An asset-managing GmbH promises enormous tax relief, but also comes with many requirements. Whether it is worth setting up depends on numerous factors.
We explain how a VvGmbH works, when it makes sense and what requirements you need to observe!
The most important in a nutshell
- A VvGmbH manages assets, investments or participations in other companies.
- It offers enormous tax relief, but is linked to strict conditions.
- It can offer numerous financial and organizational advantages for people with larger assets.
- For smaller accounts, however, the expenses and running costs outweigh the benefits. Setting up an asset-managing GmbH is therefore not worthwhile in all cases.
Disclaimer: Please note that this information does not constitute tax or financial advice! This article is intended to provide a general overview only - if you have specific questions or problems, you must consult a qualified tax advisor and/or solicitor.
What is an asset-managing GmbH / VvGmbH?
It is probably the most unpleasant part of trading on the stock exchange: you have Equity portfolioderivatives trading or Day trading earns money and now have to cede a large part to the tax office.
In Germany, this is in most cases the Settlement tax with 25 % (plus solidarity surcharge and church tax if applicable). A quarter of the profits made therefore goes to the tax authorities. No wonder that every successful trader or investor sooner or later looks for ways to reduce this tax burden!
But (legal) methods are rare. Probably the most effective option is to set up an asset-managing GmbH! A VvGmbH is a company with special advantages and requirements:
- A VvGmbH is a company that manages assets, real estate and participations.
- It benefits from considerable tax advantages: only 1.5 % tax is payable on equity gains and only 11.5 % on gains from equity ETFs.
- The tax burden for other income is around 30 % (around half corporate income tax and half trade tax), which is well below the top tax rate for private individuals.
- An asset-managing GmbH can claim extensive depreciation and expenses and thus massively reduce the taxable profit.
- Since it is a company, numerous requirements must be met, such as the preparation of balance sheets, profit and loss accounts or the publication of annual financial statements.
- There are also restrictions on which activities are permitted for a VvGmbH.
So when is an asset-managing GmbH worthwhile? Especially if you have large assets and want to increase them as tax-efficiently as possible!
The longer your capital remains in the VvGmbH, the better: the comparatively low tax burden results in a strong compound interest effect. However, if funds are withdrawn and paid out to you again, you will have to pay tax on this income as usual.
Although this double tax burden can be easily avoided in practice, it should be noted: A VvGmbH is particularly suitable for long-term asset accumulation. This is why the terms "piggy bank GmbH" or "piggy bank GmbH" have become commonplace.
What advantages does a VvGmbH offer?
As the name suggests, we can save and build up assets particularly effectively with a savings company. This is due to a number of special advantages of this type of company:
Tax benefits
Every limited liability company, including the VvGmbH, benefits from attractive tax advantages in Germany:
- Income from the sale of shares: 95 % are tax-free. Corporation tax and trade tax are levied on the remaining 5 %, resulting in an effective tax burden of 1.5 %.
- Income from equity ETFs: 80 % are exempt from corporation tax and 60 % from trade tax. This results in a total tax burden of % 11.565.
- Other income: Most other income is subject to corporation tax and trade tax. This results in a tax burden of around %, which is significantly less than wealthy private individuals would have to pay.
- Participation in an atypical, dormant company: With an atypical, dormant company, it is possible to avoid trade tax and thus further reduce expenses. To do this, the company's trade income (e.g. from interest, dividends) must remain below the exemption limit of €24,500 per year.
Further tax advantages result from services that an asset-managing GmbH can provide for you as the owner. These include, for example
- Tax-free provision of cell phones, computers and other devices.
- Tax-reducing assumption of costs for mobile telephony, Internet and similar services.
- Issue of tax-free fuel vouchers (number and value are limited)
The managing director's salary that you can grant yourself through your company can also lead to tax benefits. In particular, if the VvGmbH is your main employer and you only pay out manageable sums, a lower income tax rate is often possible.
Attention!
A managing director's salary must be in line with the size of the company and the usual salaries of comparable companies. Excessive payments could be considered a hidden profit distribution.
Only total profit is taxed
Another advantage is the tax calculation basis: companies only pay tax on the profit made, not on capital income as is the case with private individuals. This means that only what is actually left over at the end is taxed. As the owner, you can reduce your profits (and therefore your tax burden) through numerous deductions.
All expenses (operating expenses) that serve the purpose of the company are deductible. In the case of a VvGmbH, this is the accumulation of assets. Specifically, this includes, for example
- Costs for trading seminars, trade fairs, workshops such as the German Option Days.
- Travel expenses for such seminars or meetings
- Signal services such as Traderfox and other services to help you trade
- Stock market letters, magazines, financial portals
- Broker fees
- Interest costs if the GmbH takes out loans
- Costs for an office, internet connection and similar expenses
A company car can also be purchased and partly used privately. The tax structuring options are very extensive. It is advisable to consult a tax advisor in order to maximize the deductions.
