Asset-managing GmbH Turnover tax

If you are a person with high capital and real estate assets, the question of how to manage your assets most efficiently will automatically arise over time. Here, tax savings will be a crucial point. 

An interesting solution for you may be to set up an asset-managing GmbH. This special form of GmbH is exclusively responsible for asset management and brings with it various tax advantages due to its purely administrative character, depending on the type of assets contributed.

The main focus here is not on distributing profits, but on reinvesting them and is therefore a long-term matter in which the cash flow can be used for long-term asset accumulation. 

This naturally raises numerous questions: What taxes are incurred by a GmbH? Does the asset-managing GmbH have to pay turnover tax? And how exactly does one handle the matter of turnover tax in the case of an asset-managing GmbH? We would like to go into this in more detail in the course of this article.

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Is turnover tax due for the asset management GmbH? 

In principle, the question can be answered with No answer. Regardless of whether you generate income in your GmbH from renting, leasing, share transactions or participations, none of these fall under the VAT Act.

However, as with any rule, there are exceptions.

When does turnover tax arise in an asset-managing GmbH?

Let's take a closer look at the Immobilien GmbH in particular:

In the following scenarios, one falls 1.) into commercial activity and 2.) also into the obligation to pay VAT:

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

Let's take a closer look at when income from rentals is exempt from VAT.

It is important to distinguish to whom you are renting.

If the rental is to a private individual, the income is exempt from turnover tax. 

However, this also means that the input tax from the acquisition costs cannot be recovered from the tax office. Depreciation is handled in the same way as for private renting. The depreciation is therefore calculated at 2% of the acquisition costs per year.
If you intend to rent out your property to an entrepreneur, you have the possibility to make use of the VAT option. You can "opt out".
Any income from renting will then be taxed in accordance with the Value Added Tax Act, but the input tax from the acquisition costs will be refunded by the tax office. For depreciation, a percentage of 3% of the acquisition costs applies in this case.

Which of the two options you choose depends, among other things, on how important increased liquidity is to you. If, for example, you are at the beginning of building up your assets, you can take advantage of the benefits that come with renting to a company. Increased depreciation, as well as the reimbursement of input tax in the case of opting for VAT, allow you to continue investing.

What taxes are incurred by an asset-managing GmbH?

Vermögensverwaltende Gmbh - welche Steuern ?

Finally, let us look again at the overall situation with regard to the Taxes for an asset-managing limited liability company.

In principle, the following applies to an asset-managing GmbH, the

  • Corporate income tax
  • the solidarity surchargewhich is added to the corporate income tax as a percentage. is added
  • 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 of the above-mentioned taxes. 

For the special form Immobilien 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 shares in your asset-managing GmbH. In most cases, no corporate income tax is due.

As already mentioned above, you have the option of opting for VAT when renting to an entrepreneur. If you decide to opt for this option, you can ask yourself the question: Do I have to file a VAT return with the asset-managing GmbH? with Yes answer.

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

If you, as a shareholder, would like to make a profit distribution, you either have to pay capital gains tax 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. 

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