Investing money in care properties, but how?

What does nursing home property mean? How much does a care property cost? Can you buy into a retirement home? Honest questions, honest answers.

A look at Germany as an investment market.

There are currently 4.1 million people in need of nursing care in Germany. 731,000 people are cared for in full inpatient nursing facilities. Germany has the most expensive healthcare system in the world. The biggest return factor when investing in nursing care real estate is, of course, the development of demographics but also the economic capacity of a country, which ultimately supports the nursing care system and its financing. Like many rich or wealthy countries, Germany’s population is getting older and older.

Soon half of the population will be over 50 years old, accordingly the demand for care properties, nursing homes and retirement homes will increase. Demand for simple homes that serve the standard and of course also properties in the care sector that meet higher standards. Later tenants pay here, depending on the care level 2,000 euros and more per month. On average 2,600 euros / month, with 731,000 inpatients in need of care, that’s 1.9 billion euros a month or 22.8 billion a year.

Without detour, first a look at the advantages and disadvantages of this plant:

Advantages of a nursing home property as a financial investment

Nursing homes are popular with experienced investors. They offer some advantages that the “classic” property does not offer as an investment. The biggest advantage is certainly that you as an investor can invest relatively worry-free.

The long-term lease of a care property with the operator, ensures minimal effort. You as the landlord or owner have very little work. The commissioned property management regulate almost everything directly with the operator of the property.

Pros:

• High development potential, 4.1 million (increasing) are in need of care
• 731,000 people are cared for in full inpatient nursing facilities
• On-site investment, 100 units in cities with 10,000 inhabitants
• Long-term lease agreement with the operator
• Little effort, property management regulates almost everything with the operator
• Property developers seek investors for new buildings

Disadvantages: Risks of the investment form nursing home

Of course, no self-interest can take place. Likewise, there are special building regulations, which, however, as a “pure” buyer, do not really play a role, since the requirements are already fulfilled by the construction company or developer.

Disadvantages:

• No option for own use (ETW is leased to operator)
• Special building regulations (fulfilled by the developer)
• And…

There is also criticism of the model, as here in the real estate magazine FIV (interview). The question to our expert: “What do you think about investments in retirement or nursing homes?” His answer: “Very little! – is my terse answer. This is due to the very high risk that this form of housing has as a capital investment. We are talking here about so-called social real estate. In view of the ever aging population and the thus certainly increasing demand for senior and nursing home places, it is suggested that it is a safe investment. But as management properties – like hotels, for example – these properties have a serious disadvantage: if the operating company performs poorly, then such a property quickly becomes a bottomless pit.”

Read more in the magazine (external):

• Real estate investment: Tax advantages? Nursing home?

Yield & costs (purchase price, ancillary acquisition costs)

There are retirement homes, senior citizens’ homes and other variations in every part of town. One thing investors have in common is that the leases are long-term. Operators sign contracts of 20, 25 years, with renewal options of 3 years, sometimes 5 years. So the “business is secured for the long term.” If you want to get in, you can expect the typical yields on the properties to be between 3.2% – 5.0%.

Yield:

Yield mostly between 3.2 – 5.0 %

To achieve the return, of course, must first be invested. These ancillary acquisition costs are added to the purchase price:

Real estate transfer tax (3.0 – 6.5 %)

and to that:

Notary, court (2.5 %)

Two factors stand out, firstly the land transfer tax, and secondly the notary and court costs. Depending on the federal state, the land transfer tax varies from 3.0 – 6.5 %. The costs for notary and court are about 2.5 % of the purchase price.

Now to the “demand side”. How is the market for care properties developing in Germany?

Ageing society: Growing demand for age-appropriate housing

Factor 1: Ageing society. Let me give you an example – a place in a nursing home costs an average of 2,600 euros at Caritas Altenhilfe. That is 31,200 euros a year. Depending on care level, federal state and facility, the costs vary between 1,800 euros and 3,990 euros per month, according to Caritas.

