GAAP Conversion

German GAAP conversion: turning a group ledger into HGB statutory accounts

Many foreign-owned German entities keep their books in IFRS or a group GAAP for reporting, yet still have to file HGB statutory accounts locally. This page walks through the conversion workflow — from trial balance to a compliant Bilanz, GuV and Anhang — and the adjustments that most often move the numbers.

Why you convert at all

A German GmbH must file its single-entity statutory statements under the HGB, in German and euros (§§ 244, 264 HGB). If your operational ledger is maintained under IFRS or a parent's group GAAP, you cannot simply file those numbers — you have to derive an HGB view first.

Conversion is the disciplined process of taking the group-GAAP trial balance and adjusting it to HGB measurement and presentation, so the statutory Bilanz and GuV comply while your group reporting continues unchanged.

The conversion workflow

  • Start from the entity's trial balance in the source framework.
  • Identify the line items where HGB measurement differs from IFRS/group GAAP.
  • Post HGB adjustments — reversing fair-value step-ups, restating provisions, reclassifying items to § 266/§ 275 captions.
  • Recompute deferred taxes on the HGB basis (§ 274; small entities largely exempt, § 274a).
  • Map the adjusted balances into the HGB Bilanz and GuV structure.
  • Draft the Anhang disclosures that explain the policies actually applied under HGB.

Common IFRS to HGB adjustments

Fair value to historical cost

HGB caps most assets at historical cost (§ 253 Abs. 1) and has no revaluation model. Fair-value uplifts and investment-property gains recognised under IFRS are reversed.

Development costs

IFRS mandates capitalising qualifying development costs; HGB makes it an option. Align the treatment to the policy chosen for the German book and disclose it.

Leases

IFRS 16 puts nearly all leases on balance sheet. HGB follows the economic-ownership test, so many operating leases stay off balance sheet — a frequent reclassification.

Provisions

HGB recognises provisions more readily under § 249 and discounts long-term provisions on a prescribed basis. Recognition thresholds and measurement differ from IFRS.

Handelsbilanz and the tax link

The HGB statements (Handelsbilanz) also anchor the German tax accounts through the Maßgeblichkeitsprinzip (§ 5 EStG): the tax balance sheet (Steuerbilanz) starts from the commercial one and applies specific tax overrides. Getting the HGB conversion right therefore feeds directly into the correct tax base.

This is a reason not to shortcut the conversion. An IFRS number carried through untouched will misstate both the statutory filing and the tax result.

Documentation and the Anhang

Keep the conversion transparent: a schedule that lists each adjustment, the source-GAAP amount, the HGB amount and the statutory basis. That schedule is your audit trail and, for medium and large entities, feeds the auditor's work.

The Anhang then describes the accounting policies as applied under HGB — not the group's IFRS policies. With jahresabschluss.io you upload the adjusted trial balance and the AI drafts the HGB-compliant Bilanz, GuV and Anhang from it, so the conversion result becomes a filing rather than a spreadsheet.

Frequently asked questions

How do I convert IFRS to HGB for a German subsidiary?

Take the entity's trial balance, identify where HGB measurement differs from IFRS, post adjustments (fair value, leases, provisions, development costs), recompute deferred taxes under § 274, and map the result into the § 266/§ 275 HGB structure with matching Anhang disclosures.

What are the main IFRS to HGB adjustments?

Reversing fair-value step-ups to historical cost (§ 253), bringing IFRS 16 leases back off balance sheet where economic ownership sits with the lessor, restating provisions under § 249, and aligning development-cost capitalisation to the HGB option.

Can I file IFRS accounts in Germany instead of HGB?

No, not for the single-entity statutory filing. A German entity's statutory Jahresabschluss must be HGB in German and euros (§§ 244, 264). IFRS is used for group consolidated reporting, not the individual statutory statements.

Do I need both an HGB and a tax balance sheet?

Usually. The HGB commercial balance sheet (Handelsbilanz) anchors the tax balance sheet (Steuerbilanz) via the Maßgeblichkeit principle (§ 5 EStG), with specific tax overrides applied on top of the HGB result.

How is the conversion documented?

With an adjustment schedule listing each item, the source-GAAP amount, the HGB amount and the statutory basis. It is the audit trail for the conversion and feeds the Anhang and, for larger entities, the auditor.