31 – Related Party Transaction

Related parties are legal or natural entities that can exert influence on the BASF Group or over which the BASF Group exercises control or joint control, or a significant influence. These primarily 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.

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.

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.

The decline in other receivables from nonconsolidated subsidiaries resulted primarily from other finance-related receivables; and the decline in other liabilities to associated companies was due mainly to other finance-related and contract liabilities.

Balances outstanding to related parties were generally not hedged and were settled in cash.

The balance of valuation allowances on other receivables from nonconsolidated subsidiaries rose from €23 million as of December 31, 2019 to €105 million as of December 31, 2020. Of this amount, €32 million was recognized as an expense.

The balance of valuation allowances on trade accounts receivable from nonconsolidated subsidiaries rose from €2 million as of December 31, 2019 to €3 million as of December 31, 2020.

BASF had obligations from guarantees and other financial obligations in favor of nonconsolidated subsidiaries in the amount of €8 million as of December 31, 2020 (December 31, 2019: €10 million), and in favor of associated companies in the amount of €28 million as of December 31, 2020 (December 31, 2019: €36 million).

Obligations arising from purchase contracts with joint ventures amounted to €6 million as of December 31, 2020, and €4 million as of December 31, 2019.

Annual 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 until 2029 amounted to €6 million.

BASF SE had other finance-related receivables from BASF Pensionskasse VVaG in the amount of €3 million as of December 31, 2020.

Prof. Dr. Thomas Carell, member of BASF SE’s Supervisory Board, has a minor business relationship with the BASF Group in the form of a shareholding in two start-up companies in the biochemicals business, specifically DNA and RNA technologies. He holds 10.04% in baseclick GmbH, in which BASF SE holds an indirect share through its subsidiary, BASF Venture Capital GmbH, of 67.23%, and 4.2% in baseclick Vaccine GmbH, in which BASF SE holds an indirect share of 51.4%. Additionally, as its shareholder, Prof. Dr. Thomas Carell granted baseclick GmbH a loan in the amount of €30,000.

There were no further reportable related party transactions with members of the Board of Executive Directors or the Supervisory Board and their related parties in 2020.