There are around 4.1 million people in need of care in Germany (according to the Federal Statistical Office). The majority of those in need of care in this country are older than 60. Finally, the monthly expenditure, for the private persons behind the caring person, is very large. In care level 2, the costs are already ~ €2,800 a month, for a single care apartment. Here we are talking about the absolute basic equipment. Depending on the nursing home, size and equipment of the individual apartments, there are, as always, no limits.

• 731,000 persons in residential care
• 2,600 Euro / month; or 31,200 Euro / year
• Revenue / month: 1.9 billion
• Income / year: 22.8 billion

Accordingly, nursing homes are so interesting for real estate investors as a capital investment. Especially in Germany.

The calculation example shows the advantages of this development of the age structure in Germany for investors from Germany and abroad.

Inhabitants Age in Germany

As already reported in the real estate statistics, Germany is in the top 20 countries with the oldest population. Currently, Germany is even in 5th place, as will be seen in a moment. Here in advance, the current distribution by age groups in Germany. Clearly to see, the large group from 40/50 years, which is increasingly older and for increasingly housing needs in nursing and retirement homes provides.

You can find more statistics at Statista

Inhabitants Age in comparison: Worldwide

Germany ranks 5th among the countries with the oldest average population. Only Portugal, Martinique, Italy and Japan are ahead of the Federal Republic.

1. Japan
2. Italy
3. Martinique
4. Portugal
5. Germany

PS: In case you are wondering, what is Martinique? Martinique is an island in the Caribbean Sea that is part of the French territory.

Strong economy and forecast

Factor 2: Strong economy and forecast – Germany itself is the fourth largest economic power in the world, the largest economic area in Europe. Hardly any other country is as interesting when it comes to capital investment. The fewest have thereby however care real estates on the screen, but invest rather into the classical free-hold flat as capital investment or into a house. The returns that are generated here are very considerable, especially compared to other real estate as an investment in Germany.

Apart from global phenomena (2009 financial crisis, 2020 Corona), the German economy is very robust and stable in the heart of Europe. As seen here, in the evolution of real GDP (year-on-year change) in Germany, from 2008 to 2019 and forecast to 2022.

Increasing degree of care in old age, higher costs

Factor 3: Increasing degree of care in old age, higher costs – The German healthcare system is one of the most expensive in the world. Not only the state, but also the relatives of the future residents invest in care properties, or rather the monthly expenditure for their residents.

Everyone who has a relative in a nursing home in Germany pays a certain amount each month. This depends on the care level of the person being cared for. Care level 1 is the one that receives the lowest subsidy. The higher the care level, the more subsidies there are from the state, so the higher the costs.

No one wants to sacrifice comfort for their loved ones in the process!

Despite rising costs, attention is being paid to quality amenities. This means that condominiums do not have to be built and traded in the “low price” segment. In the area of nursing care real estate, it’s all about quality.

Metropolitan area or country – real estate yield

Factor 4: Metropolitan area or countryside – real estate returns – Nursing homes are not always only built in metropolitan areas such as Berlin, Hamburg, Munich or Cologne and Düsseldorf. Care real estates develop in each German small town, even in really small cities, with 5,000 to 10,000 inhabitants. Each nursing care property usually has at least 100 residential units.

In the major metropolitan areas, there is a lot of competition for the individual condos, within the nursing homes real estate. In the countryside, you can partly get hold of good bargains. The return on the property is accordingly much higher. The competition is smaller and usually the equity of local buyers is also lower than that of national real estate investors.

Investing “in the countryside”: Away from the big cities

As an investor, you should therefore not only focus on the big cities, but also keep an eye on smaller towns. Especially when it comes to investing in 5, 10 or 20 condominiums.

The procedure in the entire purchase process of the property does not differ from that of a typical condominium. Only a few parameters are different, but for you as a real estate investor, these are not of great importance. Also all legal and statutory conditions are already fulfilled by the developer or the construction company.

Real Estate Acquisition

Factor 5: Real estate acquisition – A decisive factor in the profitability (real estate yield) is therefore the real estate research (real estate acquisition).