Abschreibungen
Since a VvGmbH is a company, you can depreciate it just like any other company: Assets wear out over time and lose value. This loss in value is reflected in the company's accounts through depreciation.
Depreciation is possible, for example, for
- Building
- Machines and devices
- Furnishings and equipment
- Computers, laptops, smartphones
- Licenses
- And much more.
In practice, these impairments result in considerable tax savings. This is because, as it is a loss, the overall profit is reduced.
If you set up an asset-managing GmbH, you can benefit from some additional extras on top of the regular depreciation:
- You can use declining balance depreciation ("depreciation for wear and tear") and thus depreciate your goods even faster.
- In the case of movable assets, special depreciation of 20 % is possible in addition to normal depreciation.
- For commercial properties built after 1985, 3% depreciation (instead of the usual 2 %) is allowed.
Organize and protect assets
If you set up an asset-managing GmbH, you transfer your capital to this new company. Legally speaking, it is no longer in your possession. What sounds frightening and problematic at first has some advantages in reality!
- Protection of assets: The capital in your company is protected from external access. For example, you do not have to cede part of your company in the event of a divorce. Although you may be entitled to an equalization of gains or a higher pension equalization, these can easily be regulated by a marriage contract.
- Tax-free inheritance: No inheritance tax is payable on the inheritance of a VvGmbH in Germany, provided your surviving dependants continue to run the company for at least seven years. In addition, they cannot be obliged to sell shares in the company in order to pay inheritance tax.
- Structure and organize: You can structure your GmbH in a particularly tax-efficient way and transfer it to a holding structure, for example. Once your company has become the owner of other companies in this way, further tax benefits await you.
In the case of large assets, the central organization can therefore be reason enough to establish an asset-managing GmbH!
Conditions and disadvantages
A VvGmbH gives us numerous tax advantages. However, there are of course also some disadvantages that you should be aware of and consider before setting up an asset-managing GmbH.
What happens if I want to withdraw money from the VvGmbH?
The tax benefits only take full effect if the capital remains in the company. Sooner or later, however, the owners (or their heirs) will want to access the assets. Such a "payout" constitutes a profit distribution and is taxed as standard with the Settlement tax occupied.
- The withholding tax that we were able to save by setting up the asset-managing GmbH will therefore still be due when a payout is made.
So is a VvGmbH ultimately pointless? Not at all! Within the company, profits from share transactions, dividends, real estate, etc. are taxed at a significantly lower rate! Savings can GmbHs, for example, only pay:
- Around 1.5 % Taxes on income from the sale of shares
- Only 11.5 % Taxes on dividend income
- Only 15.8 % Taxes on real estate income
If this income is reinvested within the VvGmbH, the company's assets can grow rapidly.
The longer the capital remains in the company, the greater the financial advantage over personal taxation of income.
There are also a number of good options available to the owner to withdraw capital continuously and with a manageable tax burden. For example, we can:
- Issue a loan to our VvGmbH.
- claim wages.
- Renting out assets.
The payment of a managing director's salary or the employment of family members can also be an attractive form of payment, depending on the personal tax burden and the precise structure.
What income can a VvGmbH generate?
The asset-managing GmbH is subject to an important restriction: it may not engage in any operational business activities. This includes all traditional economic sectors: Trade, production and services are taboo!
This leaves only four areas in which a VvGmbH can be active:
- Management of investments: An asset-managing GmbH can use financial products on the stock exchanges or fixed-interest assets. This includes, for example, trading or Day trading with shares, ETF, Forex and Co. You can also Trade options or in Bondsfixed-term deposits and all other products. However, not all forms make sense from a tax perspective!
- Real estate holdings: The company may own real estate and generate income through letting and leasing. However, (commercial) trading in the properties is prohibited. Activities such as renting out vacation apartments or subletting are also problematic.
- Art and collector's items: Tangible assets, such as works of art, may also be bought, managed and sold. However, trading must not be on a commercial scale.
- Shareholdings: A VvGmbH can hold shares in other companies or own them outright. Such companies are classically referred to as "holding companies".
The permitted areas of activity are structured in such a way that the asset-managing GmbH fully lives up to its name: It is a company that is ideally geared towards preserving and increasing an existing asset.
If a company does not meet these requirements and, for example, does have a commercial activity, the special advantages are also largely lost. Fortunately, however, the reduced tax burden on share profits remains in place.
Whether a VvGmbH fulfills the requirements or has to give up its special role is often difficult to determine in practice. The decisive factor is above all that a essential part the activity is the management of the company's assets. The courts often have the final say on this issue, right up to the Federal Fiscal Court.
What are the running costs and expenses?
