Public reports

Statutory reporting obligation for extractive companies (§§ 341q et seq. HGB)

By way of derogation from the rules on German tax secrecy, companies extracting raw materials are subject to a statutory reporting obligation and disclosure of payments to public authorities in accordance with Section 341q et seq. of the German Commercial Code (HGB).

The Accounting Directive Implementation Law (BilRUG) of 23 July 2015 implemented the requirements of the EU Accounting Directive 2013/34/EU of 26 June 2013 into German legislation. The provisions of Sections 341q et seq. in the German Commercial Code (HGB) largely correspond to the requirements of the EITI. All the “large” limited companies and limited liability commercial partnerships involved in the extractive sector or in the logging sector in primary forests are subject to these reporting requirements under commercial law (cf. Section 341q HGB). The term “large” in the legal sense refers to companies that exceed at least two of the following three criteria on two successive reporting dates (Section 267(3) sentence 1 HGB):

• Balance sheet total of €25 million
• Turnover of €50 million
• An annual average of 250 employees

Within the meaning of Section 264d HGB capital market-oriented limited companies, as well as credit institutions and insurance companies in the legal form of limited companies (including limited liability commercial partnerships) are also subject to the reporting obligation, irrespective of their size. Besides reporting at the level of an individual company, the HGB also provides for an obligation to report at corporate level. Here it is not a prerequisite that the parent company itself is involved in the extractive sector or in the logging sector in primary forests. It is sufficient if this applies at least to a subsidiary.

The companies subject to the legal provisions are required to disclose payments made to government agencies above a “materiality threshold” of €100,000 per government agency, if these payments fall under one of the reasons for payment specified in Section 341r no. 3 HGB. In addition to tax payments, this includes e.g. licenses, concessions (for both it applies to mining licenses as such) and other contractual relationships related to the extraction of natural resources. The data must be allocated to individual projects (see Section 341r no. 5 HGB), if more than one project has been carried out in the year under review.

 

Similarities and differences in the reporting obligation as per EITI

In addition to the reporting obligations pursuant to Sections 341q et seq. HGB, certain financial flows of the extractive industries are also disclosed via the EITI (see Disclosed payment flows and quality assurance). The reporting requirements under commercial law largely correspond to those of the EITI. However, there are also differences.

One fundamental difference between the reporting obligations stipulated by the HGB and the EITI lies in the extent of the reporting. EITI stipulates that the participating companies from the natural resources extractive sector publish all material payments they make to government agencies. In contrast to the HGB, the material payments are not exhaustively listed by the EITI and must be clarified in the course of the EITI process (see Disclosed payment flows and quality assurance). The EITI standard does not provide for a distinction between payments above or below the limit of at least €100,000 annually. The stakeholders of the German EITI have agreed to adopt the materiality threshold of Section 341t(4) HGB.

Adjusted thresholds apply to trade tax payments, revealing the 20 municipalities that receive the highest trade tax payments from extractive companies.

In order to check whether the payments of the companies extracting the raw materials have reached the declared level with the state authorities, a quality assurance of the regularity of the payment flows is carried out after each data collection. On the initiative of the international EITI management board, Germany developed a risk-based procedure in recent years to ensure the quality of the disclosed payment flows. In October 2024, the risk-based approach was recognised as a new EITI standard procedure for the quality assurance of payment data.

For the purposes of D-EITI reporting, payment data are collected on the publicly available information in payment reports and supplemented, if necessary, with the help of the companies reporting to D-EITI. This fulfils one of the EITI’s main objectives of making payment flows accessible to all interested parties in the form of open data and thus supporting the public debate. To ensure the quality of these data, the government processes and systems underlying the collection of royalties and tax are systematically analysed and a risk assessment of possible irregularities is carried out. Depending on the risk assessment, the quality assurance is then carried out via a plausibility check of the payment data (low risk) or (partial) payment comparisons with the government agencies (medium/high risk), see the report of the Independent Administrator in Disclosed payment flows and quality assurance.