Immobilien AG: activities, stock exchange, conditions & advantages

A real estate stock corporation – or real estate AG for short – is a real estate company that has the legal form of a regular stock corporation (AG) and whose core business is primarily focused on the real estate sector. The company’s assets are thus used primarily – or exclusively – for real estate investments, or they consist of the construction of real estate and the subsequent sale of the same.

The largest German listed companies for residential real estate (as of 31.12.2o19):

• Vonovia
• German Housing
• LEG
• DAY
• Grand City Properties
• Adler Real Estate
• GAG

Business Activities Real Estate AG – Construction, Trading, Management & Co.

The range of activities of real estate stock corporations focuses, for example, on project development and the construction of real estate. The management and sale of real estate are also not uncommon focal points of this type of company. All in all, public limited companies can be involved in real estate trading, the brokerage of real estate as well as the holding and management of their own portfolios or offer corresponding services for non-corporate investment portfolios. Real estate stock corporations are a particularly popular choice for leasing.

Possible activities at a glance:

• Project development
  • Building
• Real Estate Trading
  • Acquisition
  • Distribution
• Real estate management
  • Hold
  • Farm
  • Rent
• Third-party services
  • Brokerage of real estate not owned by the company

Real estate company on the stock exchange – legal requirements & advantages

Real estate stock corporations can choose whether or not they want to be listed on the stock exchange. If you are a shareholder of a real estate stock corporation and decide to list your company on the stock exchange, you are subject to the German Real Estate Investment Trust Act (REIT Act). The REIT Act specifies which general regulations apply to your company and which qualifications your company must have in order to be admitted as a REIT stock corporation, as well as which tax regulations must be taken into account.

Many family businesses wishing to operate in the real estate sector as a public limited company (AG) deliberately decide against such a stock exchange listing, as the shareholders of their company are to be restricted to their own family circle of contacts and no share trading in public is envisaged.

Exchange-traded real estate stock corporation / REIT-AG

The REIT corporation is originally based on a US corporate form, namely the “Real Estate Investment Trust” – REIT for short – which gave the listed real estate corporation its name. Since its beginnings, the trust has experienced a considerable upswing. Little known in 1960, the corporate legal form slowly but steadily conquered the world in the 1990s and gained international renown. With the enactment of the REIT Act in 2007, the legal form of the REIT-AG was also introduced in Germany.

To make it easier to distinguish between them, German REITs are also often referred to as G-REITs, with the “G” standing for “Germany”. Sometimes REITs are also incorrectly translated as real estate funds in this country – however, there are some legal and economic peculiarities compared to the German legal form of the real estate fund.

Legal requirements according to REITG – stock exchange listing, quota & Co

In order for real estate stock corporations to be recognized as REIT corporations and to enjoy the corresponding advantages and benefits, they must meet a number of requirements defined in the German Real Estate Stock Corporations with Listed Shares Act (REITG). One of these rules requires that the real estate stock corporation be mandatorily listed on the stock exchange. Other restrictions relate to the company’s permitted free float – i.e. all company shares distributed among several, smaller investors – as well as the participation by shareholders together with per capita distribution of the shares. Other conditions regulate the equity capital, the fixed assets and also the turnover generated by the management of real estate.

Legal requirements for a REIT-AG:

• Headquarters & Management within Germany
• Listing on the market obligatory
• Free float at the time of listing: at least 25%.
• Free float after listing: at least 15%.
• Equity ratio: at least 45
• Real estate investments (immovable assets): at least 75%.
• Income from real estate: at least 75
• REIT participation per shareholder: max. 10%.
• Distribution ratio (net profit): at least 90%.

Small tip: For real estate stock corporations shortly before listing, a time window of two years is granted in order to fulfil all necessary requirements. Until all requirements under the REITG have been fulfilled, such a company is considered a pre-REIT.

Advantages for REIT stock corporations – tax exemption, competitive advantage & Co.

Real estate stock corporations with a stock exchange listing are particularly popular for financiers and large investors, as they are exempt from both corporation tax and trade tax, provided they meet the legal requirements in accordance with the REITG. As real estate is a particularly safe investment opportunity, it offers the chance to cushion inflationary fluctuations and risks. Furthermore, the purchase and sale of shares is simple thanks to market access, and transfers of ownership can be carried out quickly and flexibly.

