Tax Advice for Financial Service Providers and FinTechs in Germany

Due to their business activities, securities and financial services institutions in Germany have to comply with special requirements for their annual financial statements. Regardless of their legal form, they not only have to comply with the accounting regulations for large corporations under the German Commercial Code (Handelsgesetzbuch, HGB), but also the special regulations under the HGB for institutions and the German Accounting Ordinance for Banks (Kreditinstituts-Rechnungslegungsverordnung). These include, for example, the special structure of the financial statements and the valuation of financial instruments.

Financial and securities service providers are also subject to special deadlines for the preparation of annual financial statements. These must be prepared and submitted to the supervisory authorities no later than three months after the end of the financial year, i.e. usually by March 31 of the following year. Our tax advisors are familiar with all these special features and will prepare your annual financial statements in compliance with all regulations and deadlines.

Our tax advisors for financial service providers are also available to your auditor as a point of contact for the subsequent mandatory audit of the annual financial statements and will support you in answering any questions that may arise.

The services in detail:

• Preparation of the balance sheet, income statement and notes
  • Preparation of the financial statements within three months of the end of the financial year (usually by March 31 of the following year) and immediate submission to the Deutsche Bundesbank and BaFin
  • Submission of the financial statements approved by the shareholders, including the management report (after the audit), to the authorities
  • Timely publication of the financial statements in the electronic Federal Gazette
  • Compliance with the provisions of the German Bank Accounting Ordinance (RechKredV) in conjunction with Sections 340 to 340d of the German Commercial Code (HGB). §§ Sections 340 to 340d HGB, which regulate the special requirements for regulated institutions compared to ordinary HGB financial statements - in particular, every institution is considered “large” within the meaning of Section 267 (3) HGB
• Support for the audit of the annual financial statements and Securities Trading Act (Wertpapierhandelsgesetz, WpHG) audit by your auditor
  • Contact for accounting and balance sheet issues
  • Provision of (calculation) lists and supporting documents
  • Access to electronic documents (postings incl. document linking)
  • Recommendation of a suitable auditor on request

In addition to the regulations that apply to all companies, compliance with the special regulations for regulated institutions from the German Commercial Code (HGB) and RechKredV is already crucial during ongoing bookkeeping.

Depending on your requirements, we can take over your accounting completely or support you with your own bookkeeping.

Our services in detail:

• Monthly or weekly posting of incoming and outgoing invoices with open item accounting (OPOS), cash, credit card statements, employee travel expense reports, bank accounts
  • Prompt clarification of ongoing queries regarding accounting (missing receipts, unclear/incorrect information on invoices) with your contact persons
  • Use of DATEV Unternehmen online (digital document exchange securely via DATEV data center in Germany) with the advantages:
    • Automatic linking of the receipts with the posting records generated from them (saves time in the event of subsequent queries during any tax audits or as part of the statutory annual audit)
    • Paperless exchange between your company and WINHELLER - you can also access the evaluations and postings, including the linked receipt, via a browser after the end of the month
  • Use of automatic bank data retrieval in order to be able to post daily bank transactions without receipts and avoid any typing errors
  • If useful and desired: setting up and maintaining additional cost center accounting (in different levels of detail)
  • Possible expansion of the usual posting accounts from four to six or more digits in order to further break down accounts that are usually combined:
    • e.g. in the area of revenue or
    • In the area of costs, e.g. separation of legal consulting costs into compliance costs, data protection costs, tax consulting costs, outsourced internal auditing costs, etc.
  • Preparation of current advance VAT returns and recapitulative statements (for EU services)
• Monthly evaluations
  • Business management analysis (Betriebswirtschaftliche Auswertung, BWA) in individual compilation, e.g:
    • Short-term income statement including statement of accounts
    • List of totals and balances
    • Annual or development overview with comparison of months over time
    • Comparison with average, planned or previous year's figures
    • Industry comparisons
    • Controlling report
    • Customized evaluations
  • Quality BWA to determine monthly figures as accurately as possible (especially for meaningful Bundesbank reports), including:
    • Preliminary booking of accounting items not clarified at the end of the month as other expenses/income
    • Creation of provisions for regularly incurred costs that are not billed monthly (e.g. auditor costs, contributions to the Compensation Scheme for Securities Trading Companies (EdW), etc.)
    • Estimation of monthly receivables/payables if these are not yet available on the (near-time) reporting date
    • Creation of accruals and deferrals during the year to ensure that expenses and income are allocated evenly according to cause
    • Monthly posting of depreciation
  • Additional monthly interim balance sheets in accordance with RechKredV on the basis of the quality BWA

Securities and financial services companies that are regulated by BaFin must submit regular reports to the Bundesbank in order to disclose information about their business activities and risks.

