Which payment flows are reported on?

Selection of sectors

The EITI standard requires all major payment flows from a country’s extractive sector to be tak-en into account. The first step is to identify the sectors to be included. In various meetings, the MSG discussed which sectors of the extraction of natural resources should be included in the present German EITI report. In line with previous years, the following sectors have been adopted by the D-EITI MSG:

• Lignite
• Crude oil and natural gas
• Potash and salts
• Quarried natural resources

The mining of hard coal in Germany ended at the end of 2018. As a result, the sector is still not included in the reporting.

Selection of companies

After defining the sectors, the second step is to identify the companies to be included in the EITI reporting. The EITI standard does not contain any direct requirements for the process of selecting these companies. The MSG has therefore decided to follow the guidelines for the prepara-tion of (group) payment reports.¹

Under Section 341q et seq. of the German Commercial Code (HGB), companies in the extrac-tive industries are obliged, under certain conditions, to prepare and publish a (group) payment report. This obligation is based on criteria such as the registered office, legal form, size or activity of the company. The report shows which payments were made by the respective companies to government agencies during the reporting period (see comments on public reports).

The chosen approach is largely based on the EITI’s objective of creating transparency on government revenues from extractive industries (extractive sector) and disclosing all material payment flows between companies and government agencies. Payments and revenues are considered material if their omission or misrepresentation could significantly impair the completeness of EITI reporting (according to EITI requirement 4.1b). The individual criteria are presented individually below.

Sector

The basis for the identification of the companies is the activity within the extractive industry. The current classifications of companies according to NACE Revision 2 are applied. They are based on Regulation (EC) No. 1893/2006 of 20 December 2006. This Regulation lays down detailed rules for establishing the statistical classification of economic activities. According to this, companies are considered to be “active” in the extractive industries if they are assigned to the following sub-sections:

• Sub-section 05: Coal mining
• Sub-section 06: Extraction of crude oil and natural gas
• Sub-section 07: Ore mining
• Sub-section 08: Quarrying, other mining

Please refer to the end of this section for a detailed list.

Size categories of companies

In addition to the sector, the criteria for the identification of companies are initially based on the criteria for “large” companies in accordance with Section 267 para. 3 HGB. For the 2023 reporting year, at least two of the three criteria must be met on at least two consecutive reporting dates:

• Balance sheet total more than EUR 20 million
• Sales revenues more than EUR 40 million
• More than 250 employees on average per year

Infection theory

In addition to the legal obligation to prepare payment reports for “large” companies, there is also a group reporting obligation for parent companies, provided that at least one subsidiary is active in the extractive sector. The size of the subsidiary does not matter. This principle is known as “infection theory”. The activity of a subsidiary in the extractive sector may trigger a reporting obligation for the entire parent company. This approach has been taken into account in the identification of companies, thus broadening the range of companies concerned.

Activity test

Only companies that actively extract natural resources in Germany should be considered. Companies that extract natural resources exclusively abroad, as well as companies that focus on storage or act as service providers, are not considered.

The selection of companies is thus based on a combination of company size and economic activity in the extractive sector.

{acf_content_section_2}

{acf_quellenangaben}