Access to the capital market enables a real estate stock corporation to skilfully generate equity capital, which can then finance the investment in real estate. As a result, real estate stock corporations have a clear advantage in terms of the speed of growth of their equity, which means greater competitiveness in the market as a whole. Other legal forms of companies, on the other hand, are dependent on retaining their profits – that is, leaving the profits in the company instead of distributing them and accumulating them there – in order to increase their company’s equity capital or have no legal claim to a distribution of profits. The legal form also offers a considerable degree of security, as the equity capital accounts for just under half of the stock corporation’s total capital.

Advantages for listed real estate companies:

• No corporate income tax
• No trade tax
• Secure investment through tangible assets (real estate)
• Chance to offset inflation
• Quick & easy purchase/sale of shares
• Flexible share transfer
• Simple equity procurement
• Competitive advantage due to high growth rate
• High security due to equity ratio

Advantages for investors – Stable cash flow, growth & 90 % dividend

Another plus: the REIT corporation also offers a lucrative business for investors. Public limited companies are generally established for the long term, which means that the company can offer investors the prospect of a stable cash flow and long-term growth without exposing them to increased risk. The dividend payout is also very attractive for shareholders, with a statutory minimum requirement of 90 percent of the net profit for the year under commercial law.

Advantages for real estate AG investors:

• Stable cash flow
• Long-term corporate growth
• Low risk
• Attractive dividend payout

However, the application of the half-income method is not possible for shareholders with regard to the distribution of profits. Their profits must be fully taxed.

Real estate stock corporation / REIT-AG – For whom is it worthwhile?

Are you thinking about founding a real estate company or investing in an existing real estate company? For construction companies and development companies, this is often a lucrative venture, but also as a financier or shareholder of a real estate holding company, the formation of a real estate corporation can be quite worthwhile. Furthermore, the economic occurrence of real estate stock corporations extends to housing associations, property management companies and large brokerage firms.

Ownership of the real estate portfolio may be held either by the real estate company itself as a direct investment or by another real estate company whose shares are acquired by the real estate company by means of a participation. A mixture of direct investments and third-party investments is often used to acquire, hold or sell real estate. Due to the wide range of residential and commercial properties, the stock exchange listing is an attractive model for real estate companies.

AG: foundation, legal form, real estate shares (list)

1. Stock corporation (AG)
2. Real estate shares: List of companies
3. Real estate company
4. Alternatives to the REIT: Legal forms in Germany

Stock corporation (AG): Formation, liability, legal form & Co.

Aktiengesellschaft (AG) – The stock corporation is a German legal form founded by at least one person and organized by different bodies. Instead of a managing director, the company is managed by a board of directors consisting of at least one person. As the name already indicates, this legal form of a company primarily stands for stock trading. You would like to start a company alone or together with other people and learn more about company law forms in advance? Then you’ve come to the right place!

• Stock corporation (AG)

Real estate shares: List of companies

Real Estate Shares – Not everyone can afford real estate as a capital investment. Through real estate shares, however, everyone can participate in the real estate market and invest money. The share prices of the big players are rising year after year. Vonovia, Deutsche Wohnen, Dream Global, CBRE and Patrizia are a few of the best known active companies in Germany. In addition, there are more than 25 other companies. We have an overview of the most popular real estate stocks for you as an investor. But first a look at the risks of a stock, the stock market, for beginners and beginners. Now to the list and more on the real estate market, your investment options and all prices at a glance, here in the article on real estate stocks.

• Real Estate Stocks

Real Estate GmbH & Asset Management GmbH

Alternative – In this article you will learn the basics about real estate companies. Briefly explained, a real estate company is a company that has the purpose of leasing, developing, financing, realizing and/or marketing. It doesn’t matter if it is one or more properties. The management of residential and commercial real estate – in its own interest or as a service offered to third parties – is also a popular focus for real estate companies and asset management GmbHs. Find out more about the main advantages and disadvantages of buying real estate and the expected costs.

