Distribution of profits to foreign shareholders by a GmbH
April 15, 2018 | 100,00 EUR | answered by Steuerberater Bernd Thomas
I would like to participate as a 50% shareholder in a newly founded GmbH in Germany. I will NOT be the managing director.
I am German, but not liable to tax in Germany. I live in Dubai (moved away from Germany for more than 5 years, no connection to Germany, no residence in Germany, no bank account in Germany, nothing at all). In Dubai, there is no income tax or similar. All income is tax-free, and there is no need to file an income tax return. (I will soon move to another country where this type of participation is also tax-free.)
1.) How are distributions to me taxed in Germany? Please provide an example with sample numbers.
2.) I may not want to appear with my private name in the commercial register, but rather use a company as a shareholder with which I enter into a trust agreement. Does this change anything in the taxation of distributions?
3.) Is there any way to optimize the structure, for example with a holding company? This (No. 3) is definitely a complex question, can I contact you directly for further advice?
Dear inquirer,
I am happy to answer your inquiry based on the information provided in the context of an initial consultation on frag-einen.com. The response is based on the information you provided. Missing or incorrect information can affect the legal outcome.
With dividends, you are subject to limited income tax liability in Germany. There is no agreement on double taxation with Dubai, so the general principles of income taxation apply.
The GmbH is obligated to withhold 25% capital gains tax plus 5.5% solidarity surcharge, so you will only receive a net dividend payment.
An income tax assessment in Germany will not be carried out (not even upon request) if you, as a foreign taxpayer, only had capital gains with tax withheld at source; the withheld tax then has a final withholding effect, with no obligation to file tax returns.
As an example, this would look like the following:
GmbH distribution 10,000.00 €
minus capital gains tax 25% -2,500.00 €
minus solidarity surcharge 5.5% -137.50 €
= Net dividend 7,362.50 €
Having an effective trustee in place initially does not change anything. From a tax perspective, the settlor is usually considered the shareholder and is taxed on the profit distributions.
A holding structure would potentially change things if the holding is located in a country with which a double taxation agreement exists. However, a tax-free distribution to Dubai is unlikely to be possible in practice.
If you would like to contact me directly, you can reach me at bernd.thomas@yahoo.de.
Best regards,
Bernd Thomas
Tax Advisor
Dipl.-Kaufmann (FH) Bernd Thomas, Tax Advisor, Neustadtswall 85, 28199 Bremen, Tel. and Fax 0421 7090558, Mobile 0163 9632333, VAT ID No. DE316948369, Member of the Hanseatic Chamber of Tax Advisors Bremen, Register number 111705, Professional indemnity insurance with R+V Allgemeine Versicherung AG, Mittlerer Pfad 24, 70499 Stuttgart, Insurance sum: 250,000 euros for each individual claim; annual maximum coverage: 1,000,000 euros (for all damages within an insurance year)
