Construction company with two equal shareholders
June 30, 2010 | 15,00 EUR | answered by Matthias Wander
A partner of a construction company GmbH wants to establish another GmbH in order to take on additional projects and spread the risk. In the new GmbH, the wife (who was previously employed in an administrative role) is set to become the managing director and handle the business operations. Are there any risks to consider in this situation?
Dear inquirer,
Thank you for your inquiry, which I would like to answer based on the information you provided and in the context of your involvement in an initial consultation.
Since the same shareholder is involved in both GmbHs, the GmbHs are considered related parties. It is important to note that transactions between related parties must withstand the so-called arm's length test, meaning that one GmbH should not be favored at the expense of the other GmbH. Transactions should be conducted as if they were with an unrelated third party.
Failure to comply may result in an assumed hidden profit distribution at the disadvantaged GmbH, which the shareholder must declare as investment income (without the tax-free allowance) in their income tax return.
The above principles also apply to transactions between the GmbH and the shareholder or their relatives.
Since your wife will only take on the management but not the shares in the new GmbH, her management salary will also be subject to social security contributions.
I hope this gives you an initial overview.
Best regards,
Wander
Tax advisor