• Real estate company

Alternatives to the REIT: Legal forms in Germany

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

Company types in detail:

• Sole proprietorship
• Registered businessman / registered businesswoman (e. K.)
• Civil law partnership (GbR)
• General partnership (OHG)
• Limited partnership (KG)
• Entrepreneurial company (UG)
• GmbH: Limited liability company
• Real estate GmbH / Asset management GmbH
• Stock corporation (AG)
• Societas Europaea (SE)
• Foundation / Family Foundation

One-person limited liability company: corporation for 1 person

The formation of a limited liability company requires at least one person. One-person companies tend to be the exception, but from a purely legal point of view, mono-corporate one-person companies are certainly permissible in the case of the GmbH as well as the Aktiengesellschaft (AG). In the case of a limited liability company, the term “one-person GmbH” – alternatively also “one-man GmbH” or “Einmann-GmbH” – is often used.

Other GmbH models with special features:

• Two-person limited liability company
• No-Person-GmbH

Emergence of solo founders – self-decision, exit & e. K.

The one-person GmbH can come into being in three ways: Either you consciously decide to become a solo founder, or you were originally in a two-person GmbH or multi-person GmbH and have been reduced to a one-person company by the withdrawal of the other shareholder(s). Alternatively, you are a registered trader and have the necessary share capital to change your legal form to a one-person GmbH.

Tip: If you basically do not want to manage your GmbH alone and divide the capital burden among several heads, but still want to decide alone on the structure and wording of the articles of association, you can form a one-man GmbH in the first step and take on any number of additional shareholders in the second step. The decisions you make in the pre-incorporation phase then automatically apply to the new shareholders as well.

Special features of the one-person GmbH: § 181 BGB and § 3 GmbHG

With a one-man limited liability company, you are automatically the sole shareholder and take the position of managing director. You also participate in the shareholders’ meetings in a so-called personal union. Apart from that, the same rules and laws apply to you as to companies with several shareholders. This also means that you must form all the corporate bodies prescribed for a GmbH – for example, the supervisory board. For this reason, it is particularly important that as sole managing director of a single-member company, you exempt yourself from the single standard “insichgeschäft” (section 181, see above) laid down in the German Civil Code.

In the case of a one-person GmbH, the shareholders’ agreement does not have to be notarised prior to registration in the commercial register and is therefore usually quite short, taking into account the minimum content required by the Limited Liability Companies Act (GmbHG). However, you need a non-receivable unilateral declaration of intent to complete your registration, and this in turn must be certified by a notary.

Excerpt from the law – § 3 GmbHG:

(1) The memorandum and articles of association shall contain:

1. The company name and registered office,
2. The object of the company,
3. The amount of the share capital,
4. The number and nominal amounts of the shares that each shareholder takes over in return for a contribution to the share capital (nominal contribution).

(2) If the company is to be limited for a certain period of time or if other obligations towards the company are to be imposed on the shareholders in addition to the payment of capital contributions, these provisions must also be included in the company statutes.

Establish a GmbH: Legal form and alternatives

1. No-person GmbH: inheritance, gift, termination
2. Two-person GmbH: Founder Duo
3. Limited liability company (GmbH)
4. Special case: Real estate GmbH
5. Legal forms: List

No-person GmbH: inheritance, gift, termination

No-Person GmbH – The model for a GmbH without shareholders! By appointing new shareholders or leaving existing shareholders, the limited company model you choose can easily change. Whether it’s a one-person company, a two-person limited company or even a company that operates without shareholders at all…. In each case, there are specifics that you should be aware of as they deviate from the norm of the traditional limited liability company.

• No-Person-GmbH

Two-person GmbH: Founder Duo

Two-person GmbH – The GmbH model for founding duos! By appointing new shareholders or leaving existing shareholders, the GmbH model you choose can easily change. Whether it is a one-person company, a two-person GmbH or even a company that operates without any shareholders at all… In each case, there are specifics you should be aware of as they deviate from the norm of the traditional limited liability company.

• Two-person limited liability company

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

GmbH: foundation, advantages and disadvantages

In the following, you will find out everything you need to know about setting up a GmbH. How do you become a shareholder of a GmbH? What are the differences between incomplete and complete companies? What are the advantages? What are the disadvantages? How do I set up a company? What is a company? You will get an answer to all these questions and more – explained simply and quickly. Plus everything you need to know about taxes in Germany and real estate trading.

