Note: due to changes in the law, the information contained in this article is only partially current

The departure of a GmbH shareholder abroad regularly leads to taxation within the framework of the exit taxation. Often the GmbH remaining in Germany is also affected, because the removal can lead to a relocation of the management, in which a new company is unintentionally created abroad. Consequently, the intangible assets of the GmbH are located at this new place of management. Accordingly, the GmbH also has to pay a so-called de-tricking tax. We will show you what you can do in advance of your departure abroad to minimize the tax impact.

In the video, we explain to you what taxes you will incur if you move abroad as a GmbH shareholder and also move the company headquarters abroad.

1. The starting position

Here we consider the tax aspects of a GmbH shareholder and his GmbH when the shareholder moves abroad. This applies to shareholders who hold a participation in the GmbH of at least 1%. Otherwise, no effects are to be expected, which significantly simplifies the departure of the shareholder from a tax point of view.

Another aspect of our considerations concerns management. Here we assume that the GmbH shareholder is also managing director of the GmbH. A classic example of this is a GmbH that has only one shareholder who also performs the management. In addition, in the case we are investigating, only his own departure abroad is intended. On the other hand, all existing operating sites of the GmbH should remain in Germany.

2nd departure of a GmbH shareholder

The departure of a GmbH shareholder abroad has the consequence that this triggers an exit taxation according to § 6 AStG. This leads to a taxation of the fictitious sales proceeds of the GmbH shares of the shareholder. In this way, the legislator wants to ensure that the taxation sovereignty on a potential sale proceeds of these shares in Germany is maintained. However, since the departure does not constitute an actual sale of the shares, the legislature grants a deferral of the exit tax over 5 years under certain circumstances.

Due to the departure of the GmbH shareholder, who in our considerations acts as managing director of the GmbH, there is also a relocation of the place of management. Although the statutory seat of the company, i.e. the place indicated in the commercial register, remains in Germany, the management then takes place from abroad. As a result, the GmbH now has a further establishment whose registered office is abroad. Because the place of management, unlike the civil seat of the company, is of tax law significance. Thus, the departure of the managing director leads to a transfer of registered office, which triggers taxation within the framework of § 12 (1) KStG.

3.2. Taxation of assets affected by the transfer of registered office

By a decree of the Federal Ministry of Finance, all intangible assets of a GmbH are assigned to the establishment from which the management takes place. As you can see, the departure of the Managing Director also leads to a change in relation to the location of the management. Because of this, the Treasury levies the so-called de-tricking tax according to § 12 (1) KStG. This tax is applied to intangible assets such as patents and licenses, trademark rights, customer base, domain, website or source code. Above all, however, the company’s goodwill, which often accounts for a large share of the company’s value, is then subject to taxation. So the amount of the tax is quite considerable.

Because the tax of 15 % on the assumed sales proceeds of these assets in the corporate tax is supplemented by the business tax, which is usually also in this size. Thus, we are talking about a tax of 30% of the market value of the intangibles that has to be paid, when in fact no consideration was received. This is thus another example of the legally enforced discovery of hidden reserves.

3.3. Additional taxation of the GmbH abroad

In addition, the transfer of the management headquarters abroad can have a further side effect. Indeed, the fact that the place of management is to be regarded as a permanent establishment may mean that the respective State claims a tax right for that permanent establishment. Which actual tax obligations are associated with this, however, must be clarified in individual cases. We therefore refrain from making any further comments on this particular issue at this point.

4. How to Avoid the Untaking Tax

Since the taxation of hidden reserves depends on the fact that the intangible assets are located on the departure of the Managing Director to a new establishment abroad, it is our approach to exclude precisely this in advance. Because this avoids the removal of the shareholder an unwanted transfer of the seat of the management.

4.1. Place of management remains in Germany

In this context, our first solution is the most consistent. You avoid that the management takes place from abroad. However, this also means that the managing director must continue to make all decisions in Germany even after his departure. However, this also means that the place of his activity remains in Germany, which can therefore mean a considerable travel expense. However, if only a move to a neighboring country is planned, so that the managing director continues his work as before from his office in Germany, then this solution is the best. Of course, this is most likely to be achieved by moving to a community close to the border in the Netherlands, Belgium, France, Switzerland, Austria, the Czech Republic, Poland or Denmark.

4.2. Allocation of the intangible assets to a German permanent establishment

Our second approach is to ensure that the place of management is abroad, with the least possible tax burden. In this case, the intangible assets are assigned as a functionally essential operating basis to an operating site of the GmbH remaining in Germany. As a result, the management can then relocate its seat without the associated relocation of the intangible assets abroad. Thus, it is also possible to move to a destination far away from Germany without triggering a de-tricking tax.