32 – Related Party Transactions

A related party is a natural person or legal entity that can exert influence on the BASF Group or over which the BASF Group exercises control, joint control or a significant influence. In particular, related parties include nonconsolidated subsidiaries, joint ventures and associated companies.

The following tables show the volume of business with related parties that are included in the Consolidated Financial Statements at amortized cost or accounted for using the equity method. The values include sales, receivables, other receivables, liabilities and other liabilities with respect to the disposal groups and/or discontinued operations.

Since the transfer of the leather chemicals business to the Stahl group as of September 29, 2017, BASF holds a minority interest in the parent company of the Stahl group, over which it can exercise significant influence. Sales, trade accounts receivable and other liabilities resulting from transactions with the Stahl group since then are included in the tables below in the values for associated companies for 2018 and 2017.

Sales and trade accounts receivable from and trade accounts payable to related parties mainly included business with own products and merchandise, agency and licensing businesses, and other operating businesses.

Sales from joint ventures with BASF Group companies amounted to €543 million in 2018, and €598 million in 2017. Sales from associated companies with companies in the BASF Group amounted to €626 million in 2018, and €481 million in 2017.

Other receivables and liabilities primarily arose from financing activities, from accounts used for cash pooling, outstanding dividend payments, profit and loss transfer agreements, and other finance-related and operating activities and transactions.

Both the increase in other receivables from nonconsolidated subsidiaries and the decrease in other liabilities to joint ventures in 2018 were due mainly to other finance-related receivables and/or liabilities.

The outstanding balances toward related parties were generally not secured and settled in cash.

The balance of valuation allowances for other receivables from nonconsolidated subsidiaries increased from €74 million as of December 31, 2017 to €76 million as of December 31, 2018. Of this amount, €2 million was recognized as an expense in 2018 (2017: €1 million).

The balance of valuation allowances for trade accounts receivable from associated companies decreased from €9 million as of December 31, 2017 to €8 million as of December 31, 2018.

There were obligations from guarantees and other financial obligations at BASF in favor of nonconsolidated subsidiaries in the amount of €6 million as of December 31, 2018 (December 31, 2017: €5 million), and in favor of associated companies in the amount of €17 million as of December 31, 2018 (December 31, 2017: €23 million).

Obligations arising from purchase contracts with joint ventures amounted to €3 million as of December 31, 2018 and €3 million as of December 31, 2017.

As of December 31, 2018, the present value of the outstanding minimum rental payments for an office building including a parking area payable by BASF SE to BASF Pensionskasse VVaG for the nonterminable basic rental period to 2029 amounted to €52 million.

There were no reportable related party transactions with members of the Board of Executive Directors or the Supervisory Board and their related parties in 2018.