Organs of a GmbH – management, control & resolution

A limited liability company can only function if all its bodies work together. This requires a high level of trust and an equally high level of reliability for the individual shareholders.

Managing Director – The Management Body

A GmbH has at least one managing director who, according to his employment, is characterised by a management authority in the internal relationship and a power of representation in the external relationship. This can be one of the GmbH shareholders – one then also speaks of shareholder managing directors – but does not have to be. The term of office is not limited in time.

Supervisory Board – The supervisory body + Labour Director

The composition of the supervisory board is prescribed in different legal sources depending on the number of employees of a company. A supervisory board consists of both members of the company – i.e. the shareholders – and employees, with all members of the supervisory board having the same rights and obligations.

If the company has fewer than 500 employees, the law does not require the establishment of a supervisory board. In this case, the GmbH may decide for itself whether or not a supervisory body appears to make sense for the company from a situational point of view.

One-Third Participation Act for more than 500 employees

If there are more than 500 employees, the One-Third Participation Act (DrittelbG) comes into play. This limits the supervisory board to a minimum of three and a maximum of 21 council members. The size of the supervisory board is directly related to the size of the company. As the name of the law suggests, one third of the supervisory board must be made up of employees, who are elected as employee representatives by the entire workforce in a ballot.

Montan Co-Determination Act for more than 1,000 employees (coal and steel industry)

Coal and steel companies with more than 1,000 employees are subject to the Coal and Steel Co-Determination Act (Montan-MitbestG). Companies that are active in mining and the iron and steel producing industry are considered to be part of the coal and steel industry. The supervisory board is formed on an equal footing between the employer side and the employee side. In addition, the so-called “neutral man” is appointed. As a rule, the supervisory board consists of eleven members – depending on the share capital, it can be expanded to 15 or 21 members if necessary. Furthermore, there is a requirement to appoint an equal member to the Board of Management as Director of Labor Relations. All members of the Supervisory Board are elected at the Company’s Annual General Meeting, taking into account the proposals made by the Works Council.

Co-determination Act for more than 2,000 employees

In the case of more than 2,000 employees, on the other hand, the German Co-Determination Act of 1976 (MitbestG) applies. Accordingly, the supervisory board is composed of equal numbers of employees and shareholders. The shareholders’ side provides the chairman of the supervisory board, who may make use of his double vote in the event of a stalemate. In addition, an equal member must be appointed to the management board to take the position of labor director. Depending on the size of the company, between twelve and 20 supervisory board members may be appointed according to the MitbestG. If the GmbH does not have more than 8,000 employees, the election takes place directly; in all other cases, the election is conducted by secret ballot and is subject to the principles of proportional representation.

Shareholders’ meeting – The decision-making body

A shareholders’ meeting is convened by registered letter from the managing director(s). During the meeting, the GmbH shareholders can discuss and vote on important matters of the company, which is why the shareholders’ meeting is also defined as a decision-making body. Each shareholder receives votes in proportion to his share in the company. Thereby, the shareholder is granted one vote per 50 Euros.

Establish a GmbH: Legal form and alternatives

1. Limited liability company (GmbH)
2. Special case: Real estate GmbH
3. Legal forms: List

Limited liability company (GmbH)

Limited Liability Company (Gesellschaft mit beschränkter Haftung, GmbH) – The limited liability company is a German legal form that is founded by at least one person and managed by at least one shareholder. As the name already indicates, this corporate legal form is characterized by a limitation of liability for its shareholder(s).

• Limited liability company (GmbH)

Special case: Real estate GmbH

Immobilien GmbH / Vermögensverwaltende GmbH / Immobiliengesellschaft – In this article you will learn the basics about real estate companies. Who would think of founding a limited liability company when buying a house or a condominium? Admittedly, this makes no sense for owner-occupation, but it does for renting.

• Real estate company

Here you will find all the legal forms that can be chosen as a founder in Germany and a guide with a checklist:

Legal forms: List

Legal forms – What types of company are there? If you want to start your first company, then choosing the ideal legal form is one of the first steps in the process of setting up a company. Whether it’s a special real estate company or a start-up, I’ve summarized all the types of companies in Germany for you here.

