---
title: "Configuring Appropriation of Net Income"
source_url: https://support.lucanet.com/en/documentation/income-taxes/tax-balance/create-single-entity-tax-balance/configure-profit-appropriation
language: en
last_updated: 2026-07-27
---
# Configuring Appropriation of Net Income in Tax Balance
## Overview
Under German commercial law, the annual financial statements of a corporation or of a (commercial) partnership as defined in Section 264a HGB (German Commercial Code) allow two variants for presenting the net income for the year in equity.
- **Variant 1** – Balance sheet before appropriation of the net income for the year
- **Variant 2** – Balance sheet with partial or full appropriation of the net income for the year (Section 268 (1) HGB)
In the context of the e-balance sheet (E-Bilanz), both presentations are relevant, because they lead to different requirements for the taxonomy items used. If the balance sheet is prepared with partial or full appropriation of the net income (**Variant 2**), you must configure and enter the **Appropriation of net income** report element in **Tax Balance**. This chapter describes how to proceed.
## Variants for Presenting the Net Income for the Year in Tax Balance
Two variants are available in Tax Balance for presenting the net income for the year in equity, each of which requires different taxonomy items:
- **Variant 1** – Balance sheet before appropriation of the net income for the year
- **Variant 2** – Balance sheet with partial or full appropriation of the net income for the year (Section 268 (1) HGB)
The following table shows the balance sheet item in equity for each variant and legal form in Tax Balance:
| Variant | Legal form | Balance sheet item in equity |
|---|---|---|
| Variant 1 | Corporation (KapG) | Net income/net loss for the year (`bs.eqLiab.equity.netIncome`) |
| Variant 1 | (Commercial) partnership (PersG) | Net income/net loss for the year (`bs.eqLiab.equity.netIncomePartnershipsHGBs264c`) |
| Variant 2 | Corporation (KapG) | Net retained profits/net accumulated loss (`bs.eqLiab.equity.profitLoss`) |
| Variant 2 | (Commercial) partnership (PersG) | Net retained profits/net accumulated loss (`bs.eqLiab.equity.profitLossPartnershipsHGBs264c`) |
> **Note:** The **Appropriation of net income** report element (`incomeUse`) is mandatory if the core and supplementary taxonomy is used (see the BMF (German Federal Ministry of Finance) letter of September 28, 2011, annex to margin no. 11) – even if the e-balance sheet is submitted as a pure tax balance sheet.
According to the prevailing opinion, the equity items **net income/net loss for the year** and **net retained profits/net accumulated loss** must not be changed for tax purposes, because they are items under commercial law. The tax surplus/deficit (Section 60 (2) EStDV) is therefore reported in the balance sheet item **Equity, tax adjustment item** (`bs.eqLiab.equity.netIncome.taxBalanceGenerally`), irrespective of the legal form and irrespective of how the net income for the year is presented. In **Tax Balance**, this procedure is preset in the [Tax Balance Sheet Settings](https://support.lucanet.com/en/documentation/income-taxes/tax-balance/create-single-entity-tax-balance/configure-tax-balance-settings.md) workspace.
The following sections describe the settings to be taken into account if the balance sheet is prepared with appropriation of the net income for the year (**Variant 2**). They assume that a commercial balance sheet with a tax reconciliation is submitted.
## Configuring GCD Master Data in Tax Balance
In the GCD master data in Tax Balance, you specify whether the balance sheet reports the net retained profits/net accumulated loss and whether the appropriation of net income is submitted as a separate report element.
To do this, open the [tax balance sheet](https://support.lucanet.com/en/documentation/income-taxes/tax-balance/create-single-entity-tax-balance/open-tax-balance.md) you want to edit and, under **GCD Master Data** | **Report Elements**, set the **Income statement ends with net retained profits / accumulated loss** option (`genInfo.report.id.incomeStatementendswithBalProfit`) to **Yes**.
