Equity
Equity in the German balance sheet: the Eigenkapital section
The equity section (Eigenkapital) of a German balance sheet follows a fixed layout set by § 266 Abs. 3 A HGB and detailed by § 272. This page walks through each line — subscribed capital, capital reserve, revenue reserves, profit and loss carryforwards and net income — and explains how the appropriation of profit and negative equity are shown.
The prescribed structure (§ 266 Abs. 3 A)
For corporations the equity side is not free-form: § 266 Abs. 3 A HGB fixes five Roman-numbered positions in order. I. Gezeichnetes Kapital (subscribed capital), II. Kapitalrücklage (capital reserve), III. Gewinnrücklagen (revenue reserves), IV. Gewinnvortrag/Verlustvortrag (profit or loss carried forward) and V. Jahresüberschuss/Jahresfehlbetrag (net income or loss for the year).
Smaller companies present the section in this same order but may condense the detail. The layout deliberately separates capital contributed by owners (positions I and II) from results the company has retained (positions III to V), a distinction that drives what may be distributed.
Subscribed capital and reserves
I. Gezeichnetes Kapital
The nominal capital the owners have committed — Stammkapital for a GmbH (minimum €25,000) or Grundkapital for an AG (minimum €50,000). It is shown at nominal value; treasury shares held are deducted openly under § 272 Abs. 1a.
II. Kapitalrücklage
The capital reserve under § 272 Abs. 2 — chiefly share premium (Agio) paid in above nominal, plus other shareholder contributions to equity. It is money put in by owners, not earned, so its use is restricted.
III. Gewinnrücklagen
Revenue reserves under § 272 Abs. 3, built from retained profit. They include the legal reserve, statutory (articles-based) reserves and other revenue reserves. This is profit the company kept rather than distributed.
Carryforwards and the result for the year
Position IV, the Gewinnvortrag or Verlustvortrag, carries forward the undistributed result of prior years that has not been moved into reserves. Position V shows the current year's Jahresüberschuss (net income) or Jahresfehlbetrag (net loss) as it drops out of the GuV.
A company may draw up the balance sheet before or after the appropriation of profit (§ 268 Abs. 1). If it is prepared after appropriation, positions IV and V are replaced by a single Bilanzgewinn or Bilanzverlust reflecting the shareholders' resolution on what to retain and what to distribute.
Negative equity and special situations
If accumulated losses exceed the sum of capital and reserves, equity turns negative. HGB does not net this to zero: under § 268 Abs. 3 the shortfall is shown separately on the asset side as a Nicht durch Eigenkapital gedeckter Fehlbetrag (deficit not covered by equity), a visible red flag that can point to over-indebtedness.
Legal-form specifics also live in this section. A UG (haftungsbeschränkt) can start with subscribed capital as low as €1 but must build a statutory reserve; an AG must feed the legal reserve under § 150 AktG. These reserve duties are covered in the dedicated reserves guide.
Frequently asked questions
What are the equity items in a German balance sheet?
Under § 266 Abs. 3 A HGB, equity (Eigenkapital) comprises five positions in order: subscribed capital (gezeichnetes Kapital), capital reserve (Kapitalrücklage), revenue reserves (Gewinnrücklagen), profit or loss carried forward (Gewinn-/Verlustvortrag) and the year's net income or loss (Jahresüberschuss/Jahresfehlbetrag).
What is gezeichnetes Kapital?
Gezeichnetes Kapital is the subscribed or nominal capital the owners have committed — the Stammkapital of a GmbH (minimum €25,000) or the Grundkapital of an AG (minimum €50,000). It is shown at nominal value in the first equity position and is the capital against which many disclosure and reserve rules are measured.
What is the difference between capital reserve and revenue reserves?
The capital reserve (Kapitalrücklage, § 272 Abs. 2) holds amounts contributed by owners above nominal, such as share premium. Revenue reserves (Gewinnrücklagen, § 272 Abs. 3) are built from retained profit. The first is contributed capital; the second is earned and kept — a distinction that affects what can be distributed.
How is negative equity shown under HGB?
If losses exceed capital and reserves, § 268 Abs. 3 HGB requires the shortfall to be shown on the asset side as a separate line, the Nicht durch Eigenkapital gedeckter Fehlbetrag. It is not netted away, which makes a potential over-indebtedness situation visible on the face of the balance sheet.
What is Bilanzgewinn?
Bilanzgewinn (or Bilanzverlust) appears when the balance sheet is drawn up after the appropriation of profit under § 268 Abs. 1 HGB. It replaces the separate carryforward and net-income lines with a single figure showing the result available after the shareholders' decision on retention and distribution.