• Legal forms: List

Patio at a glance: Outdoor patio on a house for spending time outdoors

• Is a covered or uncovered major platform on a house
• Intended for outdoor use
• Creates a transition between the interior of the building and the adjacent garden
• Located on the ground floor level or on the roof of a building
• Increase in the quality of living, which also increases the value of the property

Back to the wiki: Real Estate

Build wood stone terrace

Build WPC terrace

Build porcelain stoneware terrace

Build stone terrace

The allowances of inheritance – what is taxed and what is not?

In order to protect the heirs from a large financial burden, different tax rates and allowances apply depending on the degree of relationship. These allowances include various things that do not have to be taxed, so that the heirs do not have to pay the most as taxes, especially in the case of a large estate. You can now find out what the tax-free amounts are and how high they are for the respective family members.

• Life estate: bequeathing correctly
• Learn more about: Inherit properly

Pension allowances – precisely regulated for children and spouses

Pension allowances are payable if the partner or children were dependent on the financial support of the deceased. For spouses, the pension allowance is €256,000 provided that the surviving spouse does not have a widow’s pension or occupational pension for which no inheritance tax is payable. If such a pension exists, the value of the pension is determined on the basis of the expected duration of the benefits and the pension allowance is reduced by this value.

Children are entitled to pension allowances that are graduated according to the age of the child at the time of death. Infants up to the age of 5 are entitled to a pension allowance of 52,000 euros. Starting from this point, the pension allowance decreases by approximately 10,000 euros every five years. Children aged 20 to 27 can therefore claim a pension allowance of 10,300 euros, but these allowances are only relevant if the children do not have their own pension payments, such as an orphan’s pension.

• Pension allowances apply if the partner or children were dependent on the deceased’s financial support
• Spouses and registered partners receive 256,000 euros
• Children receive 52,000 euros, but the amount is reduced under certain conditions

Inheritance tax: clever use of allowances – tips from a specialist lawyer

Further allowances – different according to degree of relationship

The other allowances, in addition to the pension allowances, are regulated according to the degree of relationship and are independent of existing survivors’ pensions or own assets. Accordingly, spouses and registered partners inherit an allowance of 500,000 euros. Children of the deceased or grandchildren of the deceased, if their parents die before the inheritance, can claim an allowance of 400,000 euros. Grandchildren whose parents are still alive can claim an allowance of 200,000 euros. Great-grandchildren or the deceased’s own parents are entitled to an allowance of 100,000 euros. All other heirs can claim tax allowances of 20,000 euros. To ensure that as little tax as possible has to be paid on inheritance, the testator can make important decisions long before death and specify them in the will.

Only what remains of the estate after deducting the allowances is taxable. Each taxable acquisition is rounded down to a full €100. The individual tax rates of inheritance tax depend on the different tax classes of the heirs and are also progressively graduated.

• There are other allowances that apply to both inheritance and gifting
• The free allowances are based on the degree of relationship

Gifts – allowances and gift tax

Inheritance tax and gift tax are closely linked. Almost the same allowances apply as in the case of inheritance, however, the gift allowances may only be left tax-free once in ten years. Testators who wish to reduce the inheritance tax for their heirs must therefore start gifting their assets ten years before their death. In the case of patchwork families, this rule means that it can make sense to adopt the spouse’s children in order to bring the tax-free amounts into line with those of the biological children. The adoption does not affect the succession to the other biological parent.

A gift thus actually allows for savings opportunities in inheritance tax. The testators must be aware of these possibilities and use them in a targeted manner in order to have to hand over less of an estate in taxes. Non-marital partners must note that even long-term civil partnerships only allow the given tax allowances if they are officially recognised, either through marriage or through registration of the partnership.

• The same allowances apply to gift tax as to inheritance tax.
• The two are closely linked and follow the same premises

Tax-exempt goods – works of art, libraries or household effects

In addition to tax-free allowances, there are also goods that are tax-free. For close relatives in tax class I, movable assets such as household effects or similar objects of daily use are tax-exempt if they do not exceed a value of 42,000 euros. For all other heirs, a value of 12,000 euros applies here. If works of art, archives or libraries are part of the estate, they are generally exempt from tax at a rate of 60 percent. If the estate includes a building in which one of the heirs lives, this can also be exempt from tax.

• Some goods are tax free or tax exempt up to a certain amount
• Archives, works of art and libraries are 60 percent tax-exempt

You can also find out more about the topic: Bequeathing correctly during your lifetime!

