sector not being recorded as taxable entities themselves, but instead in income taxes being paid on their earnings by a parent company, although the parent company itself is often not active in the extractive sector. At the level of the parent company, however, it is not possible to allocate the tax payments made to the individual companies included in the scope of consolidation (cf. Selection of payment flows.). Furthermore, recording and allocation of trade tax are also made more difficult by the federal structure of the State system in Germany, as trade tax is levied by the individual municipalities.

A further difficulty lies in the clear classification of the companies that are active in the extractive sector and therefore must prepare a payment report. This may result in deviations within the scope of recording under commercial law based on the EU Accounting Directive 2013/34/EU of 26 June 2013 and the statistical recording of sector-related government revenues.

Against this background, the production volume, supplemented by the extraction royalties, is the best possible yardstick for the coverage of the sectors.

Coverage of sectors

The following overview shows the coverage of the respective sectors by the group of identified companies and the companies participating in the reporting process, with their respective reference values upon which the determination procedure was based:

* Against the background of the small-scale nature of the sector, the determination of a degree of coverage of the quarried natural resources sector was dispensed with (cf. Selection of payment flows)

** The remaining shares of the oil sector have not been included, since it is made up of several smaller companies (see https://www.bveg.de/Der-BVEG/Publikationen/Jahresberichte).

*** Coverage details have been omitted to ensure the protection of competition-relevant data.

Overall overview of reported company data

The following overview shows the 2021 payments made by the participating companies to government agencies for corporate tax, trade tax, lease payments and payments to improve the infrastructure:

¹ No payments have been made due to the legal form of the company

² Payments are made by the parent company

³ No payment information available due to the existence of a consolidated tax group

The reports on the payment flows of corporate tax and trade tax illustrate the high relevance of consolidated tax groups in Germany. In these cases, if the main activity of the consolidated tax group does not involve the extraction of natural resources, the details of the taxes paid by the parent company can be omitted. On the other hand, if the consolidated tax group is mainly active in the extractive industry, a report (on a pro rata or complete basis) of the taxes paid by the parent company is required.

At the request of the MSG, the content and the composition of the reported payments to improve infrastructure were further analysed by the Independent Administrator in cooperation with the reporting companies for the purposes of the first two EITI reports. Payments are recorded based on statutory regulations (land transfer taxes) and payments based on private legal contracts between companies and public authorities (towns, municipalities, and associations). The latter include the reconciliation of additional administrative costs caused by mining activities or services in connection with the construction and maintenance of local public infrastructures. The payment reports for 2021 published pursuant to §§341q et seq. HGB also show payments of water abstraction fees.

¹ Company register: https://www.unternehmensregister.de/ureg/search1.8.html;jsessionid=EF0FD8F4536B7CA4161A4DF528B64AE4.web02-1; enter the search term “Zahlungsberichte” (“Payment reports”) in the “Suchen” (“Find”) field.

² BVerfG (Federal Constitutional Court), Resolution of the First Senate of 26 June 2002, 1 BvR 558/91 – recital no. (1-79), http://www.bverfg.de/e/rs20020626_1bvr055891.html

³ BVerfG, Resolution of the 2nd chamber of the First Senate of 16 August 2002 – 1 BvR 1241/91 – recital no. (1-25), http://www.bverfg.de/e/rk20020816_1bvr124197.html