The obligation to submit reports and the frequency of the reports are based on the statutory reporting regulations (e.g. Securities Institutions Act (WpIG), Directive on the Supervision of Investment Firms (IFR)). The German supervisory authorities also have detailed requirements for the form of the reports. Reports in accordance with Art. 54 IFR may only be submitted in XBRL format from the reporting date of December 31, 2023. XBRL is an XML-based data format that is used to standardize financial reporting.

Depending on your requirements, we can prepare the quarterly reports on financial information as well as the equity and liquidity reports for you or support you in submitting these reports independently. In doing so, we also implement the current specifications of the supervisory authorities regarding the technical requirements for reporting (e.g. XBRL format for IFR reports from the reporting date of December 31, 2023).

The statutory capital ratios must be met not only on the reporting dates, but at all times (see e.g. Art. 9 IFR). To ensure this, we are happy to support and advise you in assessing the impact of certain events on the capital ratios (e.g. planned distributions, expected losses).

The services in detail:

• Financial information in accordance with Section 66 (2) WpIG and Section 25 (1) sentence 1 KWG - Preparation of quarterly reports for submission via the Deutsche Bundesbank's EXTRANET, including direct submission of reports after approval by you; these are based on the interim financial statements prepared from the quarterly financial statements
  • Report on the income statement (GVFDI)
  • Report on the statement of financial position (STFDI)
• Reports in accordance with Art. 54 IFR
  • Report on the calculation of own funds, overheads and capital ratios
  • Report on liquid assets
  • Report on the review of threshold values
• Monitoring of ongoing compliance with the minimum capital requirements in accordance with Section 17 (1) WpIG and Section 33 (1) No. 1 KWG
• Advice on the impact of certain events on the capital ratios (e.g. planned distributions, expected losses)

If necessary, we will prepare a separate tax balance sheet or a reconciliation from commercial to tax law for you and, on this basis, all necessary tax returns.

The services in detail:

• Preparation of corporate, trade and VAT tax returns on the basis of the annual financial statements
• (Electronic) submission of tax returns to the tax office on time
• If required, preparation of a separate tax balance sheet or reconciliation from commercial law to tax law (only in exceptional cases is a balance sheet/unit balance sheet sufficient)
• Electronic reporting of the e-balance sheet to the tax office in accordance with special taxonomy regulations (based on the RechKredV) on the basis of the tax balance sheet
• Review of the corresponding tax assessment notices and, if necessary, appeal proceedings in the event of errors. Necessary appeals procedure in the event of incorrect assessments
• Preparation of any other tax returns that may be required, e.g. capital gains tax returns for profit distributions to shareholders

• Ongoing payroll accounting
  • Maintenance of employee data
  • Monthly payroll accounting
  • Payroll tax declarations and certificates
  • Contribution statements and social security notifications to health insurance companies
  • Communication with you, the tax office and health insurance companies
• Registration and deregistration of new employees
• U1/U2 applications in the event of illness or pregnancy of employees
• Notifications to the employers' liability insurance association
• Certificates of earnings
• Certificates for authorities
• Other certificates at the request of employees
• Creation and provision of a wide variety of evaluations, e.g.
  • Payroll journal
  • Data transmission logs of the various values/applications/notifications transmitted to the authorities
  • Cost center values
  • Personnel cost overview
  • Personnel report
  • Payment files directly for import into your banking program
• Direct and uncomplicated cooperation with employment lawyers, either externally or directly from our office (advantage of short distances)

Of course, we also offer additional tax advice, e.g.

• In the area of VAT (VAT-exempt financial services vs. financial services subject to VAT, which is particularly relevant for partial outsourcing in the area of portfolio management or fund management and for multi-level sales companies)
• On the special features of international tax law, also with regard to foreign permanent establishments
• Advice on expansion or succession, including the acquisition or sale of client portfolios
• Advice on the tax implications of planned changes in the group of shareholders (keyword: harmful acquisition of shareholdings)