If you use the core and supplementary taxonomy, also set the **Appropriation of net income** entry (`genInfo.report.id.reportElement.reportElements.EV`) to **Yes**. If the balance sheet was prepared in accordance with Section 268 (1) HGB, the tax authorities require a statement of appropriation of net income.
> **Warning:** If you use special taxonomies (for example taxonomies for banks or insurance companies), the **Appropriation of net income** entry must not be set to **Yes**. Instead, enter the corresponding P&L items as described in the section [Special Procedure for Special Taxonomies](#special-procedure-for-special-taxonomies-in-tax-balance).
Configuring the appropriation of net income in the GCD master data
All other report elements of the **GCD Master Data** are described in the article [Managing GCD Master Data](https://support.lucanet.com/en/documentation/income-taxes/tax-balance/create-single-entity-tax-balance/gcd-master-data.md).
## Configuring Taxonomy Items in Tax Balance
In the **Company** | **Tax Balance Sheet Settings** | **Taxonomy items** workspace in Tax Balance, you specify how the net retained profits/net accumulated loss are transferred between the report elements and which taxonomy items are used for this. If you use the **core and supplementary taxonomy**, the following options are relevant for the appropriation of net income in Tax Balance:
| Option | Description |
|---|---|
| **Activate automatic transfer between income statement and balance sheet** | Controls whether the net retained profits/net accumulated loss are transferred automatically from the **Appropriation of net income** report element to the **Balance sheet** report element.
With **Yes**, the transfer is automatic.
With **No**, the net retained profits/net accumulated loss must be assigned manually as an account under **Company** \| **Mappings** to the corresponding taxonomy item (`bs.eqLiab.equity.profitLoss` or `bs.eqLiab.equity.profitLossPartnershipsHGBs264c`). If no suitable account exists, create a manual account and then assign it. |
| **Net income recognized in equity** | If the net income is appropriated, the taxonomy item for the net income for the year must be changed to **net retained profits/net accumulated loss**. Depending on the legal form, select the item **Equity, net retained profits/net accumulated loss(balance sheet)** (`bs.eqLiab.equity.profitLoss`) or **Equity, net retained profits / net accumulated loss for the financial year (balance sheet) of partnerships** (`bs.eqLiab.equity.profitLossPartnershipsHGBs264c`). |
| **Activate automatic transfer for the appropriation of profit** | Controls whether the net income/net loss for the year is transferred automatically from the **Income statement** report element to the **Appropriation of net income** report element as the starting figure.
With **Yes**, the transfer is automatic.
With **No**, the net income/net loss for the year must be assigned manually to the statement of appropriation of net income under **Company** \| **Mappings**. If no suitable account exists, create a manual account and then assign it. |
| **Net income/net loss for the year in the appropriation of net income** | Is set automatically. No adjustment is required. |
| **Net retained profits/net accumulated loss in the appropriation of net income** | Is set automatically. No adjustment is required. |
Options for the appropriation of net income in the tax balance sheet settings
>
> **Note:** **Notes on configuration**
>
> - To select a taxonomy item, click **Actions** | **Choose item** in the relevant field and then navigate to the item you want in the tree structure.
>
> the shows 'net income recognized in equity' field in tax balance with value 'equity, net income/net loss for financial year (balance sheet), corporations' and opened 'actions' menu with options 'determine default value' and 'choose item'. highlighted in red are 'actions' menu and 'choose item' option. icon
> Selecting a taxonomy item with the 'Choose item' command
>
> - You do not have to configure the tax balance sheet settings again for every tax balance sheet. In the **More actions** menu in the top right corner of the **Tax Balance Sheet Settings** workspace, you can apply the settings from the previous year with the **Apply from the previous year** command.
> - All other options of the **Tax Balance Sheet Settings** are described in the article [Configuring Tax Balance Sheet Settings](https://support.lucanet.com/en/documentation/income-taxes/tax-balance/create-single-entity-tax-balance/configure-tax-balance-settings.md).
