What are the tax consequences of converting my company into a GmbH?
January 11, 2024 | 50,00 EUR | answered by Konrad Falk
Dear Mr. Ackermann,
I am about to convert my business into a GmbH in order to limit my liability and to run my business in a more professional manner. However, I am concerned about the tax consequences of this conversion.
Currently, I operate my business as a sole proprietor and pay taxes on the profits according to the Income Tax Act. With the conversion to a GmbH, the taxation would likely change, and I am unsure how this would affect my tax burden.
I am wondering if there are any tax benefits associated with a GmbH structure, or if I would end up paying more taxes than before. Are there ways to minimize or optimize the tax consequences?
I am also interested in knowing which taxes, such as corporate tax or trade tax, I would be subject to and what the expected amounts would be. Are there any tax planning options to reduce or optimize the tax burden?
I would greatly appreciate your expertise and advice on this matter in order to make a well-informed decision regarding the conversion of my business.
Thank you in advance for your support.
Sincerely,
Marco Ackermann
Dear Mr. Ackermann,
Thank you for your inquiry and your interest in my expertise in the field of tax law. The conversion of your company into a GmbH can indeed have both advantages and disadvantages, especially in terms of taxation.
Firstly, regarding taxation: As a sole proprietor, you are taxed on your profits according to the Income Tax Act. With a conversion to a GmbH, the tax framework would actually change. The GmbH is subject to corporate tax, which is currently at 15%. In addition, there is the trade tax, the amount of which varies depending on the municipality.
One advantage of a GmbH structure is the limitation of liability, as you as the managing director generally do not personally liable with your private assets. Furthermore, you can take advantage of tax benefits through strategic tax planning, for example, by the possibility of profit retention in the GmbH, which can lead to a lower tax burden.
There are various tax optimization possibilities to reduce the tax burden. For example, through smart management of profits and losses in the GmbH, you can achieve tax advantages. The choice of legal form can also affect the tax burden, so a detailed analysis and consultation in your specific case is essential.
It is important that you seek comprehensive advice before the conversion to fully understand the tax consequences. I am happy to provide you with detailed advice to clarify your questions and help you with decision-making.
Thank you for your trust and inquiry. I look forward to supporting you further in a personal conversation.
Best regards,
Konrad Falk
