Calendar year vs. fiscal year in Germany

What is a fiscal year?

A fiscal year—also called a financial year—is the 12-month accounting period defined in the German Commercial Code. It begins with an opening balance sheet and ends with the year-end financial statements. For most UGs and GmbHs, the fiscal year aligns with the calendar year and ends on 31 December.

However, companies may choose a different fiscal year if it better suits their business cycle. This must be specified in the articles of association and registered with the commercial register.

Possible deviations

If a company uses the standard articles 💬Musterprotokoll, the fiscal year automatically ends on 31 December. However, bespoke articles of association give entrepreneurs the flexibility to choose a different fiscal year — for example, one ending on 30 June to align with international reporting cycles.

Choosing an alternative fiscal year can be especially helpful when founding a UG late in the year. It avoids the need to prepare the first annual financial statements only weeks after incorporation and allows founders to focus time and resources on building the business. Seasonal industries, such as winter tourism, may also benefit from shifting the fiscal year to a quieter period.

Keep in mind that using customised articles of association increases notary costs. In exchange, every provision—from voting rights to profit distribution to share transfers — can be precisely tailored to the needs of the GmbH or UG and its shareholders.

Pros & cons of a differing financial year

Advantages

• You can prepare annual accounts at a time that better fits your business cycle.
• If you incorporate late in the year, a shifted fiscal year gives you more time to generate revenue before accounting fees are due.
• Administrative work can be scheduled during your off-season, reducing operational pressure.

Disadvantages

• A non-standard fiscal year requires custom articles of association, which increases notary costs when forming a GmbH or UG.

When to opt for a different fiscal year

A non-calendar fiscal year can be beneficial in certain situations. Consider the following questions to decide
whether an alternative fiscal year makes sense for your GmbH or UG:

• Will the UG be formed shortly before year-end, making it difficult to prepare annual accounts right away?
• Does your business expect high revenue or peak activity at the end of the calendar year, leaving little time for administrative work?
• Will the UG have multiple managing directors or other complexities that require customised articles of association anyway?