Disclosed payment flows 2018

Participating companies and sector coverage

Out of 49 companies or corporate groups identified by the Independent Administrator in accordance with the requirements of the MSG, a total of 17 companies or corporate groups participated in the reporting process for this EITI Report.

It should be noted that the identification of the companies or corporate groups was based on an estimate as to which companies and corporate groups are likely to be subject to the statutory provisions (cf. for details Quality Assurance procedure). Following the expiry of the deadlines for the publication of payment reports for the period from January 1, 2018 to December 31, 2018 and the experience gained from the publication of payment reports for the 2016 and 2017 periods, it has become apparent that the number of payment reports published is lower than the number of companies or corporate groups that have been identified . Therefore, any assessment or evaluation of the number of companies or corporate groups participating in EITI reporting must consider the payment reports actually published. Since a large part of the lignite, natural gas, oil, potash, and salt sectors are covered in this EITI report in terms of production volume and the reported mine site and extraction royalties, the participation rate achieved can be assessed as positive.

All payment reports submitted by companies pursuant to §§341 q et seq. HGB are publicly available through the Federal Gazette.1 During the preparation of the first D-EITI report, the MSG, at the suggestion of civil society, thought about naming the identified companies that did not participate in the reporting for the first D-EITI report or for the supplementary report.

In view of the public availability of the payment reports and the legal concerns raised by the German Government against naming these companies, the MSG has maintained its policy pursued for the first and second D-EITI report and has refrained from naming the companies that did not participate in this third D-EITI. From the Federal Government’s point of view the following legal concerns speak against naming non- participating companies in the report:

On the one hand, data privacy law applies in cases where the company name allows the identification of a specific natural person (e.g., if the company name is the name of a sole businessman and includes further details such as the registered place of business of the company). This is the case for at least two companies that have not reported under D-EITI, so that naming must be waived for reasons of data privacy.

On the other hand, there are concerned that the publication of the company names in the D-EITI report without a sufficient legal basis could interfere with the fundamental right of companies to freely exercise their activity (Art. 12 GG). Besides, there is no legal obligation to mention the names of the companies.

One of the interests protected by Article 12 GG is free entrepreneurial activity for making a profit. Any publication of the company names in the D-EITI report would interfere with the protected interest and would be seen as a government measure to control the activities of private enterprises. The publication of the names of the non-participating companies would put pressure on them and force them to agree to the reconciliation of payments made by them. This problem is exacerbated by the fact that the data to be transmitted by the companies (payment flows such as corporation tax, mine site and extraction royalties, in some cases trade tax) are trade, business and tax secrets.

The naming of the companies would also not be legally justifiable in view of the decisions of the Federal Constitutional Court in the so-called glycol case2 or the scientology3 case. In these cases, the Federal Constitutional Court has ruled that the Federal Government can fulfil its warning and information obligations even without having an appropriate legal basis, especially if, as in the glycol case, there are consumer interests worth protecting so that a warning is indicated (consumer health). However, a comparable interest does not exist for companies that do not participate in D-EITI reporting.

The following overview shows the participating companies or corporate groups participating in the third D-EITI report across the different sectors:

Participating companies or corporate groups per sector

Recording government revenues from the extractive sector is difficult in Germany for various reasons. One reason is that the mine site and the extraction royalties are the only levies specific to the extractive sector in Germany. Besides, the extractive companies (just like companies in other sectors, too) pay taxes, especially corporation tax, and trade tax or, depending on their legal form, income tax. Corporation and trade tax payments made by the extractive sector are not recorded timely in any statistics. Rather, the share of the extractive sector in tax revenue can only be extrapolated from other data.

Furthermore, there are special features in German tax law that make it difficult to record the taxes paid by the sector. Among these special features are tax groups consisting of a parent company with activities outside the extractive sector and a subsidiary operating in the extractive sector. In these cases, any taxes to be paid by the extractive subsidiary are paid by the parent and not by the subsidiary. At the level of the parent company, the tax payments made cannot be allocated to the individual companies included in the scope of consolidation (cf. Selection of payment flows). Furthermore, the federal structure of the German state complicates the recording and allocation of trade tax, as trade tax is levied by the municipalities.

Besides, it is difficult to clearly classify companies that operate in the extractive sector and are under an obligation to file a payment report. The classification according to commercial law based on the EU Accounting Directive 2013/34/EU of June 26, 2013 may be different from the sector classification used for government revenue statistics.

Therefore, the best possible sector coverage is achieved by using the extraction volume and the extraction royalties paid as metrics.

Sector coverage

The following sector coverage overview reflects the identified companies, and the companies participating in the reporting process, including the respective reference values on which the identification was based:

Coverage of the mine site and extraction royalties

Total overview of data reported by the companies

1 No payments have been made due to the legal form of the company

3 Payments are made by the parent company

3 No payment information available due to the existence of a consolidated tax group

The corporate and trade tax payments reported show the high relevance of tax groups in Germany. If the focus of a tax group is outside the extraction of natural resources, the taxes paid by the tax group parent does not have to be reported (cf. footnote 3 in Table “Total overview of data reported by the companies”). If, however, the tax group mainly operates in the extractive sector, the taxes paid by the tax group parent are reported (proportionally or in full) (cf. footnote 2 in Table “Total overview of data reported by the companies”, cf. also Quality assurance procedure).

At the request of the MSG, the content and composition of the reported payments for infrastructure improvements were further analysed by the Independent Administrator in cooperation with the reporting companies. The IA included both payments based on statutory regulations (such as real estate transfer taxes) and payments based on private-law contracts between companies and government agencies (cities, municipalities, and local government associations). The latter include, among other things, compensation for additional administrative expenses due to mining activities or services in connection with the construction and maintenance of local public infrastructure. The payment reports published pursuant to §§ 341q et seq. HGB for 2018 also show payments of water withdrawal charges.

Data reporting on the mine site and extraction royalties paid to government agencies

1https://www.bundesanzeiger.de/; unter „Suchen“ den Begriff Zahlungsberichte eingeben.

2 BVerfG, Beschluss des Ersten Senats vom 26. Juni 2002 – 1 BvR 558/91 – Rn. (1–79), http://www.bverfg.de/e/rs20020626_1bvr055891.html

3 BVerfG, Beschluss der 2. Kammer des Ersten Senats vom 16. August 2002-1 BvR 1241/97 – Rn. (1–25), http://www.bverfg.de/e/