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October 1, 1998

EURO COURT BOOSTS ACCOUNTING SOFTWARE IN GERMANY

By CBR Staff Writer

Accounting software vendors in the German market have received a helping hand from the European Court of Justice (ECJ), which has ruled that small and medium-sized companies must publish financial results. The legal requirement upon the country’s vast numbers of companies in this category, the so-called Mittelstand, already exists, but is only scantily observed, for lack of punishment of offenders. It is estimated that only 10%-20% of the companies required to publish in Germany actually do so. This has led to complaints to the European Court from competitors in other countries, who have argued that their German counterparts have enjoyed an unfair advantage due to their ability to keep secrets about their business. This week, the Court has agreed with them, and called upon the German government to act to force compliance with the law. UK-based Sage Group Plc leads the market in Germany for accounting software for SMEs. Its business development director Paul Stobart said the ruling is a potential fillip to the company’s business there. He recalled that much of the work preparing tax returns for the Mittelstand is carried out by the co-operative of accountants and tax consultants, Datev eG. Tax consultants send their clients’ figures off to Datev, which processes them and prepares a tax form, Stobart explained. That company’s market share has already been falling, however, as companies have been discovering the convenience (and economic advantage) of preparing their own tax returns, and the ECJ ruling looks set to intensify that trend, he argued.

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