Accounting issues relating to commercial partnerships: IDW RS FAB 7 and IDW ERS FAB 18 adopted

published on 7 march 2025 | reading time approx. 3 minutes

The Institute of Public Auditors in Germany (“Institut der Wirtschaftsprüfer”, IDW) issues, among other things, statements on accounting that are relevant for auditors in particular. These IDW statements on accounting are generally recognized professional standards and therefore have de facto relevance for accounting practice. With IDW RS FAB 7 and IDW ERS FAB 18, a statement and a draft statement have now been published that relate to the accounting of commercial partnerships (“Personenhandelsgesellschaften”) and the accounting of investments in such companies. These may therefore have an impact on a large number of companies.

IDW RS FAB 7

On December 2, 2024, the IDW's Financial Reporting Committee (“Fachausschuss Unternehmensberichterstattung”, IDW FAB) adopted its final statement on accounting for commercial partnerships (IDW RS FAB 7). The need for a revision resulted primarily from the new version of the two laws “Gesetz zur Modernisierung des Personengesellschaftsrechts” (MoPeG) and “Gesetz zur Modernisierung des Körperschaftsteuerrechts” (KöMoG). The changes and novelties have an impact on accounting according to the German Commercial Code (“Handelsgesetzbuch”, HGB) in various places, which had to be reflected in the statement. Further changes were also made. There are amendments in the following areas in particular:

Recognition of profit shares;
Accounting consequences in the context of the option for taxation in accordance with the “Körperschaftssteuergesetz” (KStG) at the level of commercial partnership;
Accounting for the leaving of partners and compensation in kind.

The statement applies to annual financial statements beginning after December 31, 2024.

IDW ERS FAB 18

On November 22, 2024, the IDW adopted the darf of a new IDW statement on accounting for investments in commercial partnerships in the annual financial statements according to HGB (IDW ERS FAB 18 or “draft”). In this case, too, the need for adjustment resulted primarily from the changes introduced by the MoPeG and the KöMoG, although further amendments and clarifications to the previous regulations were also made independently of these. The amendments essentially relate to the following areas:

Initial measurement of investments in commercial partnerships;
Collection of profit shares;
Capital repayments by the commercial partnership;
Treatment of deferred taxes.

The draft can be commented on by interested members of the public until May 31, 2025. The final version of IDW RS FAB 18 is expected to be mandatory for the preparation of financial statements for periods beginning after June 30, 2025 and will replace the currently valid version of IDW RS HFA 18 (as of: 04.06.2014). However, as the KöMoG and MoPeG may have an impact on financial statements for reporting dates prior to this date, the IDW FAB recommends that the draft is already applied. A detailed description of the novelties of IDW ERS FAB 18 can be found in this article.

Conclusion

Overall, both IDW RS FAB 7 and IDW (E)RS FAB 18 may have implications for a large number of companies. From the perspective of potentially affected companies, it therefore seems sensible and advisable to analyse the individual effects of these changes promptly and, if necessary, together with their advisor and/or auditor.