Learn everything important about it here! In addition, you will find all German types of companies and legal forms, as well as tips on how to start a company, including the special case of real estate GmbH, family foundation & Co.

If you’re considering setting up a limited company, the first thing you need to know about is the incorporation process: Who can form what exactly, when and to how many… what are the differences and similarities between the various forms of company law? It is equally important to know the advantages and disadvantages of a GmbH: From profit distribution to saving taxes – an overview of the seven most important founding criteria for you.

What are the founding criteria?

1. Number of shareholders
2. Management
3. Foundation
4. Company name
5. Funding
6. Liability
7. Profit distribution

Corporation GmbH: Management according to HGB

In the entrepreneurial world, there are many different forms of business you can choose from. They are roughly divided into two categories, namely sole proprietorship and companies, which in turn are divided into incomplete companies – these include dormant companies and BGB companies – and complete companies – partnerships, corporations and some more.

The limited liability company – in short: GmbH – is one of the so-called complete companies and, in contrast to incomplete companies, is not subject to the German Civil Code (BGB) but to the German Commercial Code (HGB). As a corporation, the GmbH has a more complex structure than other forms of corporate law, as it cannot be formed informally like a general partnership (OHG), but requires notarisation of the shareholders’ agreement.

Other typical corporations:

• Entrepreneurial company / UG (limited liability)
• Stock corporation (AG)
• European Company (Societas Europaea, abbreviated to SE)
• Partnership limited by shares (KGaA)

Legal form variant GmbH & Co KGaA – KGaA with general partner GmbH

Sometimes the GmbH also appears in combination with a partnership limited by shares (KGaA). For example, family businesses occasionally organise themselves as a Gesellschaft mit beschränkter Haftung & Compagnie Kommanditgesellschaft auf Aktien – in short: GmbH & Co KGaA. In this case, they form a stock corporation in the legal sense – however, the general partner as personally liable shareholder is not just any natural person, but specifically a limited liability company (GmbH). If the general partner is instead embodied by an AG, it is referred to as an AG & Co KGaA, and in the case of a Societas Europaea, as an SE & Co KGaA.

More about the individual hybrid forms:

• AG & Co KGaA – see stock corporation (AG)
• SE & Co KGaA – see Societas Europaea (SE)

Companies operating under the legal form variant of the GmbH & Co KGaA have only existed since the end of the 1990s, after open legal questions were clearly explained by a court ruling of the Federal Supreme Court (BGF). The licensing departments of some well-known football clubs have opted to set up a GmbH & Co KGaA, as have many other companies from a wide range of industries: Food, pharmaceuticals, clothing, publishing and digital media, to name but a few.

Examples of GmbH & Co KGaA companies:

• Asklepios Clinics GmbH & Co. KGaA
• Borussia Dortmund GmbH & Co. KGaA
• CoinIX GmbH & Co. KGaA
• Funke Media Group GmbH & Co. KGaA
• H&R GmbH & Co. KGaA
• Jack Wolfskin Ausrüstung für Draußen GmbH & Co. KGaA
• Merz Pharma GmbH & Co. KGaA
• Mineralbrunnen Überkingen-Teinach GmbH & Co. KGaA
• NorCom Information Technology GmbH & Co. KGaA
• Paragon GmbH & Co. KGaA
• Schwartauer Werke GmbH & Co. KGaA
• Wiley-VCH GmbH & Co. KGaA

CEWE Stiftung & Co. KGaA is a special case: In this company, the general partner is embodied by a foundation. In principle, the partnership limited by shares is possible in all conceivable combinations, as GUB Investment Trust KGaA points out as an example.

Continue reading here on the topic of setting up a family foundation:

• Establish a family foundation

Foundation & management: alone, as a partner or in a team

You want to found a GmbH and live your dream of independence in reality? No problem! Because for the foundation of a GmbH one natural – or legal – person is completely sufficient. If you want, you can be the sole founder of the company and thus automatically take over the management alone. Founder duos, on the other hand, usually share the management, whereas in a multi-person GmbH all shareholders can exercise their co-management rights. Optionally, the position of managing director can also be outsourced and filled externally. In this case, one speaks of a commissioned external managing director.