## Configuring the Balance Sheet and the Statement of Changes in Capital Accounts in Tax Balance
If the **Income statement ends with net retained profits / accumulated loss** option (`genInfo.report.id.incomeStatementendswithBalProfit`) is set to **Yes** in the GCD master data in Tax Balance, the following conditions apply to the **Balance sheet** and **Statement of changes in capital accounts** report elements (see the technical guide to the e-balance sheet, section B.9.1.1):
#### Balance sheet
In the **Balance sheet** report element, the following items must not be reported with a value or submitted as part of the e-balance sheet:
- **Equity, net retained profits / net accumulated loss for the financial year (balance sheet) of partnerships** (`bs.eqLiab.equity.netIncomePartnershipsHGBs264c`)
- **Equity, net income/net loss for the financial year (balance sheet), corporations** (`bs.eqLiab.equity.netIncome`)
- **Equity, retained profits/accumulated loss (balance sheet) brought forward of (commercial) partnerships** (`bs.eqLiab.equity.retainedEarningsPartnershipsHGBs264c`)
- **Equity, retained profits/accumulated loss brought forward of corporations** (`bs.eqLiab.equity.retainedEarnings`)
- **Equity, surplus of unappropriated funds** (`bs.eqLiab.equity.SurplusOfUnspentFunds`)
#### Statement of changes in capital accounts
In the **Statement of changes in capital accounts** report element (`kke`), for the combination of dimension values **Tax reconciliation** (`dim_taxTrans`) = **Tax base** (`dim_taxBal`), values may only be reported for the following characteristics of the **Kinds of capital accounts** dimension (`dim_kindsOfEquityAccounts`) if the partner or co-entrepreneur concerned has an **Opening balance capital account** (`table.kke.sumEquityAccounts.sumYearEnd.begin`) other than 0:
- **Net income/net loss for the financial year (balance sheet) of (commercial) partnerships** for general partners (`table.kke.allKindsOfEquityAccounts.unlimitedPartners.netIncomeLoss`)
- **Net income/net loss for the financial year (balance sheet) of partnerships** for limited partners (`table.kke.allKindsOfEquityAccounts.limitedPartners.netIncomeLoss`)
- **Retained profits / accumulated loss brought forward (balance sheet) of (commercial) partnerships** for general partners (`table.kke.allKindsOfEquityAccounts.unlimitedPartners.retainedProfitLoss`)
- **Retained profits/accumulated loss (balance sheet) brought forward of partnerships** for limited partners (`table.kke.allKindsOfEquityAccounts.limitedPartners.retainedProfitLoss`)
Otherwise, the **Closing balance of equity capital account** (`table.kke.sumEquityAccounts.sumYearEnd`) must be 0 for the respective combination.
> **Note:** As a rule, the account types **net income/net loss for the year** and **retained profits/accumulated loss brought forward** should not be submitted with a value either for limited partners (Kommanditisten, Teilhafter) or for general partners (Komplementäre, Vollhafter). An exception applies only if the opening balance of these account types is other than 0.
## Mapping Accounts for the Appropriation of Net Income in Tax Balance
The **Appropriation of net income** report element (`incomeUse`) in Tax Balance starts with the **net income/net loss for the year** (`incomeUse.gainLoss.netIncome`) as the starting figure and leads via several arithmetically linked sub-items to the **net retained profits/net accumulated loss** (`incomeUse.gainLoss`).
> **Tip:** The taxonomy visualization provided by the tax authorities at [www.taxonomie.hessen.de](https://www.taxonomie.hessen.de) helps to distinguish arithmetically linked items from purely explanatory disclosures. In addition, some items are only relevant for certain legal forms, for example **Capital contributions in reporting period** (`incomeUse.deposits`) and **Capital withdrawals in reporting period** (`incomeUse.withdrawals`) for a KGaA and for entities other than corporations.
