1. Compiling financial services in Germany
Simon Lohner, Deutsche Bundesbank

2. Compiling financial services in Germany Reporting obligations
Every resident unit has to report monthly all transactions with non-residents with a full country breakdown
Exemption:
Transactions below €12,500
Deutsche Bundesbank
April 2018

3. Compiling financial services in Germany Explanatory notes on financial services
Deutsche Bundesbank
April 2018

4. Compiling financial services in Germany Definition financial services in MSITS 2010
Deutsche Bundesbank
April 2018

5. Compiling financial services in Germany Estimation of transactions below the threshold
In 2001, the reporting threshold for transactions was raised from DM 5,000 to €12,500.
The value of transactions below the new threshold is estimated based on the ratio between the transactions below and above the threshold observed in 2000.
As transactions in financial services are usually relatively large, the estimated value below the threshold is rather small (around 1% for credits and 2% for debits).
In Germany it is forbidden to charge explicit fees on loans. As a result, households are rarely specifically charged for financial services therefore private households should not be involved in financial services.
Deutsche Bundesbank
April 2018

6. Compiling financial services in Germany Treatment of borderline cases
Negative interest rates
Negative interest rates could be considered as deposit-taking fees by banks and therefore be classified as a financial service.
However, according to the IMF (BOPCOM 16/6), negative interest rates should be recorded in primary income.
Transfer pricing
Banks all over the world have back offices which perform different tasks, but these back offices do not generate profits on their own (eg through trading). However, these units must achieve certain amounts of profit for tax purposes. The provision of this profit by the headquarters is not a financial service, but rather a transaction recorded as FDI income.
Deutsche Bundesbank
April 2018

7. Compiling financial services in Germany Allocation of costs for financial services within MNEs
Example:
A German company purchases financial services in country B worth 100.
I a second step the affiliated companies abroad are charged to bear all/part of the costs for the services.
In Germany, we record the amounts received on a gross basis within the same accounting item:
How is the treatment in other countries?
Financial service
Receipts
Expenditure
Country B
100
Country C 30
Country D
Country E
Deutsche Bundesbank
April 2018

8. Compiling financial services in Germany Why we currently do not estimate dealer’s margins
The dealer’s service charge is the spread between the buying and selling price (excluding traditional holding gains).
The service charge can be estimated by multiplying the bid-ask spread for securities by their turnover:
Regardless in which way the service is calculated, it is necessary to know whether the reporting party is the buyer/seller or the dealer in order to determine if the service has to be recorded as a credit or a debit.
Deutsche Bundesbank
April 2018

9. Compiling financial services in Germany Why we currently do not estimate dealer’s margins
When we receive a report of a sale of a German security to a non-resident, two cases can occur.
Dealer is resident
Dealer is non-resident
In Germany, this information is only in rare cases available because security transactions are usually reported by banks which are not obliged to distinguish between transactions on their own book or those of their customers.
Simplifying assumptions such as “Resident securities are traded by national dealers/market makers” are not valid for German securities with major turnover, eg government bonds are traded heavily in London and New York.
Germany
abroad
Sale of a German security leads to a
receipt in dealer’s margin
DEALER
Buyer
Germany
abroad
Sale of a German security leads to an
expenditure in dealer’s margin
Seller
DEALER
Deutsche Bundesbank
April 2018

10. Compiling financial services in Germany Geographical breakdown of financial services in 2016
Deutsche Bundesbank
April 2018

11. Compiling financial statements for financial services Reporting units in financial services in 2016
Nace 1
Deutsche Bundesbank
April 2018