Rental Agreement between managing partner and GmbH
February 7, 2011 | 30,00 EUR | answered by StB Kiehne Katja Kiehne
I am currently founding a GmbH, in which I will be the majority shareholder (95%). I would like to partially use my privately rented apartment as a workplace, as the GmbH will not have any other business premises.
Therefore, I would like to enter into a rental agreement between myself and the GmbH, which is formulated correctly for tax purposes. For illustration, the following determinants are given: total living area = 100m², office space = 30m², rent = 800€, additional costs = 200€.
The following questions arise:
1. Can the additional costs be included as a lump sum in addition to the rent (i.e. GmbH gross rent: 300€)?
2. Is the rent subject to value-added tax (i.e. GmbH gross rent: 357€)?
3. If question 2 is answered with "yes", does the value-added tax increase my rental income as a private individual, or do I have to pay the value-added tax separately?
4. The office space is not separated from the rest of the living area and could be used for private purposes from the tax office's point of view. Is it advisable to exclude private use in the rental agreement, or is it irrelevant due to my shareholder position?
Dear inquirer,
as part of an initial consultation and considering your fee, I would like to provide you with an initial assessment of the situation:
First, it is important to differentiate whether the use of the office primarily serves your interests as an employee (managing director) or the operational interest of the employer (the GmbH).
In the first case, the payments to you as a shareholder managing director constitute wages. There is no rental agreement. However, if an operational interest of the employer (the GmbH) can be demonstrated, the payments should be treated as income from rental and leasing activities. In this case, your questions are to be answered as follows:
1. In the case of a rental agreement between a controlling shareholder managing director and the GmbH, this agreement must stand up to a third-party comparison. Otherwise, the tax authorities will assume a hidden distribution of profits to the company. While you can agree on a flat monthly advance payment, at the end of the year, a final settlement must be made as with other rental agreements. If there has been an overpayment, a refund must be made to the GmbH, and if there has been an underpayment of utility costs, the GmbH must pay the remaining amount to you as the landlord.
2. You have the option to rent to the GmbH either tax-free or subject to VAT if the GmbH carries out VAT-taxable transactions. If you opt for VAT liability, you will be considered a taxable entity and must remit the VAT to the tax authorities.
3. In the ruling of the Munich Finance Court of 07.10.2008 13-K 1037/06, it is stated that "if the parties have made an express written agreement on the conditions of use of the provided space, it may be an indication of the employer's operational interest". In this case, such an agreement regarding the exclusion of private use may be helpful, however, as mentioned a few sentences later in the ruling, it is not solely sufficient to classify the "rent" payment as wages.
Best regards,
Katja Kiehne
Tax consultant
Master of Business Consulting (M.BC.)
Dipl.-Finanzwirtin (FH)