Whoever ultimately holds the power of management… There is an obligation towards the other shareholders to provide information on the affairs of the GmbH and to submit the books and documents to them for inspection upon request.

Tip: A limited liability company is an excellent way to set up a family business. Due to the flexible possibilities to adapt the share capital and the business shares to the financial framework of all family members and to manage the business across generations, parents, children and grandchildren can jointly participate in the corporation.

Entry in the commercial register: The most important applications for GmbH founders

The internal relationship determines the beginning of the company as the date contractually agreed between the partners. In the external relationship, however, the formation of the GmbH is dated on the first action on behalf of the company, i.e. at the latest with the binding entry in the commercial register. Registration costs you on average around 200 to 300 euros and is usually carried out by a notary.

Since you are registered in the commercial register as a GmbH shareholder, you can – just like a OHG shareholder – officially trade under a company name. This means that your company has a company name, i.e. an official name, which you can freely design together with the other shareholders. It doesn’t matter whether it is a personal company, a real company, a fancy company or a mixed company… As long as the name is in the sense of the prohibition of misleading and the name is “Gesellschaft…. mbH” or carries the suffix “GmbH”, almost anything is allowed.

Tax ID, Trade Licensing Office, Articles of Association & Notary Public

You will first receive a tax identification number – tax ID for short – from your local tax office, which serves as a basic requirement for all other formalities and applications. The registration of the GmbH as a company or commercial enterprise is carried out by the Trade Licensing Office for a processing fee of approximately 10 to 65 euros.

Moreover, a so-called obligation to make additional contributions can also be agreed in the shareholders’ agreement. This is an optional limited or unlimited obligation of the partners to make further limited or unlimited additional contributions on top of the existing contributions. Such a requirement is usually linked to certain conditions or the occurrence of certain situations, such as the pending redevelopment of a property. According to the Law on Limited Liability Companies (GmbHG), such agreed additional contributions must be in proportion to the GmbH shares of the individual shareholders. However, by means of an abandonment – i.e. the relinquishment of one’s own shares in the company – it is possible to free oneself from an existing obligation to make additional contributions.

Excerpt from the law – § 26 GmbHG:

(1) The memorandum and articles of association may stipulate that the shareholders may decide to demand additional payments (additional contributions) over and above the nominal amounts of the shares.

(2) The payment of additional contributions shall be made in proportion to the shares held.

(3) The obligation to make additional contributions may be limited in the memorandum and articles of association to a certain amount to be determined in proportion to the shares held.

25,000 Euro share capital, half for cash foundation

A prerequisite for registration in the commercial register is the payment of the required share capital of at least EUR 25,000 into the business account. At least half of the specified amount must be paid into the business account when the GmbH is founded in cash. For the residual value it is irrelevant whether it is a cash contribution or a contribution in kind such as real estate, machinery, real estate liens, etc., the main thing is that the capital contribution is recognisably noted in the shareholders’ agreement according to its type.

Possible contributions in kind:

• Real Estate
• Machines
• Car
• Office & business equipment
• Copyright
• Real estate liens
• Trademark rights
• Patents
• Receivables recoverable

In general, share capital is defined as the sum of all capital contributions and is given the term “subscribed capital” in the balance sheet. The exact value is determined by the shareholders in the shareholders’ agreement and can vary for the individual shareholders. The prescribed minimum amount is set above 100 euros, whereby all higher-value contributions must be a multiple of 50. In addition, a quarter must be paid in as a minimum on each capital contribution until summa sumarum 12,500 euros is reached.

Profits, Losses & Liability

In contrast to partnerships such as the general partnership (OHG) and the limited partnership (KG), a profit made by a limited liability company is not necessarily paid out directly. Rather, the partners decide jointly how to proceed with the profit: In the case of a profit distribution, the calculation of the profit shares is carried out in proportion to the shares of the individual partners. In the case of a reserve formation, on the other hand, the profit is retained and contributes to the increase of the equity capital.

The limitation of liability is a decisive factor for the name of a GmbH and often a criterion for choosing this and no other legal form of a company. As a corporation, the GmbH is a legal entity under private law. This has the consequence that the individual partners are limited in their liability to the corporate assets and do not have to participate in the losses with their private assets in the case of corporate debts. Before registration in the commercial register, however, it is still a pre-GmbH and thus all shareholders involved in the pre-foundation are liable without limitation, directly and jointly and severally.

However, a separate liability applies to the managing director: In case of doubt, he is the only one who must also be liable with his private assets.

GmbH Bodies: Managing Director, Supervisory Board & General Meeting of Shareholders

A limited liability company consists of several organs. These bodies are divided into:

1. The directors,
2. The Supervisory Board and
3. The shareholders’ meeting.

The managing directors deal with the day-to-day business and other matters of the company and represent their company externally in accordance with the GmbHG. The supervisory board is required by law above a certain number of employees and acts as the company’s supervisory body by appointing and advising the management, but also by monitoring and, in case of doubt, dismissing it. Alternatively, its establishment can also be determined within the framework of the articles of association. The shareholders’ meeting acts as the decision-making body of the GmbH.

If you want to know more about the individual bodies of a limited company, read on here:

• Corporate bodies of a limited liability company

Advantages: Reputation, credit rating, security, flexibility & Co.

After presenting the typical characteristics of a limited liability company, you have certainly already recognised the advantages that this legal form offers you: The high start-up capital also makes the GmbH a reputable legal form, which can be an advantage especially in matters of company financing. Financial institutions are therefore often willing to issue good loans and business partners and customers gain more security due to the good credit rating.

Furthermore, contributions in kind are also accepted, so that it is not solely a matter of the cash assets of a shareholder. The financial risk, on the other hand, remains low, since the partners are not held liable with their private assets. Taxation with corporation tax is also more favourable in many cases than having to handle everything – as is the case with partnerships – via income tax.

Flexible GmbH models further allow to establish a GmbH both alone and among partners as well as in a team – the management can be arranged internally and externally for one or more persons. Shares in the GmbH can be bought and sold by both individuals and legal entities. This makes the change of shareholders much easier.

• Respected legal form
• High credit rating
• More security for banks, business partners & customers
• Contributions in kind are permissible
• Low financial risk due to limitation of liability
• More favourable taxation with corporation tax
• High flexibility in structure & management
• Legal entities are accepted as shareholders
• Simple change of shareholders

Disadvantages: Trade tax liability, 25.000 Euro share capital & liability

The disadvantages, which the establishment of a GmbH can bring with itself, are likewise fast localized: On the one hand, the high share capital of at least 25,000 euros is an obvious problem for many start-ups. Also the social adhesion measures itself accordingly to at least 25,000 euro. The foundation may not take place informally, but is subject to extensive formalities and specifications. In case of doubt, the managing director is also liable with his private assets. Banks can easily leverage the exemption from liability if, despite high creditworthiness, they aim for a directly enforceable guarantee from the shareholders. Last but not least, the GmbH is subject to trade tax and, depending on the purpose of the company and how it is handled, has to pay further taxes.

• High share capital required
• Liability based on share capital
• No informal incorporation
• Possible private liability for managing directors
• Banks may require directly enforceable guarantees
• High trade tax levies

Evaluation: Invest, Risk & Hedge

After comparing the advantages and disadvantages, it becomes clear: At first glance, the formation process seems complex and much more extensive than, for example, with a civil law partnership (GbR)… Basically, however, the process is not overly difficult, especially if it is a one-person company. A limited liability company makes particular sense if business projects are planned that are exposed to a high level of risk, or if the managing director and shareholder are one and the same person. Business founders with monetary reserves and real estate investors are given many options for structuring and managing their dreams and entrepreneurial goals through a GmbH.

Especially for families, the GmbH is often a suitable legal form, since each family member can contribute to the company according to his or her qualifications, possibilities and reliability, and changes can easily be made across generations.

GmbH models with and without shareholders

As a sole shareholder, you are your own boss: you are founder, shareholder and managing director at the same time and can set up your GmbH entirely according to your wishes. If the entrepreneurial responsibility is too high for you or if you have plans for whose implementation you are dependent on several people, you can bring in as many co-founders as you wish or add them to the GmbH later. You can also divide the management authority among one or more persons. The multi-person GmbH is therefore the most common GmbH model.

