IFRS to HGB
Converting IFRS to HGB: producing a German statutory single-entity set from a group ledger
Many German subsidiaries keep their books under IFRS or a group chart, yet the accounts that are legally filed must be HGB. This is a practical guide to converting an IFRS or group ledger into a German statutory single-entity set: what changes, and in what order.
Why you need an HGB set at all
A German subsidiary often keeps its records under IFRS or a group-defined chart because that is what the parent consolidates. But the legally filed accounts, the basis for dividends and, through the tax balance sheet, for tax, must be HGB (§ 264). There is no IFRS single-entity statutory statement in Germany.
So the group ledger has to be converted into a German statutory single-entity set each fiscal year. jahresabschluss.io prepares that single entity's HGB accounts; it does not produce the group consolidation.
What actually changes
The mechanical adjustments to expect.
Reverse fair value
Strip out IFRS fair-value gains on investment property and financial instruments back to historical cost (§ 253 Abs. 1). Unrealised gains disappear, which usually lowers equity.
Un-capitalise operating leases
Remove IFRS 16 right-of-use assets and lease liabilities and recognise the rental as an operating expense over the term. The balance sheet shrinks and the expense pattern shifts back to straight rent.
Development costs
Decide the HGB option: capitalise under § 248 Abs. 2 (with the § 268 Abs. 8 distribution block) or expense. Research is always expensed, so IFRS-capitalised research must come off.
Provisions and pensions
Re-measure IAS 37 provisions to the HGB settlement amount and Bundesbank discount rates (§ 253 Abs. 2). Pension provisions follow the HGB averaging rules and typically differ from the IFRS figure.
Re-map the chart of accounts and formats
HGB prescribes the Bilanz (§ 266) and GuV (§ 275) layouts, so a group chart has to be mapped to German positions. Most German entities use an SKR chart (commonly SKR 03 or SKR 04), and you choose the GuV format: nature of expense (Gesamtkostenverfahren) or cost of sales (Umsatzkostenverfahren).
Comparatives and the fixed-asset movement schedule (Anlagenspiegel, § 284 Abs. 3) must be rebuilt on the HGB basis, not carried across from the IFRS presentation.
Deferred tax and the tax link
Converting also resets deferred tax. HGB deferred tax (§ 274) is narrower than IFRS, small entities are exempt (§ 274a), and the HGB result feeds the tax balance sheet through the Maßgeblichkeitsprinzip (§ 5 EStG).
Many conversion differences reverse over time, so document each one. A clean opening HGB carrying amount saves you re-deriving everything from IFRS the following year.
Do it once, cleanly
Upload the entity's trial balance and our AI maps it to HGB positions, applies the prudence adjustments that are mechanical, and drafts the Bilanz, GuV and notes (Anhang). You keep control of the judgemental calls, such as the development-cost option and provision estimates.
The output is the German-language statutory set for filing. The judgement stays with you; the mapping, formatting and drafting are automated.
Frequently asked questions
Do I have to convert IFRS to HGB every year?
Yes. The filed German statutory accounts and the dividend and tax basis are HGB, so each fiscal year needs an HGB single-entity set even if the group reports under IFRS.
What are the biggest IFRS-to-HGB adjustments?
Reversing fair-value gains, taking IFRS 16 leases off balance sheet, re-measuring provisions and pensions, and resetting deferred tax and capitalised development costs.
Does HGB or IFRS give higher equity?
Usually IFRS, because fair value and capitalised leases inflate assets. HGB's historical cost and prudence typically produce lower equity and profit.
Can software do the conversion?
It can do the mechanical mapping and prudence adjustments and draft the statements. The judgemental options, such as whether to capitalise development, stay with you. See the reconciliation guide for the line-by-line adjustments.
Is the converted HGB set the group consolidation?
No. It is the single German entity's statutory statement. The group consolidation stays with the parent, and the HGB numbers feed its reporting package.