The most important questions on the subject of tax allowances and inheritance tax

Since the allowances vary depending on the degree of relationship and also depend on the succession, questions often arise on this topic. So that you know which allowance you are entitled to and how much inheritance tax is due, the experts at Lukinski answer all the important questions on the subject of allowances and inheritance tax.

What is the allowance for inheritance tax?

The tax-free amounts vary depending on the degree of relationship. For spouses and civil partners, an amount of 500,000 euros applies, for children and grandchildren, if their parents are already deceased, an amount of 400,000 euros applies. For grandchildren whose parents are still alive, an amount of 200,000 euros applies and for parents and grandparents an amount of 100,000 euros applies.

What is the allowance for inheritance between siblings?

In the case of inheritance among siblings, an allowance of 20,000 euros applies. The heirs are subject to tax class 2.

How can I avoid the inheritance tax?

The inheritance tax can be reduced by the testator already starting to give away his inheritance during his lifetime. Here, some guidelines must be followed so that no gift tax is incurred. If everything is observed, the inheritance tax can be reduced by the gift and, depending on the case, can even be completely omitted.

When do I pay inheritance tax?

Inheritance tax is paid by every heir. However, tax is only levied on the amount that exceeds the exempt amount. The possible tax-free amount varies depending on the degree of relationship.

Is a gift taxable?

Gift tax is very close to inheritance tax. In general, a gift must be taxed in the same way as an inheritance, but the same allowances apply here. Testators can therefore minimise inheritance tax by making a gift during their lifetime.

Until when is an inheritance tax-free?

This depends on the degree of kinship. Close relatives such as spouses and children have a higher allowance than grandchildren, parents or grandparents of the deceased.

How much is the inheritance tax?

The amount of inheritance tax depends on the degree of relationship, the amount of the estate but also on the respective allowances. How high the inheritance tax is in each individual case must be calculated individually.

The partial auction for communities of heirs

Objects such as real estate or land often give rise to disputes in communities of heirs. The ideas of how to proceed with the common property are too different and the participants cannot agree. Every heir has the right to demand a partition of the community of heirs at any time and thus to force its dissolution. In such a case, a partition auction may be the last resort to settle the disputes and dissolve the community of heirs. You can find out here what needs to be taken into account in the event of a dispute and a partition auction.

Learn more about communities of heirs!

Application for partition auction – the correct form must be observed

An application procedure always precedes a partition auction. This application can be made by any heir of a community of heirs. Formally, a written application, which must be submitted to the competent district court, is sufficient. However, it must be accompanied by certain documents. In the first application, it must be proven beyond doubt that the applicant has co-ownership of the property to be auctioned. The appropriate document is a corresponding extract from the land register, which must not be older than six months. Once the application has been received, it is examined by the local court and the next steps are initiated.

Partition auction & community of heirs – Video

The procedure – step by step to the partition auction

The process of a partition auction already begins with the application that one of the heirs from a community of heirs must file with the district court. This is followed by further steps in order to carry out the partition auction in accordance with the law.

The expert opinion – assess the value of the property

A partition auction requires an appraisal of the value of the property or land. The court needs this in order to determine the lowest bid for the partition auction. Such an appraisal can be obtained in three different approaches. The petitioner can obtain a private appraisal, but the entire community of heirs must agree to this step. An alternative is to obtain the appraisal through the court. Often a valuation report is already available. As long as this is not older than a few weeks or months, it can also be used.

The minimum bid – determined by the court

The court sets a so-called lowest bid before the partition auction to ensure that the proceeds of the partition auction can cover the costs of the proceedings and all claims of the heirs. Once this is determined, neither the market value nor the purchase price of the property or land is relevant and the lowest bid is considered the notional value. It is made up of the rights, encumbrances and minimum cash amounts. The person who acquires the property or land at the partition auction assumes all rights and encumbrances in addition to the subject matter and thus becomes the purchaser and debtor.

The auction – the highest bid gets the surcharge

Once the lowest bid has been determined by the court, a date for the partition auction can be set. Subsequently, the partition auction of the property or the land should be advertised in newspapers and on the Internet in order to attract interest in the property. Viewing appointments are also possible in consultation with the community of heirs. On the auction date, all interested parties can submit bids within a predetermined time frame. The highest bid is accepted for the property and the community of heirs may be divided.

The duration – varies from case to case

The duration of a partition auction is different depending on the case. It depends in particular on how long it takes to prepare the expert opinion and how long it takes to process the application. The applicant can only shorten the duration by already having a valuation report available when filing the application and the court agrees to its use.

The disbursement – dispute of the community of heirs

The community of heirs does not successfuly dissolve until the proceeds have been successfuly distributed. Disputes can also arise here. If the testator has not determined the distribution in his will, the statutory inheritance quotas usually apply. If the heirs do not agree, a civil action may be brought. The proceeds from the partition auction are deposited with the district court and are not paid out until the heirs have reached a written agreement on the distribution.

The costs – how much are they and who bears them?

Certain costs are incurred for a partition auction. These include the application costs, the procedural costs, the expert’s fees, the lawyer’s fees and the costs for newspaper and internet advertisements. All these costs are incurred when the court orders a partition auction. The costs for the notification of the co-heirs are part of the application costs. Usually, the costs of the proceedings have to be paid as an advance. Who bears the costs of a partition auction depends on the outcome of the auction. If the auction is successful, all costs will be deducted from the proceeds and thus each heir will share equally in the costs. However, if the auction is not successful, the applicant bears the costs alone and the community of heirs continues to exist.

The alternatives – private sale or voluntary auction

The partition auction involves some risks that should be well thought out in advance. The property could be sold below value and lead to low profits for the heirs. There are some alternatives that eliminate these risks. The property can be sold privately, saving the application, procedural and legal fees. In addition, the heirs can choose the buyer themselves and thus ensure that the property is not sold below value.

Another alternative is the voluntary auction. The community of heirs can turn to a public auctioneer who organises and conducts an auction. The advantage here for the heirs is that the minimum bid can be determined themselves and thus there is no risk of an auction below value. However, in both cases the community of heirs must unanimously agree to the sale of the property.

The most important questions on the subject of partition auctions in communities of heirs

A partition auction can resolve disputes within a community of heirs, but it can also reignite disputes. To avoid mistakes and save time, it is important to take the right steps. Lukinski’s experts answer the most important questions on the subject of partition auctions in detail for you.

Why a partition auction?

A partition auction can put an end to long disputes, especially in communities of heirs, and lead to a result with which all heirs agree. The partition auction also offers the last resort if no agreement can be reached.

What does for the purpose of abolishing the community mean?

The partition auction success for the purpose of the abolition of the community around from an indivisible article, like a property or a real estate a divisible money equivalent to generate.

What is a partial auction of a house? More terms in our property glossary.

A partial auction is held when several people are co-owners of a property. The partial auction turns an indivisible object into a divisible amount of money that can be divided among the owners.

What does § 1010 BGB mean?

Pursuant to § 1010 of the Civil Code, the co-owners of a plot of land may make arrangements for the administration or use of a plot of land or exclude the right to demand the dissolution of the community.

What did ZVG mean?

The abbreviation ZVG stands for Zwangsversteigerungsgesetz. This regulates both the forced sale and the forced administration.

The legal succession – this is how you inherit according to the law

Legal succession regulates both the order of heirs and the individual amounts that are inherited. First the closest relatives, such as children and grandchildren, inherit and then the more distant relatives, such as nephews and nieces. Closer relatives generally exclude the more distant relatives from inheritance. The proportion to which the individual heirs inherit is documented in the certificate of inheritance.

The legal succession is based on the Parantel – or order system. It divides the relatives into different orders. Accordingly, children and grandchildren of the deceased belong to the first order. Parents, siblings, nieces and nephews of the testator are assigned to the second order. The third order includes grandparents, uncles and aunts as well as cousins of the deceased. Spouses and registered partners are not considered relatives, but have the right of inheritance as spouses. This gives them a special status and limits the right of relatives to inherit. Relatives of the preceding order always exclude relatives of a subsequent order from the succession.

The spouse – special position in the law of succession

Although the spouse or registered partner is not considered a relative in the legal succession, he or she has a special position. If the deceased leaves both a spouse and children, the spouse inherits half of the estate and the children the other half. However, if there are more than three children, the spouse receives only one-fourth and the children divide the remainder among themselves. If there are only second-order relatives or grandparents, the spouse receives half of the estate and the second- and third-order relatives share the other half. If there are no relatives of the first, second or third order, the spouse inherits everything.

