date | theme

17. August 2019 | Video: 5 tax advantages of the GmbH optimal use: 30% tax dividend sale real estate salary

17. January 2020 | GmbH shareholders: Managing Director salary or profit distribution?

20. January 2020 | Video: How high the Managing Director salary must be at the GmbH

09. July 2021 | Key figures of the industry on the salary of Managing Directors (this contribution)

The general salary of a GmbH shareholder-managing director influences both the amount of corporation tax and business tax of the GmbH and the income tax of the shareholder. If the general manager’s salary appears unreasonably high from the point of view of the financial administration, then the amount above the maximum appropriate general manager’s salary must be qualified as a hidden profit distribution. However, in order to determine whether a managing director's salary is appropriate, an external comparison is carried out. The industry in which the managing director is responsible for the company management plays just as much a role as the amount of the company’s annual turnover. With the help of these industry key figures, the managing director salary can be exploited in a targeted manner in order to optimize both the corporate tax and trade tax on the part of the GmbH as well as the income tax of the shareholder managing director.

The general salary of a GmbH shareholder-managing director can in principle be freely determined. But there are also tax aspects to consider. Because if you assume that the CEO salary potentially causes less income tax than a profit distribution, then it is clear that most CEOs would only like to take this circumstance to the utmost in order to save taxes.

But also on the side of the GmbH, the managing director salary is an important tax variable. Because the managing director’s salary is deductible from the tax profit as operating expense, thus reducing the corporate tax and business tax. The higher the general manager’s salary, the lower the corporate tax and business tax.

As you can easily see, a GmbH shareholder Managing Director has two good reasons to set his CEO salary as high as possible. And this is also known to the Treasury, which is likely to see significantly lower tax revenues in such an approach. Therefore, the legislator has determined that a managing director salary should be appropriately high. But in order to determine what is appropriate in terms of height in this regard, a comparison must be made. So the question is what other managers earn in comparable position and situation. And the answer to this is a table with industry metrics on managing director salary.

What is the basis of the table with the industry key figures for managing director salary? On the one hand, this listing takes into account the industry in which the company operates, for which the managing director leads the fortunes. Depending on the industry, there are apparently certain differences in the amount of the appropriate managing director salary. On the other hand, the annual turnover of a company is also quite relevant. Of course, a managing director who manages his company more successfully than a competitor may also receive a proportionally higher managing director salary. Finally, the number of employees is also a criterion by which the amount of a managing director salary can be assessed as appropriate.

In addition, you can also use other criteria in individual cases, such as the age or the professional qualification of a managing director. However, since this data is very variable, we refrain from excessively expanding our descriptions with further details that can only serve as conditionally clear criteria.

So we come to the next question: who determines the range within which a CEO salary is appropriate? Few should be surprised that the financial administration decides on adequacy. However, it must also be guided by the realities. So it is a fine-tuned interplay between what managers actually earn and what the financial administration may consider appropriate at most.

However, in order to provide clarity in this regard, the Oberfinanzdirektion Karlsruhe recently published a table with industry key figures on managing director salary, which serves as a guideline in this regard at least at the tax offices in Baden-Württemberg. But the financial administration of other federal states certainly knows similar requirements. In the further course of the article, however, we would like to refer explicitly to the published table on the industry key figures for the Managing Director’s salary of the Oberfinanzdirektion Karlsruhe.

So let’s take a closer look at which industry key figures to expect in terms of managing director salary. The graduation takes place both according to the annual turnover amounts and according to the number of employees. The industry indicators are in the range of less than EUR 2.500,000 and 20 employees, between EUR 2.500,000 and EUR 4.999.999 and 20 to 50 employees, between EUR 5,000,000 and EUR 24.999.999 and 51 and 100 employees, and finally between EUR 25,000,000 and EUR 50,000,000 and 101 and 500 employees. But now more on that.

So now we go into detail and provide the specific industry key figures on managing director salary. Of course, we break them down by industry. The six most important industries are in the foreground: industry and production, wholesale, retail, freelancers, other services and crafts.

In the manufacturing sector or industry, the industry key figures in the first size class are between EUR 170,000 and EUR 220,000. In the next larger class, the appropriate managing director salaries are between EUR 214,000 and EUR 284,000. The third size class gives industry key figures on managing director salary in a range of EUR 271,000 and EUR 314,000. Finally, in the case of large industrial companies, we are talking about managing directors’ salaries between EUR 337,000 and 533,000.

After the industry has produced its goods, they usually enter the wholesale market. So in our considerations we follow the path that the goods take and now look at the industry key figures for the managing director salary of the wholesale trade.

In the lowest size class, the appropriate managing director salaries are between EUR 194,000 and EUR 239,000. It continues with EUR 209,000 to EUR 286,000. In the next class, EUR 239,000 to EUR 310,000 are considered an appropriate managing director salary. And in the fourth size class, most wholesale managers earn between EUR 314,000 and EUR 544,000.

Looking at wholesale is now followed by the retail sector. Here, managing directors’ salaries start at EUR 148,000 within the smallest size class and end at a maximum of EUR 183,000. In addition, the next size class will be followed by the staggering of the appropriate managing director salaries between EUR 158.000 and EUR 212.000. The third size class has managing director salaries between EUR 212,000 and EUR 257.000. Managing Directors’ salaries are between EUR 256.00 and EUR 531.000.

Freelancers earn as Managing Directors in the lower segment of the four size classes between EUR 192,000 and EUR 275,000. This is followed by the spectrum with managing director salaries between EUR 279,000 and EUR 329,000. Third, we see appropriate managing director salaries between EUR 326,000 and EUR 393,000. With EUR 337,000 and EUR 578,000 in the top size class, we conclude the considerations on the industry key figures of freelance managing director salaries.

The service industry knows general salaries, which start in the lowest size class at EUR 164,000, but at most with EUR 220,000 are still considered appropriate. In the next higher size class, managing directors’ salaries are between EUR 227,000 and EUR 278,000. For companies in the third size class, the industry key figures for managing director salary are between EUR 257.000 and 320.000. In addition, they amount to EUR 292,000 to EUR 555,000.

The craft sector has the lowest managing director salaries of all industries. They start at a relatively modest EUR 123,000 to EUR 175,000. In the second size class, they rise to EUR 164,000 and EUR 231,000 respectively. It continues in the third size class of artisanal companies with managing director salaries between EUR 222,000 and EUR 286,000. The conclusions are industry key figures on managing director salary, which range from EUR 248,000 to EUR 440,000 in the craft sector.

Of course, a table can visualize these industry key figures on managing director salary much better. Therefore, at this point, finally, a table on which our previous statements are based: