Tax-optimised structuring of managing director remuneration requires careful balancing of salary, benefits in kind, and profit distributions. We highlight the key levers.
The Challenge of Optimal Remuneration
The remuneration of a GmbH managing director exists in a tension between tax optimisation and the requirements of the tax authorities. Excessively high remuneration is classified as a hidden profit distribution (verdeckte Gewinnausschüttung, vGA) and leads to double taxation.
Appropriateness Review of Total Remuneration
The Principles
The tax authorities assess appropriateness by means of an internal company comparison and an external arm's length comparison. All remuneration components are included in the review: fixed salary, performance bonuses, benefits in kind, retirement contributions, and ancillary benefits.
Optimising Remuneration Components
Fixed Salary and Variable Remuneration
The ratio between fixed salary and performance bonus should be at least 75 to 25. The performance bonus should be clearly defined in the contract and capped at a maximum of 50 per cent of total remuneration.
Company Car
The company car is a tax-attractive remuneration component. For electric vehicles, the assessment basis under the 1 per cent method is reduced to one quarter of the gross list price. For the employer, the company car is fully deductible as a business expense.
Health Insurance Contributions
The employer's contribution to private health insurance is deductible as a business expense and is tax-free for the managing director, provided it does not exceed the employer's contribution pursuant to § 257 SGB V.
Profit Utilisation Strategy
Retention versus Distribution
Retained profits are taxed at approximately 30 per cent at the company level. In the event of a distribution, an additional 25 per cent flat-rate withholding tax or taxation under the partial income method applies. If the marginal tax rate exceeds 30 per cent, it may be advantageous to retain profits within the GmbH.
Shareholder Debt Financing
Loans Instead of Equity
The granting of loans by the shareholder to their GmbH can be tax-advantageous. The interest is deductible as a business expense for the GmbH and is taxed at the flat-rate withholding tax of 25 per cent for the shareholder. The interest barrier rule pursuant to § 4h EStG and the exemption threshold of 3 million euros in net interest expense must be observed.
Conclusion
Tax-optimised structuring of managing director remuneration requires a holistic view of all remuneration components. At compleneo, we develop a tailored remuneration concept for you that combines tax efficiency with legal certainty.