>
> For example, the arithmetic link of the item **Bilanzgewinn / Bilanzverlust** (net retained profits / net accumulated loss) in the appropriation of net income is presented as follows:
>
> the shows 'berechnung' tab of 'detailansicht taxonomie' panel on www.taxonomie.hessen.de with list 'die position berechnet sich aus:', for example '+ jahresüberschuss/ fehlbetrag', '+ gewinnvortrag aus dem vorjahr', ' verlustvortrag aus dem vorjahr' and ' vermögensminderung durch abspaltung'. icon
> Visualization of the taxonomy item 'Bilanzgewinn / Bilanzverlust'
In practice, the statement of appropriation of net income can only rarely be entered exclusively on the basis of the accounts imported from the trial balance (Summen- und Saldenliste). Therefore, under **Company** | **GAAP Reports** | **Accounts**, create manual accounts if required and then assign them to the taxonomy items of the appropriation of net income. You can choose the account number and description freely.
Creating a manual account for the appropriation of net income
How to create and assign accounts manually is described under [Maintaining GAAP Reports](https://support.lucanet.com/en/documentation/income-taxes/tax-balance/create-single-entity-tax-balance/maintain-gaap-reports.md).
## Special Procedure for Special Taxonomies in Tax Balance
If you use special taxonomies (for example taxonomies for banks or insurance companies) in Tax Balance, the **Appropriation of net income** report element (`incomeUse`) must not be announced.
If the item **Income statement ends with net retained profits / accumulated loss** (`genInfo.report.id.incomeStatementendswithBalProfit`) is set to **Yes**, the corresponding P&L item for the net retained profits/net accumulated loss must be reported with a value instead (see the technical guide to the e-balance sheet, section B.9.1.1):
| Taxonomy type | P&L item | Taxonomy item |
|---|---|---|
| Taxonomy for banks | 34. Net retained profits/net accumulated losses | `isBanks.gainLoss` |
| Taxonomy for insurance companies | 21. / 18. / 22. Net retained profits/net accumulated losses (P&L) / 18. Adjustment item | `isIns.gainLoss` |
## ERiC Validations When Submitting the E-Balance Sheet in Tax Balance
If the item **Income statement ends with net retained profits / accumulated loss** (`genInfo.report.id.incomeStatementendswithBalProfit`) is set to **Yes** in the GCD master data in Tax Balance, ERiC performs the following checks when the e-balance sheet is submitted (see the technical guide to the e-balance sheet, section B.14.3.2.3.4.2):
**Check 1**
Balance sheet → Equity, net retained profits/net accumulated loss (balance sheet) for corporations (`bs.eqLiab.equity.profitLoss`) or for partnerships (`bs.eqLiab.equity.profitLossPartnershipsHGBs264c`)\
**=** Appropriation of net income → Net retained profits/net accumulated loss (P&L) (`incomeUse.gainLoss`)
This check ensures that the net retained profits/net accumulated loss submitted in the statement of appropriation of net income (`incomeUse.gainLoss`) match the balance sheet item of the same name, **net retained profits/net accumulated loss** (`bs.eqLiab.equity.profitLoss` for a KapG, `bs.eqLiab.equity.profitLossPartnershipsHGBs264c` for a PersG).
**Check 2**
Appropriation of net income → Net retained profits/net accumulated loss (P&L); Net income/net loss for the financial year, appropriation of net profit (`incomeUse.gainLoss.netIncome`) **+** Balance sheet → Equity, tax adjustment item, reconciliation difference tax accounts to financial statements in current year (`bs.eqLiab.equity.netIncome.taxBalanceGenerally.transferDiffTaxAccounts`)\
**=** Income statement → Net income/net loss for the financial year (`is.netIncome` or `ismi.netIncome`)
This check ensures that the sum of the net income/net loss for the year from the statement of appropriation of net income (`incomeUse.gainLoss.netIncome`) and the tax surplus/deficit from the balance sheet (`bs.eqLiab.equity.netIncome.taxBalanceGenerally.transferDiffTaxAccounts`) matches the net income/net loss for the year in the income statement (`is.netIncome`) after the tax reconciliation has been processed.