Where can attractive new buildings be found? The fewest high-yield properties appear in the typical real estate portals, they are bought “under the hand”(off market), directly from the real estate agent or developer. If you are looking for high-yield properties, you should not only rely on real estate advertisements, but also build up your network in advance in order to get to the really interesting properties.

Especially for beginners this tip:

Tip: Contact agents at an early stage; the property is sold before completion.

In order to have as few disadvantages or risks as possible, it is worthwhile to contact brokers in advance. Because, as described, properties are not only sold at the end of construction, but long before. Accordingly, usually 6 months before completion of construction all individual units are sold.

Let’s summarize the benefits of care apartments once again:

1. High development potential, 4.1 million (increasing) are in need of care
2. 731,000 people are cared for in full inpatient nursing facilities
3. On-site investment, 100 units in cities with 10,000 inhabitants
4. Long-term lease agreement with the operator
5. Little effort, property management regulates almost everything with the operator
6. Property developers seek investors for new buildings

Investment Germany: Berlin, Hamburg, Cologne & Co.

Capital investment Germany you are looking for a profitable capital investment in Germany? In the largest real estate market in Europe, there are many options available to you, from small condominiums in international metropolitan areas such as Berlin, to the above-described nursing homes, which are becoming increasingly attractive in an aging society such as Germany. Ultimately, the return on the property plays the biggest role in the choice and selection of the property.

Condominium, commercial, care property & Co.

If you want to get a more comprehensive overview of the subject of real estate investment in Germany, then we have here for you a more detailed guide to the matter.

• Investment Germany

Exotic capital investment: apartment or… ?!

Read here also a very interesting interview on the subject of exotic investment property. It does not always have to be the typical detached house, terraced house or semi-detached house in which you invest. There are definitely other properties where it is worth thinking about an investment.

Classic or exotic investment: Which property is suitable as an investment?

• Which property to invest in? – Investment interview

Financing: real estate and care apartments

Financing of care apartments, building plots or a commercial property – the right choice of real estate loan decides how high the interest burden and thus the total costs for your real estate loan are. Even when choosing a real estate loan, you as a potential buyer are faced with many questions and considerations, such as whether you should choose a classic annuity financing or opt for another form of financing. Follow-up financing is also possible in various ways. Ultimately, you are faced with the question of whether you are better off with a long and fixed debit interest rate or with a flexible real estate loan.

• Real estate financing

UG (limited liability company) – foundation, financing, liability & Co.

The UG was created in 2008 in the course of the Act to Modernise the Law on Private Limited Companies and Combat Abuses (MoMiG) and is thus one of the newer forms of corporations. With regard to the required start-up capital, the special character of an entrepreneurial company (haftungsbeschränkt) is reflected: The company can be founded with a cash contribution of as little as one euro, which is why this legal form variant is sometimes simply called a 1-euro GmbH.

By lowering the required share capital to a symbolic euro, the founding process has been considerably simplified for many start-ups: Instead of laboriously putting money aside and saving the 25,000 euros for the founding of a conventional GmbH, you can become self-employed as a corporation almost immediately. However, a UG (haftungsbeschränkt) is always founded with the prospect of later changing its legal form to a conventional GmbH. There are no time limits for this, but at some point an economically managed entrepreneurial company (haftungsbeschränkt) will inevitably become a limited liability company.

Other typical corporations:

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

Foundation & Company Name

You can found a UG (limited liability company) with just one person. This means that as a founder you also take on a managing position at the same time. To do this, you need a tax identification number – tax ID for short – from the tax office and must register your company with the trade office. In addition, you have to take care of the establishment of the partnership agreement aka articles of association and have it notarized. If you have a maximum of three founding members, you can also simply use a sample protocol, as it is available as an annex to the Law on Limited Liability Companies (GmbHG): In this way, you can complete the articles of association, appointment of managing directors and list of shareholders all in one!