By appointing new shareholders or leaving existing shareholders, the limited company model you choose can easily change. Whether it’s a one-person company, a two-person limited liability company or even a company that operates without any shareholders at all…. In each case, there are specifics you should be aware of as they deviate from the norm of the traditional limited liability company. In the following, you will learn the most important aspects for solo founders, founding duos and team founders in order to be able to make an informed decision regarding the form of company that is best suited to you and your plans before you start your own business.

• Two-person limited liability company
• One-person limited liability company
• No-Person-GmbH

Tip: For GmbH formations with a maximum of three shareholders, a sample protocol is available that can significantly simplify the formation process for you.

Immobilien GmbH: Management, Leasing, Marketing & Co.

You think the idea of a limited liability company is not bad at all and are now wondering how you can combine your capital company with the real estate business? A real estate company is a company that serves the financing, development, realization, leasing or marketing of real estate – starting with a single property up to a real estate portfolio in the three- or multi-digit range. The management of real estate property or third-party real estate on behalf of third parties can also be handled by a real estate company.

Small tip: When acquiring and/or managing real estate, make sure that all details are clearly stated in the partnership agreement.

Vermögensverwaltende GmbH – Variant 1: Advantages of the Immobilien GmbH

This variant of the asset-managing GmbH is often referred to as a leasing company due to the advantages associated with it. It impresses with several advantages, first and foremost impressive tax advantages: Instead of having to pay tax on the rental property privately at high rates (income tax, solidarity surcharge, church tax), a corporation placed in front of the property can save taxes to a considerable extent. The rental income is counted as business income and is therefore taxed at the corporate tax rate, which significantly reduces the overall tax burden.

Furthermore, the renting and leasing of private real estate property is generally not considered a commercial activity, which would have to be regarded as taxable. The pure asset management takes place outside the general economic traffic, which is why the trade tax is completely omitted upon application to the competent tax office. In order not to risk a later taxation with the full trade tax rate, you should outsource all commercial administrative as well as manual tasks as a precaution.

Attention: In the case of a real estate GmbH, the usual distribution of profits is not provided for, as the shareholders must charge the final withholding tax on their earnings in the event of a distribution of profits. Instead, any savings resulting from the tax benefits will be used to repay debts or as an asset investment.

Asset-managing GmbH – Variant 2: Advantages of the holding company

This variant of the asset-managing GmbH is – in contrast to the Immobilien GmbH presented above – a commercial real estate company. Here, direct participations are combined in a hierarchically superior parent company – called a holding company. In addition to holdings in corporations such as the GmbH and the AG, other corporate legal forms can also be incorporated. One of the purposes of a holding company is to save taxes: By combining the various company holdings, no capital gains tax is levied in the event of a profit distribution.

Taxes for GmbH shareholders: KSt, GewSt, USt & Co.

As a GmbH shareholder, you need to know about some types of tax, because with the establishment of your company you receive income from your business and must of course also pay tax on this. In accordance with tax law, sales tax must therefore naturally be paid, insofar as the GmbH does not only carry out tax-free sales. The following applies to all corporations: They are subject to corporate income tax. An exemption from taxation is possible under certain circumstances, for example if the GmbH meets the criteria for non-profit status. The payment of trade tax is also obligatory for a GmbH, even if all founding members were freelancers, because by virtue of its legal form it is always regarded as a commercial enterprise.

• Corporate income tax (KSt)
• Trade tax (GewSt)
• Value added tax (VAT)
• Income tax (ESt)
• Capital gains tax (KapESt)

Other taxes: LSt for employees, GrESt & GrSt

As an employer, the GmbH is of course also responsible for the payment of income tax for all persons in an employment relationship with it. Under tax law, the managing director is considered a dependent employee. When a property is purchased, a one-time land transfer tax is due. It is always demanded if the company not only rents real estate, but acquires it by purchase. For all real estate owned by the GmbH, the real estate tax is then also applied.

• Wage tax (LSt)
• Real estate transfer tax (GrESt)
• Property tax (GrSt)

You can find out what taxes you can expect with a real estate corporation here:

• Save taxes on real estate

Conclusion: Limited liability company – For whom is it worthwhile?

