German income tax law provides for various tax exemptions. They are largely listed in § 3 EStG and primarily concern employees. As a result, shareholder-managing directors, in particular GmbHs, also fall within the scope of most tax exemptions. Using them skillfully can bring considerable tax advantages – because the exemptions allow a partially tax-free payment of the monthly managing director’s salary.
1st Overview: Background of the “classic” tax exemptions
Tax exemptions are part of almost all German tax laws and are generally similar in structure. The legislator pursues one of the following two purposes with the respective standards:
This article does not replace tax or legal advice in an individual case. Facts, current law, jurisdiction, documentation and implementation remain decisive.