In the next step you can register your company in the commercial register. Your company can consist of personal names, industry names, fantasy names or a mixture of these… It is important that the name contains either “Unternehmergesellschaft (haftungsbeschränkt)” or “UG (haftungsbeschränkt)” – in exactly one of these two variants: Brackets are a must and abbreviations are forbidden! Once you have reached the minimum share capital of 25,000 euros, you decide whether to change the name of your company to a GmbH or to continue it as a UG (haftungsbeschränkt).

Financing & profit distribution

Even if the contribution of only one euro may sound quite attractive at the beginning… Caution is required when determining the amount of the share capital for your company: If the capital is too low and the company’s specific needs cannot be met as a result, you can quickly slide into insolvency! Many UG founders therefore opt for a starting capital of around 500 to 1,000 euros. This way they can ensure that their entrepreneurial company (haftungsbeschränkt) does not go bankrupt after the first small purchases.

When founding a UG (limited liability company), you may only use cash contributions; contributions in kind are prohibited. If a share capital of more than 25,000 euros is set, you can no longer establish your company as an entrepreneurial company (haftungsbeschränkt) and will automatically be treated as a GmbH (limited liability company). Until your share capital reaches this limit, you are subject to the obligation to retain profits, which means that you are not allowed to distribute profits in full, and you must transfer 25 per cent of your profits to the statutory reserves.

Liability, accounting & taxes for UG shareholders

As an entrepreneurial company, you are limited by liability and – as with the GmbH – are usually liable for the amount of your capital contribution, i.e. at least one euro. As a UG shareholder, however, you are also subject to the obligation to file for insolvency: In the event of a breach of duty or other criminally relevant actions, you may also be held personally liable under certain circumstances.

The Unternehmergesellschaft (haftungsbeschränkt) is subject to the same taxes in Germany as its big sister, the Gesellschaft mit beschränkter Haftung. It is therefore subject to the obligation of double-entry bookkeeping – annual balance sheet plus profit and loss account – and, depending on the size of the company, may have to prepare regular management reports. Furthermore, it is fully burdened with corporation tax, trade tax and input tax or turnover tax as well as – with regard to the distribution of profits to shareholders – capital gains tax and other final withholding taxes. For all natural persons, income tax also applies as usual.

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

Unternehmergesellschaft (haftungsbeschränkt) – For whom is it worthwhile?

A UG (limited liability company) is the perfect choice for solo founders who have few assets but still want to start their own business with limited liability. The mini-GmbH is particularly suitable for smaller companies in the service industry, as unlike the formation process of a GmbH, no large start-up capital is required for the company formation. Another major advantage is the limitation of liability, which protects the private assets of the UG shareholders.

So for whom is the formation of an entrepreneurial company (haftungsbeschränkt) worthwhile? The legal form always makes sense if the later change of form to a limited liability company is planned. In this way, the first profits can be made with the company at an early stage and business relationships can be established, even though the share capital of over 25,000 euros is not yet available. The UG (limited liability) forms a more favourable preliminary stage to the GmbH – the conversion from UG to GmbH itself is extremely simple, as it is basically only a change of name within the same legal form.

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.

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

• One-man limited liability company – see GmbH
• Sole proprietorship (EU)
• Small public limited company – see AG

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 might also consider setting up a sole proprietorship.

Alternatives to the UG: 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)
• GmbH: Limited liability company
• Real estate GmbH / Asset management GmbH
• Stock corporation (AG)
• Real estate stock corporation (REIT-AG)
• Societas Europaea (SE)
• Foundation / Family Foundation

Stock Corporation: Establishment, Advantages and Disadvantages

The AG is not just a legal form — it is a structured vehicle for taxation, liability, and capital raising. In the following, you will learn everything essential about the establishment: Who can found an AG? What is the difference between internal and external relations? What are the actual costs — not only the share capital, but also notary, founding auditor, and ongoing management? And above all: When is an AG worthwhile from an investor’s perspective — and when is a Real Estate Holding in GmbH structure the better choice?

