Holding & Co.: Tax-Efficient Wealth Building with the Spardosen-GmbH
Every entrepreneur has heard of it at some point: the “Spardosen” GmbH.
But what exactly is it, how does it work, and is it right for me?
Starting at a 0.79% tax burden on distribution profits of the OpCo. Operating Company
The average tax burden for a GmbH is around 30%, comprising corporate income tax (15%), the solidarity surcharge (5.5%), and trade tax (14% at an assessment rate of around 400%). This means that for every euro of profit earned by an operating corporation, approximately 30 cents in taxes go to the tax authorities.
Reducing the Tax Burden on Distributions
- For individuals, the tax burden on distributions or dividends is 26.375% (approximately 27.995% including church tax).
- For legal entities, 95% of the distribution is generally tax-exempt from the outset, meaning that only 5% is taxed at the company’s individual tax rate. Even if this rate is 30%, the resulting tax burden is typically only about 1%; that is, if the 70-cent after-tax profit of the operating corporation from the example above is distributed in full, only 1.05 cents in taxes go to the tax authorities.
The prerequisite is that the holding company holds a direct stake of at least 10% or more in the operating corporation at the beginning of the calendar year.
Combining the holding company advantage with trade tax exemption
The holding company pays taxes on only 5% of the gross dividends received. Tax-savvy investors can also take advantage of the so-called extended trade tax reduction. In that case, the holding company effectively pays no trade tax.
There is one restriction on this additional tax benefit:
The holding company may then only manage and use its own real estate and capital assets, or, in addition, manage residential buildings or construct and sell single-family homes, two-family homes, or condominiums.
Is this a model for me?
That depends on whether you rely on that income.
This is because distributions to the holding company are subject to a deferred capital gains tax ranging from 26.375% (excluding church tax) to 27.995% (including church tax). This tax applies when distributions are made to the actual shareholders, the individual(s).
As a general rule, the assets are ultimately liquidated upon reaching retirement age or transferred to the next generation. Therefore, this approach is only suitable for those who want to invest for the long term and have funds available to fill their holding company “piggy bank.”
