Anyone who has bought a GmbH privately instead of structuring the acquisition through a holding company pays in many cases almost double the tax. The reason for this is two-tier taxation and almost ineffective financing interest. The good news: The error can also be corrected afterwards.

1. The typical mistake when buying GmbH

The aim of the design is to hold a so-called double holding company at the end – i.e. a holding GmbH, which in turn buys a GmbH for a high purchase price, usually finances the purchase via a bank loan. If the acquisition is then made privately, i.e. by a natural person, the acquirer often pays almost twice as much tax as necessary.

The mistake is not in the purchase itself, but in the structure. Better would have been the acquisition through an intermediate holding company.

Why this is so, we calculate with a simplified example.

2. The starting example

A GmbH is acquired for 1 million euros. It generates a return of 20% on the purchase price, i.e. an annual profit of 200 monetary units.

A bank finances the purchase at, for example, 5% interest on the loan amount of 1 million euros. That is about 50 monetary units of interest per year.

3. Why buying privately is so expensive

At the level of the GmbH, the profit of 200 monetary units initially accrues around 30% corporation and business tax, i.e. about 60 monetary units. 140 monetary units remain.

These 140 monetary units are distributed to the private shareholder. Then there is again about 25 % capital gains tax, i.e. about 40 monetary units. Net land only about 100 monetary units in the private checking account.

The total burden of 200 to 100 monetary units corresponds to a tax rate of around 50%.

3.1. The real problem: interest rates

Out of the remaining approximately 100 monetary units, the purchaser must additionally service the financing. However, the privately paid interest of around 50 monetary units practically does not reduce the tax burden.

This leaves a free liquidity of only about 50 monetary units for the repayment.

4. The result: around 20 years of eradication

With a repayment of about 50 monetary units per year, the purchaser is calculated to be involved in repayment for about 20 years for a loan amount of 1,000 monetary units.

The legitimate question therefore arises: why carry an effective burden of around 50% if a structure were possible in which only around 30% were incurred?

5. The solution: buying through a holding company

Significantly more advantageous is the acquisition via an intermediate holding company. The acquirer first sets up his own company in which he holds a 100 % stake; In practice, a GmbH or a UG (limited liability) offers itself.

Not the acquirer personally, but this holding company takes out the bank loan of 1 million euros and thus acquires operative GmbH.

6. The Organization as a Key

The decisive lever is the connection of the holding and operative GmbH to a tax unit via a so-called organization.

Unlike a private person, the holding company can use the interest costs tax-reducing: Profits and losses shall be offset through the institution. The operating profit arises in the subsidiary, the interest burden as an expense in the holding company – both variables flow into a single assessment basis.

6.1. How organs are created

The prerequisite is a profit transfer agreement within the meaning of § 14 KStG between the holding company as organ carrier and the acquired GmbH as organ company.

The contract must be concluded effectively under civil law, must last for at least five years and must be effectively implemented throughout its duration. Only then does the taxation of operating profits take place at the level of the holding company – and this is where the interest burden can be offset.

7. Load comparison

Let’s transfer the figures to the holding structure with organs: From the profit of 200 monetary units, the financing interest of about 50 monetary units is first deducted as an expense.

Therefore, only 150 monetary units are taxable. This accounts for around 30%, i.e. about 45 monetary units. 105 monetary units remain after taxes.

Condensed into one sentence: Instead of first paying around 60 monetary units in the GmbH and then again around 40 monetary units of capital gains tax, only about 45 monetary units are incurred in the holding structure once.

8. How to repair an existing structure

Even those who have already acquired operative GmbH privately do not have to accept this condition. The existing structure can subsequently be transferred to a holding structure.

For this purpose, the GmbH shareholding held in private assets and the bank loan taken out are considered together and brought one level deeper into a holding company.

The result is the same advantageous constellation as for an acquisition structured from the outset via the holding company. This restructuring can be brought in tax-neutrally in suitable cases – depending on the amount of the shareholding, the initial structure and the treatment of the co-transferred financing.

9. Do not overlook the blocking period

A qualifying share exchange triggers a seven-year lock-up period. If operative GmbH is sold within this period, there is retroactively the so-called transfer profit taxation (transfer profit II). The later tax-free sale does not therefore apply to the repaired structure without restriction.

10. Further advantages of the holding company

As soon as operative GmbH does not need its profits for repayment, but distributes them, another privilege takes effect: According to § 8b Abs. 1 in conjunction with para. 5 KStG such dividends are 95 % tax-free at the holding company.

Only 5 % is considered to be non-deductible operating expenses, so the effective burden is around 1,5 %. This tax exemption in accordance with § 8b KStG allows to save profits almost unencumbered in the holding company.

The same applies to the subsequent sale of operative GmbH: the capital gain is also 95 % tax-free at the holding company level. In the case of subsequent submission, however, the above-mentioned seven-year blocking period must be observed.

11. Conclusion

The private purchase of a GmbH on credit is usually the more expensive variant: Interest rates have little effect on taxation, and two-tier taxation leads to around 50% of the total burden.

A holding structure with an organization reduces this burden to around 30% because the interest burden is offset directly against the operating profit. The annual redemption force thus increases to more than double.

Decisive for acquisitions already made: In suitable cases, an unfavorable private structure can be converted into a holding structure tax-neutrally.

Frequent questions about the GmbH purchase via a holding company

Why is the private purchase of a GmbH a tax mistake?

The profit is initially taxed at the level of the GmbH at about 30 % and the distribution then again with about 25 % capital gains tax. In addition, the financing interest hardly affects tax, so that the total burden is around 50 %.

How does a holding company with an organization reduce the tax burden?

If the holding company takes out the loan and there is an organization with the acquired GmbH, the interest can be offset directly with the operating profit. The burden drops to around 30% and more than twice as much liquidity is available for repayment.

Can I subsequently bring an already privately purchased GmbH into a holding company?

Yes. GmbH participation and loans can subsequently be brought into a holding company. In appropriate cases, this is tax-neutral; What matters is the level of participation, the initial structure and the treatment of financing.

What is the seven-year ban?

A qualifying share exchange triggers a seven-year lock-up period. If the GmbH is sold within this period, there will be retroactive taxation of the contribution profit (transfer profit II).

What is the approximate tax savings?

In the example, the running load decreases from around 50% to around 30%. This doubles the annual repayment power, and a loan is repaid in almost 10 years instead of in about 20 years.

Related topics