Anyone doing business across borders soon faces the question: when do annual financial statements actually require an audit? While the German Commercial Code (HGB) draws clear lines, Switzerland – with its distinction between ordinary and limited audits and the “opting-out” – offers a flexible but advice-intensive system. In this article you will learn which thresholds apply and what to look out for in cross-border structures.
The situation in Germany: size categories under HGB
In Germany, the audit requirement depends primarily on the size of the corporation (Section 267 HGB).
When is an audit required in Germany?
Small corporations are generally exempt from the audit requirement. An obligation to have the annual financial statements audited arises if at least two of the following three criteria are exceeded on two consecutive balance sheet dates:
| Criterion | Threshold |
|---|---|
| Total assets | > EUR 7.5 million |
| Revenue | > EUR 15 million |
| Employees | > 50 on annual average |
The situation in Switzerland: a three-tier system
Switzerland does not have a rigid “yes/no” system like Germany; instead, it differentiates by the intensity of the audit.
Ordinary audit vs. limited audit
An ordinary audit is mandatory for public companies and economically significant companies. A company is considered economically significant if two of the following three thresholds are exceeded in two consecutive financial years – the values are considerably higher than in Germany:
| Criterion | Threshold |
|---|---|
| Total assets | > CHF 20 million |
| Revenue | > CHF 40 million |
| Full-time positions | > 250 on annual average |
If a company is below these values, it is generally subject to a limited audit and therefore still requires an audit.
The Swiss “opting-out”
A key difference from Germany: companies with no more than 10 full-time positions on an annual average can waive the limited audit with the consent of all shareholders (Art. 727a para. 2 CO).
Cross-border considerations for group structures
For German parent companies with Swiss subsidiaries (or vice versa), this often creates tension.
Conclusion: complex requirements – harmonised solutions
The requirements for statutory audits in Germany and Switzerland follow comparable parameters but different thresholds. While the German HGB relies primarily on size categories, Swiss law – with the limited audit and the opting-out – offers a wider range in terms of audit requirement and audit depth.
Despite these different obligations, cross-border structures need not be an administrative obstacle. With forward-looking planning, statutory audits and reporting standards can be harmonised efficiently.
This article is for general information only and does not replace advice on individual cases.