On 26 March 2009, what was supposed to be the greatest reformation of German accounting law within the last 20 years passed the German Bundestag.

However, the draft Act on the Modernisation of Accounting Law (Bilanzrechtsmoder-nisierungsgesetz “BilMoG”) which was finally passed contained little of the original reformation and, after more than 4 years of proceedings and discussions, the following aspects were eliminated from the draft:

• The use of the present value method for the valuation of financial instruments held for trading purposes;
• The mandatory accounting of active deferred taxes (the accounting option remains);
• The obligation to book self-developed intangible assets in the balance sheet.

The remaining changes are intended to ease accounting rules for small and medium-sized businesses as well as to introduce valuation methods which better represent a company’s actual business value. The following are among the passed changes:

• The initial accounting threshold has been raised so that established merchants are now first obligated to prepare commercial financial statements when business turnover reaches EUR 500,000 or business profits reach EUR 50,000;
• Interim thresholds, which require companies to prepare different types of financial statements depending on their size, have also been increased by 20 %;
• The valuation of liability reserves taking into account interest discounting as well as price and cost increases.
• The abolishment of several commercial accounting options — such as the write-off of future value fluctuations; and,
• The assimilation of the “reverse principle of correlation” with the result that commercial balance sheets must be adjusted to reflect the changes in the tax balance sheet created by the abolishment of the options discussed above.

Before becoming law, the draft bill must still pass the German Bundesrat, whose decision is expected for either 3 April or 15 May 2009.