Founding and operating an asset-managing GmbH is an expensive pleasure. There are numerous time and financial costs, both at the start and during ongoing operations.
For the foundation:
- Notary fee
- Commercial register fee
- Costs for the opening balance sheet
- If necessary, advice from lawyers, tax consultants, start-up consultants
- Membership of the IHK
You will incur further costs during operation:
- Accounting costs, in particular:
- Preparation of balance sheets
- Preparation of profit and loss accounts
- Preparation of tax returns
- Membership of the IHK
- Bank account, brokerage costs (partly custody account fees)
- Publication of the annual financial statements in the commercial register
- Entries in the transparency register
So what does a VvGmbH cost?
The exact price depends of course on the scope and the specific features. As a guideline, however, a Minimum of € 3,000 per year established. You should expect initial costs of at least € 2,000 for the foundation. Complex cases are also significantly more expensive here.
You can reduce these expenses to some extent, but never completely avoid them. For example, a Company Account CapTrader significantly reduces the cost of brokerage fees. Custody account fees are also eliminated in this way.
When is an asset-managing GmbH worthwhile?
In view of the considerable costs involved, the question naturally arises as to when it is worth setting up an asset-managing GmbH. The answer depends on the individual case!
- From a purely financial point of view, a VvGmbH is worthwhile if the tax savings exceed the costs.
- With expenses of at least €3,000 per year, you need substantial assets and/or high returns to make the start-up worthwhile.
- You should also consider the costs for notaries and tax advisors: they increase depending on the value, i.e. the larger your assets, the more expensive the services.
As a guideline, it can be said that it almost always makes sense to set up a company with assets of €500,000 or more. For smaller sums, a detailed examination is required. However, an asset management company is hardly worthwhile - at least financially - for starting capital of less than €100,000.
Good to know:
The theoretical lower limit is €1 - the minimum capital required to found a UG (limited liability company), which offers very similar tax savings. In practice, however, founding a company with very low share capital is not worthwhile, at least financially, due to the running costs.
The founders' plans also play an important role:
- If capital is to be paid out regularly, the tax advantage is reduced. When the capital is paid out to the owner(s), the flat-rate withholding tax or the personal tax rate is applied, which leads to an additional tax burden. The formation of a VvGmbH is therefore less worthwhile.
- If the capital is not required and can remain in the company for a long time - ideally decades - the VvGmbH becomes much more attractive. If you are planning to build up assets over the long term, it may be worth setting up a company even if you only have small assets.
VvGmbH advantages and disadvantages
The advantages of an asset-managing GmbH make this form of company very attractive. These include
- Tax relief: Capital gains and income from investments are taxed only minimally. You can also benefit from significant tax relief on equity funds and rental income. As a result, the assets in such a company can increase quickly and the compound interest effect can take full effect.
- Consolidate assets: A VvGmbH is ideal for organizing your own assets in a central location. This not only provides protection against external access, but also facilitates the transfer in the context of an inheritance.
- Use depreciation and deductions: You can write off property and other assets, deduct management costs and even a director's salary. Only the remaining total profit is taxable - not all capital gains, as is the case for private individuals.
However, you should definitely be aware of the disadvantages before you consider setting up a company:
- Double taxation: The tax advantages only apply as long as the assets remain within the company. As a rule, capital gains tax or the personal income tax rate is payable on payout. The corporate form is particularly worthwhile if the money remains in the GmbH in the long term.
- Capital difficult to access: The capital contributed is no longer readily available to you, as the withdrawal is accompanied by an increased tax burden.
- High costs: Additional expenses arise For example, for annual financial statements, bookkeeping, Chamber of Industry and Commerce fees and more. Fees such as tax advice or notary fees also depend on the size of the assets. Setting up a VvGmbH is therefore only worthwhile for assets where the tax savings exceed the expenses.
Conclusion: Setting up a VvGmbH is only worthwhile for larger assets
An asset-managing GmbH is a company whose main task is to manage assets, real estate and investments. It benefits from enormous tax advantages, but in return can only be active in specific areas.
As the owner of such a company, you can also benefit from depreciation on real estate and other valuables. In addition, taxes are only levied on actual profits, which you can reduce through operating expenses.
However, before you set up such a VvGmbH, you should definitely consider the costs and expenses!
This is because you will incur one-off and ongoing expenses as well as administrative costs. The tax benefits are only worth these costs if you have sufficient assets. Around 500,000 euros has established itself as a safe guideline. Lower values of up to 100,000 are also possible, but should be examined carefully in each individual case.
Professional advice from a specialized tax consultant or lawyer is therefore highly recommended before setting up a business. Depending on your personal circumstances and available capital, it may also make sense to set up a Establish a foundation or a Family Office to be set up.
More Vorteile einer Trading-GmbH / VvGmbH hat auch Profi-Trader Alexander Eichhorn für Sie zusammengestellt.
