The credit crisis has led to substantial liquidity problems especially for medium-sized companies (not only) in Germany: their (almost traditionally) small equity base makes it difficult for them to gain access to fresh money, be it from banks following Basel II regulations, from the capital markets or from private investors.

Considering the importance of German “Mittelstand” for the national economy, substantial changes of the German Commercial Code were resolved by Parliament regarding, among other things, the commercial accounting principles of self-created intellectual property rights.

Since January 2010 certain intellectual property rights created by a company itself such as patents, design patents or know how may be booked as an asset within its commercial financial statement. Other intellectual property rights such as (self-created) trademarks, publishing rights and customer lists may not be booked. The tax treatment of these intellectual property rights remains unchanged, which means in general that they may not be booked as an asset within the tax statement of the company but as deductible expenses.

It is the legislature’s intention that especially start-ups, medium-sized and research-intensive companies will now have the chance to show their true commercial value as reflected in their own inventions by an increase of their equity basis. Time will tell to what extent this equity adjustment will raise the credit-worthiness of these companies to banks, capital markets and private investors. Nevertheless, intellectual property rights become more and more important for the corporate financing of such companies.