Many entrepreneurs hold shares in more than just one GmbH. This can be the case, for example, if you run your own GmbH for each rented property. Furthermore, individual business units can be divided into own GmbHs (for example, holding companies or corporate structures). Therefore, in such constellations the question arises more often how to transfer money between the sister GmbHs without incurring tax disadvantages. For this purpose, we have already dealt with the various variants of how you can transfer money to a sister GmbH in another article. In this article, however, we would like to deal with the variant of the separation of a Cash GmbH as a fictitious sub-operation (§ 15 UmwStG).

In this article we would like to use the following starting point: A shareholder wants to transfer money from one GmbH to another GmbH as tax-neutrally as possible. He is to be involved in both GmbHs. However, within the framework of the preferred design here, there should be no loan. There should also be no transfer of the money by distribution and subsequent deposit. Rather, the shareholder establishes a subsidiary with the money of one sister GmbH, which is then split off and transferred. This subsidiary is, as we shall see, a fictitious sub-operation.

The reasons why he wants to transfer money from a GmbH to a sister GmbH can be manifold. For example, it can serve as investment capital.

2. The fictitious part-operation within the meaning of § 15 UmwStG

2.1. Definition of operation branch

Imagine you have an extensive operation with several workshops and your own retail store. A sub-company is now an “organically closed part of an overall business”, which has a certain independence. In our example, you could say that both the workshop and the sales shop each represent a partial operation. So there are always at least two subsidiaries (or none) in a sole proprietorship or a GmbH.

2.2. Creation of a fictitious branch

But now it is the case that our shareholder has only one company in each of his GmbHs. We cannot split a single operation (without partial operation) and thus not transfer the money. Money in itself is not a part of an enterprise. Instead, we set up a subsidiary GmbH with the money we want to transfer.

With the founding of the subsidiary GmbH, a further, fictitious sub-operation is now being created at the transferring GmbH. According to § 15 (1) sentence 3 UmwStG, a 100 % shareholding in a limited liability company (GmbH) is regarded as a part of the business. The legal word ‘applies’ regularly describes a fiction, which is why it is spoken of a fictitious partial operation. A fictitious sub-operation is therefore primarily a legal construct.

Now that a fictitious sub-operation has been created at the GmbH, there are now two sub-operations in the GmbH. And because we now have two branches, we can split.

In the case of the division we are in § 15 UmwStG, which refers us to the provisions of §§ 11 to 13 UmwStG. However, § 15 (1) sentence 2 UmwStG is important here: Only if a partial operation remains after the division, § 11 (2), 13 (2) UmwStG apply.

3.1. Fictitative sub-operation: continuing book value

And it is precisely these two provisions that must apply here, since they grant the continuation of the book value at the level of the company being transferred (§ 11(2) UmwStG) and at the level of the shareholder (§ 13(2) UmwStG). Only by continuing the book value can we make a tax-neutral division here.

3.2. Fictitative partial operation: elimination of tax neutrality

However, § 15 paragraph 2 sentence 1 UmwStG also contains a blocking period. The division may not be acquired or set up three years before the division. The fact that we founded the fictitious sub-operation at the same time as the division thus eliminates tax neutrality at the level of the transferring company, i.e. the GmbH in which the money is located. The hidden reserves must be discovered and taxed.

However, the elimination of tax neutrality is hardly relevant, because in such a case a fictitious part of the company has no hidden reserves. The transferring GmbH has only financial assets in this sub-operation – and money usually contains no hidden reserves.

3.3. Tax neutrality of the shareholder is important!

Important in this design, however, is that tax neutrality is maintained at the level of the shareholder of the two GmbHs – i.e. § 13 paragraph 2 UmwStG can continue to be applied. But this tax neutrality is fortunately guaranteed here.

4th Fictitative Partial Operation – Conclusion

In contrast to other designs, such as a loan, this design, for which a fictitious sub-operation serves as a design tool, is especially suitable for large amounts of money. Because while both the granting of the loan and the distribution and repayment lead to tax implications, which must be considered, the effort of the design is greater here, but after completion of the division there are no long-term consequences.

With a loan you have to pay attention to the interest: interest payments must flow regularly and be appropriate, otherwise a hidden profit distribution threatens.

In the case of distribution and payment, however, this runs through the shareholder. So here the capital gains tax is due at 25%. Of course, this massively restricts the financial possibilities at the GmbH, which should receive the money. So this path should be avoided.

In contrast to these two methods, as I said, the split is more complex in its implementation, but then does not entail any further consequences once it has been completed. Therefore, this design, in which a fictitious partial operation is the focus, is best suited for large amounts of money.