The period for approving financial statements is approaching, bringing with it a topic that regularly arises in practice: profit distribution.

With this post, we are launching a short series on profit distribution in capital companies. In the first part, we focus on a basic question:

#1 How long can financial statements be used for the distribution of profit for 2025?

How has the interpretation developed?

Under earlier case law of the Supreme Court relating to the Commercial Code, ordinary financial statements could be used as the basis for profit distribution no later than six months after the end of the previous accounting period — typically by 30 June of the following calendar year.

After the Business Corporations Act came into effect, i.e. after 1 January 2014, the question of whether financial statements could still be used after the expiry of this six-month period was reopened. In 2019, the Supreme Court subsequently concluded that ordinary financial statements may serve as the basis for profit distribution until the end of the following accounting period.

The amendment to the Business Corporations Act effective from 1 January 2021 expressly confirmed this interpretation.

What follows from this?

Profit may be distributed on the basis of ordinary or extraordinary financial statements until the end of the following accounting period.

For companies whose accounting period corresponds to the calendar year, the financial statements for 2025 may therefore be used as the basis for profit distribution until 31 December 2026.

This should be distinguished from the rule that the general meeting should discuss the ordinary financial statements within six months of the end of the accounting period. This deadline is procedural in nature and does not in itself mean that, after 30 June, ordinary financial statements can no longer be used as the basis for profit distribution.

In the next parts, we will focus, for example, on the following questions:

• What conditions must be met for the distribution and payment of profit? Can profit be distributed even before the financial statements have been audited?
• What resources may actually be distributed — only profit, or also other own resources?
• Can a company leave profit undistributed?
• Can a profit share be distributed only among shareholders?
• Is it possible to distribute profit unevenly?
• Can a profit share also be paid in non-monetary form, for example by assigning a receivable?
• When do advances on profit shares make sense?
• What are the consequences of unlawful profit distribution and payment?

If you are interested in other aspects of profit distribution or are dealing with a specific situation in your company, we will be happy to take a closer look at it with you.