If the deceased leaves neither relatives nor spouses, the state inheritance law applies. The federal state in which the deceased last had a residence inherits the estate.

Heirs of the first order – children and grandchildren

The first order includes the children and grandchildren of the deceased. Non-marital children born after 1 July 1949 are also entitled to inherit. If a child of the deceased and the spouse are alive at the time of death, both inherit half. If several children are living, the inheritance is divided between them and the spouse. If children of the deceased are already deceased, the grandchildren inherit.

Explained by example: If the deceased leaves his mother, his spouse, 2 children with two grandchildren each and a deceased child with one grandchild, the following succession results. The mother is not entitled to inherit because she belongs to the second order and there are heirs of the first order. The spouse and the two living children inherit in equal shares. The grandson of the deceased child takes the place of the parent in the succession and thus inherits in equal shares with the two living children and the spouse. The grandchildren of the living children also do not inherit.

Heirs of the second order – parents and siblings

If there are no children or grandchildren, the heirs of the second order. The second order includes parents, siblings, nephews and nieces. If both parents of the deceased are alive at the time of death, the estate is divided in half. However, if one parent is already deceased, the descendants of this parent, i.e. siblings or nieces and nephews of the deceased, take their place.

Explained by example: The testator leaves his mother, a sister with two children, a nephew of the deceased brother and a half-sister from the father’s second marriage. The inheritance is therefore distributed as follows: One half of the estate goes to the mother’s line and the other to the father’s line. Since the mother is still alive, she receives half of the inheritance. Since the father is already deceased, his inheritance falls to his children. In this case, to the sister, the deceased brother and thus the nephew of the deceased, and the half-sister from the second marriage. These three divide the other half of the inheritance. The children of the still living sister do not inherit.

Heirs third order – grandparents and aunts / uncles

If the deceased leaves only heirs of the third order, the inheritance is divided as follows. The inheritance of the deceased falls to the grandparents and their descendants. If a grandparent has already died, the inheritance also falls to the aunts, uncles, cousins of the deceased.

Explained by example: If the testator leaves only his grandmother and an aunt with two children, they inherit as follows. The grandmother receives half of the estate. Since the grandfather is already deceased, his descendants inherit his share. In this case, therefore, the aunt inherits the other half of the estate. However, the two children do not inherit.

Legal succession at a glance – Who inherits if there is no will?

Adopted children – inheritance claims against biological and adoptive parents

Adoption confers legal kinship on a child. If the child is a minor at the time of adoption, it acquires the legal status of a joint child of both spouses and thus belongs to the heirs of the first order. Thus, not only the adopted child inherits from the parents, but also vice versa. With the adoption, however, the child loses all claim, rights and duty to the blood relatives and is therefore no longer entitled to inherit from the natural parents. This is regulated differently in the case of adopted children who have reached the age of majority. The kinship relations to the bodily parents do not expire and thus an adopted child of full age can be entitled to inherit from up to four inheritance parts, the bodily and the adoptive parents. However, there is no legal right to inherit from the relatives of the adoptive parents.

Read more about inheriting debt!

All questions about inheritance without a will

Inheriting without a will can often lead to disputes within the family, as the last will and testament of the deceased is not made clear. In order to clarify all questions in such a case and to avoid disputes, the experts of Lukinski have answered all important questions around the topic of inheritance without a will.

What is the intestate succession?

If no will has been left or if it has been found to be invalid, the legal succession applies. This is based on the degree of kinship and the marital property status of the testator. The relatives are divided into three orders for this purpose.

When does the spouse inherit?

In principle, the spouse always inherits. However, how much he inherits depends on the remaining relatives of the deceased. If there are no relatives, the spouse inherits the entire estate alone.

When does the state inherit?

The state inherits if there are no relatives or other dependents, such as the spouse or partner. This is stipulated in the Fiskalerbrecht according to § 1936 BGB.

When do siblings of the deceased inherit?

Siblings of the deceased inherit if there are no first-order heirs, i.e. children or grandchildren of the deceased. These belong to the second order and only inherit if at least one parent has already died, otherwise the parents of the deceased inherit the estate.

Can half siblings inherit?

Half-siblings are on the same level as full siblings according to the legal order of succession. They both belong to the second order and inherit if neither children, grandchildren or at least one parent of the deceased is still alive.