The HGB

The German Commercial Code (HGB): where German accounting law lives

German accounting law does not sit in a standalone standards manual — it lives inside the Handelsgesetzbuch (HGB), Germany's Commercial Code. This page explains what the HGB is, how it is structured, where its accounting rules sit (the Third Book, §§ 238–342e), and how it connects to company law and tax law.

What the Handelsgesetzbuch is

The Handelsgesetzbuch, usually abbreviated HGB, is the core statute of German commercial law. First enacted in 1897 and amended many times since, it governs merchants (Kaufleute), commercial transactions, trading partnerships and — the part that concerns us — commercial bookkeeping and annual financial statements.

It is federal law, so the same text applies across Germany, and it is the primary source: when a question of German GAAP arises, the answer is found by reading the relevant § of the HGB, not a board's guidance note.

How the code is organised

The HGB is divided into five books; only one covers accounting.

  • Book 1 — Handelsstand: who counts as a merchant and the commercial register.
  • Book 2 — Handelsgesellschaften: trading partnerships such as the OHG and KG.
  • Book 3 — Handelsbücher: bookkeeping and annual financial statements (§§ 238–342e).
  • Book 4 — Handelsgeschäfte: commercial transactions.
  • Book 5 — Seehandel: maritime commerce.

Inside the Third Book (§§ 238–342e)

First Division (§§ 238–263)

General rules for all merchants: the duty to keep books, prepare an opening balance sheet and annual accounts, and the general recognition and valuation principles (§§ 252–256a).

Second Division (§§ 264–335c)

Extra rules for corporations (GmbH, AG and comparable forms): the Bilanz format (§ 266), the GuV (§ 275), the notes (§§ 284–288), the management report (§ 289), audit (§ 316) and disclosure (§§ 325–329).

Further Divisions (§§ 336–342e)

Special provisions for cooperatives (eG, §§ 336–339), the recognition of private accounting standards, and the German accounting standards committee.

How the HGB fits with other German laws

AktG (Stock Corporation Act)

Adds requirements for the AG and KGaA — for example reserve rules (§ 150) and shareholding disclosures (§ 160). The HGB and AktG are read together for those forms.

GmbHG (Limited Liability Company Act)

Governs the GmbH and UG, including how shareholders adopt the accounts (§ 42a) and the § 5a UG reserve. Measurement still follows the HGB.

EStG (Income Tax Act)

The Maßgeblichkeitsprinzip (§ 5 EStG) links the commercial balance sheet to the tax balance sheet, so HGB choices often drive the tax base, subject to specific tax overrides.

PublG / GenG

The Publizitätsgesetz extends disclosure to very large non-corporations; the Genossenschaftsgesetz (§ 53) governs the audit of cooperatives by their Prüfungsverband.

How to read a paragraph reference

German statutes are cited by paragraph (§), then Absatz (Abs., subsection), then Satz (sentence) and Nummer (Nr., item). '§ 266 Abs. 3 A HGB' means paragraph 266, subsection 3, item A. Once you can decode a citation, the primary source becomes readable.

Because the rules are law, the exact wording controls. Amending acts renumber and repeal items over time, so always check the current text rather than relying on an older secondary summary.

Why this precision matters

Whether your company must prepare a management report, publish its income statement or have an audit is decided by size thresholds and specific paragraphs, not by judgement. Getting the § right is the difference between an accepted filing and a rejected one, or between an audit obligation and an exemption.

Frequently asked questions

What does HGB stand for?

HGB stands for Handelsgesetzbuch, the German Commercial Code. It is the federal statute that, in its Third Book (§§ 238–342e), contains German accounting and financial-statement law.

Which part of the HGB covers accounting?

The Third Book (Drittes Buch), paragraphs 238 to 342e. General bookkeeping rules apply to all merchants, and a second division from § 264 onward adds requirements specific to corporations.

Is the HGB the same as German GAAP?

For financial reporting, effectively yes. 'German GAAP' is the English label for the HGB accounting provisions plus the Grundsätze ordnungsmäßiger Buchführung that support them.

How does the HGB relate to tax accounting?

Through the Maßgeblichkeitsprinzip (§ 5 EStG): the commercial (HGB) balance sheet is authoritative for the tax balance sheet unless a specific tax rule overrides it, so the HGB and tax accounts are linked but not identical.

Where can I read the HGB in English?

An official English translation of the HGB is published by the Federal Ministry of Justice, though it can lag behind amendments. The binding text is always the current German version.