Asset Management GmbH and the value added tax VAT

Is VAT due for the asset-managing GmbH?

In principle, the answer to this question is no. Regardless of whether you generate income from letting, leasing, share transactions or investments in your GmbH, none of these are subject to VAT. However, as with every rule, there are exceptions.

When is VAT incurred in an asset-managing GmbH?

Let’s look specifically at the real estate GmbH. In the following scenarios, you are – firstly – acting commercially and – secondly – also subject to VAT:

• when operating a solar system on the property
• in the case of income from parking garage or parking garage (changing, permanent tenants)
• income from renting out a room with a rental period of less than one year
• in the case of income from furnished accommodation with terms of less than one year

Let’s take a closer look at when rental income is exempt from VAT. It is important to differentiate between who you are renting to.

Letting to a private individual

If the rental is to a private individual, the income is exempt from VAT. However, this also means that the input tax from the acquisition costs cannot be reclaimed from the tax office. Depreciation is handled in the same way as for private rentals. Depreciation is therefore calculated at 2% of the acquisition costs per year.

Letting to companies

If you intend to let your property to a business, you have the option of making use of the VAT option; you can “opt out”. Any rental income will then be taxed in accordance with the VAT Act; however, you will receive the input tax from the acquisition costs back from the tax office. In this case, a depreciation rate of 3% of the acquisition costs applies.

Which of the two options you choose depends, among other things, on how important increased liquidity is for you. For example, if you are just starting to build up your assets, you can take advantage of the benefits of renting to a company. Increased depreciation – as well as the refund of input tax if you opt for VAT – allow you to continue investing.

What taxes are incurred by an asset-managing GmbH?

Finally, let’s take another look at the overall situation with regard to taxes for an asset-managing GmbH. In principle, the following taxes apply to an asset-managing GmbH:

• Trade tax
• Corporate income tax
• Solidarity surcharge. This is added to the corporation tax as a percentage
• Value added tax

Depending on the type of assets to be managed, there are different tax reliefs. Accordingly, there are also various exceptions with regard to the tax liability for the above-mentioned taxes. For the special form of real estate GmbH, an exemption from trade tax applies in the case of an extended property reduction.

You can also expect tax relief if you hold capital gains from the sale of shares in your asset-managing GmbH. In the vast majority of cases, no corporation tax is payable here. As mentioned, you have the option of opting for VAT if you rent to an entrepreneur. If you opt for this option, you can answer the question “Do I have to file a VAT return for the asset-managing GmbH?” with yes.

What applies to the asset-managing GmbH with regard to profit distribution?

If you, as a shareholder, would like to make a profit distribution, either capital gains tax is payable on the entire distribution amount or you can opt for the partial income method. In this case, 60% of the distribution is taxed at your own individual income tax rate, while the remaining 40% remains tax-free. This should always be weighed up individually in order to achieve the best result for you personally.