The GuV

The German income statement (GuV): formats and structure under § 275 HGB

The German income statement — the Gewinn- und Verlustrechnung, or GuV — reports the profit or loss for the financial year. Section 275 HGB prescribes its structure and offers two formats: nature of expense and cost of sales. This page explains both, the small-company Rohergebnis simplification, and how the statement builds to net income.

What the GuV is

The GuV is always presented in vertical (staffelförmig) form under § 275 HGB: you start from revenue and work down through categories of income and expense to the net result for the year (Jahresüberschuss or Jahresfehlbetrag). Like the Bilanz, it carries a prior-year comparative column.

A company chooses one of two prescribed layouts and applies it consistently. The choice affects how expenses are grouped, not the final profit — both formats reach the same bottom line.

Two permitted formats

Gesamtkostenverfahren (GKV)

The nature-of-expense method. Expenses are grouped by type — materials, personnel, depreciation, other — and the change in finished-goods inventory is shown, so the statement reflects total output for the period. It is the more common choice in Germany.

Umsatzkostenverfahren (UKV)

The cost-of-sales method. Expenses are grouped by function — cost of sales, distribution, administration — matching the layout familiar to US and IFRS readers. It requires a functional cost allocation that many smaller firms prefer to avoid.

Inside the nature-of-expense format

  • Revenue (Umsatzerlöse), plus changes in inventory and own work capitalised, gives total operating output.
  • Material expense (Materialaufwand): raw materials, goods and purchased services.
  • Personnel expense (Personalaufwand): wages and salaries, then social security and pension costs.
  • Depreciation and amortisation (Abschreibungen) on fixed and, where relevant, current assets.
  • Other operating expenses and income, then the financial result (interest and investment income and expense).
  • Taxes on income, other taxes, and finally the net result for the year.

The cost-of-sales format

Under the Umsatzkostenverfahren the operating expenses are re-cut by business function. Revenue is followed by the cost of goods and services sold, giving a gross profit; then distribution costs, administrative expenses and other operating items lead down to the operating result.

The financial result, taxes and net income lines are the same as under the nature-of-expense method. Because the two formats share revenue, financial result and taxes but split operating costs differently, a company using cost of sales must disclose total personnel and material expense in the notes, so that information is not lost.

Rohergebnis: relief for small and micro entities

Small and micro corporations get a simplification: instead of showing revenue, changes in inventory, own work and material expense line by line, they may combine those top items into a single gross result line, the Rohergebnis (§ 276). It condenses the most commercially sensitive figures, notably revenue.

This matters because a small company that files its accounts can begin the published GuV at Rohergebnis, keeping its exact turnover out of the public statement. Combined with the fact that small companies need not publish a GuV at all, sales figures are heavily protected for smaller entities.

Building to the bottom line

Whichever format you use, the GuV ends the same way: operating result, plus or minus the financial result, less taxes on income and other taxes, equals the net income or net loss for the year. That figure flows into the equity section of the Bilanz and, after the shareholders' resolution on profit appropriation, determines what can be distributed.

The prudence principle governs what reaches the GuV in the first place: realised income only, but all foreseeable expenses and losses. That is why a German GuV can look more cautious than an IFRS income statement for the same underlying business.

Frequently asked questions

What is a GuV?

The Gewinn- und Verlustrechnung (GuV) is the German income statement, or profit and loss account. Section 275 HGB prescribes a vertical format that runs from revenue down to the net result for the year.

What is the difference between Gesamtkostenverfahren and Umsatzkostenverfahren?

Gesamtkostenverfahren (nature of expense) groups costs by type and reflects total output; Umsatzkostenverfahren (cost of sales) groups costs by function and shows a gross profit. Both reach the same net income; the GKV is more common in Germany.

Can a small company keep its revenue private?

Largely, yes. Small and micro entities may combine the top lines into a single Rohergebnis (§ 276), and small companies need not publish a GuV at all, so exact turnover need not appear in the public filing.

Which format should I choose?

Either is permitted, but you must apply it consistently. Many German SMEs use the nature-of-expense format because it maps directly to the trial balance; groups reporting to a US or IFRS parent sometimes prefer cost of sales.

Does the format change my profit?

No. The two § 275 formats regroup operating expenses differently but produce the same net income. If you use cost of sales, the notes must still disclose total personnel and material expense.