With versatile GmbH models you can start your dream of your own company in any constellation and have the possibility to react flexibly to changes in the number of shareholders. Whether you prefer to work alone or in a team – a GmbH offers solo founders, team founders and entrepreneurial partnerships a suitable legal form to handle even risky transactions skillfully and without private liability. The easy introduction of new shareholders and changeable management allow for a cross-generational management of the corporation and can also organize a secure succession.

In real estate terms, asset-managing real estate companies are particularly worthwhile for start-ups and investors with high private assets who wish to manage, rent out and, if necessary, sell their own and/or third-party real estate portfolios on a non-commercial (Immobilien GmbH) or commercial (Holding) basis. The GmbH is also a good choice for long-term transfers of real estate property to children and grandchildren. Furthermore, the capital contributed to the GmbH is protected even if private financial bottlenecks arise.

Comparison: Sole proprietorship, one-man GmbH, small AG or entrepreneurial company?

If you plan to set up your business on your own, you can choose between different legal forms of business: On the one hand, there is the classic sole proprietorship, in which you act as a freelancer or registered trader, or set up a small business. Alternatively, you can choose between the one-man limited liability company and the entrepreneurial company – often referred to as a “mini-GmbH” – or set up a small public limited company.

Sole proprietorship & one-person GmbH

Basically, there is not much difference between the two legal forms of a sole proprietorship and a single-member company, because in both cases you are the sole shareholder with sole power of management and sole power of representation. However, the decisive difference arises in the form of the liability issue: As a registered businessman (e. Kfm.) or registered businesswoman (e. Kff.) you are liable without limitation, directly and jointly and severally – as the sole shareholder of a one-person GmbH, on the other hand, you are liable exclusively for the business up to the amount of the capital contribution you have made.

Are you a sole proprietor yourself and no longer want to bear the enormous liability risk? Then you should think about converting your sole proprietorship into a one-person limited liability company. The change of form is easily accomplished, but can make a huge difference in case of losses! In order to avoid personal liability, as part of the registered traders (e. K.) you only need a notarial certificate confirming a value of at least 25,000 euros for your business and submit this to the commercial register together with the opening balance sheet. The sole proprietorship is practically brought into the GmbH as a contribution in kind.

Entrepreneurial company & small public limited company

Alternatively, you can consider setting up an entrepreneurial company (UG). Often referred to as a “small GmbH” or “mini-GmbH”, this legal form of company is a sub-form of the conventional limited liability company, but unlike the “normal” GmbH, it only requires a single euro as share capital. It is therefore particularly attractive for solo founders who do not have 25,500 euros in their bank account. Without the share capital of a GmbH, however, your image with the banks could be lower and your chances of getting a good loan could decrease.

The so-called “small AG” is primarily intended for individual shareholders who wish to keep their public limited company within a small group of people. Apart from the individual shareholder, who also equally assumes the role of the management board, only three other persons are required to be appointed as supervisory board members. However, the formation of a public limited company, regardless of its size, is very complex and more cost-intensive than the other common forms of corporate law. Therefore, a one-person limited liability company or an entrepreneurial company may be more suitable if you intend to found your company on your own. Alternatively, you may also consider setting up a sole proprietorship.

You can find out more about the different legal forms for solo founders here:

• Sole proprietorship (EU)
• Entrepreneurial company / UG (limited liability)
• Small public limited company – see AG

Reading tip: Legal forms & real estate GmbH

1. Legal forms: List
2. Real estate GmbH / Asset management GmbH

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

Company types in detail:

• Sole proprietorship
• Registered businessman / registered businesswoman (e. K.)
• Civil law partnership (GbR)
• General partnership (OHG)
• Limited partnership (KG)
• Entrepreneurial company (UG)
• Real estate GmbH / Asset management GmbH
• Stock corporation (AG)
• Real estate stock corporation (REIT-AG)
• Societas Europaea (SE)
• Foundation / Family Foundation

Real estate GmbH / Asset management GmbH

In this article you will learn the basics about real estate companies. Briefly explained: A real estate company is a company that pursues the purpose of renting, developing, financing, realizing and/or marketing. It doesn’t matter if it’s one property or multiple properties. The management of residential and commercial real estate – in its own interest or as a service offered to third parties – is also a popular focus for real estate companies and asset management GmbHs. Find out more about the main advantages and disadvantages of buying real estate and the expected costs.

• Real estate company