The 7 Founding Criteria of an AG at a Glance

1. Number of Partners — at least 1 shareholder, plus 3 supervisory board members = 4 people minimum
2. Management — Board of Management (not managing director!), controlled by the supervisory board
3. Founding — formal, notarized, multi-stage process
4. Company Name — freely selectable, suffix “AG” mandatory
5. Funding — at least 50,000 Euro share capital, share issuance possible
6. Liability — limited to share capital in external relations
7. Profit distribution — dividends, decided by the general meeting

Capital company AG: Management according to HGB

In the business world, there are many different types of business structures. They are broadly divided into two categories: sole proprietorships and companies, which in turn are divided into incomplete companies — including silent partnerships and BGB partnerships — and complete companies (personal companies, capital companies, and a few more).

The stock corporation — abbreviated as AG — is one of the complete companies and is not subject to the Civil Code (BGB), unlike incomplete companies, but rather to the Commercial Code (HGB) and the Stock Corporation Act (AktG). As a capital company, the AG is more complex in structure than other forms of business law. It cannot be established informally, but requires the notarized certification of the shareholder agreement and compliance with numerous legal requirements.

Other typical capital companies:

• European stock corporation (Societas Europaea, abbreviated as SE)
• Limited liability company with shares (KGaA)
• Entrepreneurial company / UG (limited liability)
• Company with limited liability (GmbH)

The stock corporation is, together with the GmbH, the best-known form of capital companies. In Germany, it is mainly chosen as a legal form for listed companies and is considered — not least because of the higher initial capital — as the “big sister” of the company with limited liability.

AG vs. GmbH vs. KGaA: Comparison table

REPEAT (Attempt 3). The previous attempt was faulty. The previous attempt has altered the HTML structure. Copy the tags exactly in number and order from the input. Add NO and no other tags, leave none out.

Before you decide on a legal form, a direct comparison of the three heavyweights of capital companies is worthwhile:

Insider Tip: For pure Real Estate Holding Structures, the GmbH is usually the more efficient choice — the AG only pays off starting from an asset base of 5–10 million euros or in case of a planned stock market listing/REIT status.

Legal Form Variant AG & Co KGaA — KGaA with Complementary AG

Sometimes the AG also appears in combination with a stock limited partnership (KGaA). For example, family businesses occasionally organize themselves as a stock corporation & Compagnie Limited Partnership on Shares — short: AG & Co KGaA. In this case, they form a stock corporation in a legal sense — however, the general partner as personally liable partner is not an individual, but also a stock corporation. If the general partner is instead represented by a GmbH, it is referred to as a GmbH & Co KGaA, and in the case of a Societas Europaea, as a SE & Co KGaA.

Why this structure? It combines the capital market capability of an AG with the takeover protection of a KG. Families like Henkel, Merck or Hornbach thus retain full control through the general partner, even if 90% of the shares are listed on the stock exchange.

More about the individual hybrid forms:

• GmbH & Co KGaA — see Gesellschaft mit beschränkter Haftung (GmbH)
• SE & Co KGaA — see Societas Europaea (SE)

Examples of AG & Co KGaA companies:

• CTS EVENTIM AG & Co. KGaA
• Drägerwerk AG & Co. KGaA
• Fresenius Medical Care AG & Co. KGaA
• Henkel AG & Co. KGaA
• HORNBACH HOLDING AG & Co. KGaA
• ProCredit Holding AG & Co. KGaA

A special case is CEWE Stiftung & Co. KGaA: Here, the general partner is represented by a foundation. In general, the stock limited partnership is possible in all conceivable combinations.

Read more about the topic “Establishing a family foundation”:

• Establishing a family foundation

Establishment & Founding of an AG — From Articles of Association to Registration

You want to set up an AG? Then you need to know: A natural or legal person is sufficient as a founder, so you can appear as the sole shareholder and automatically be the sole managing board member. Such a one-person AG is often referred to as a “small stock corporation.” However, you can’t do it entirely alone: an AG must appoint at least three members of the supervisory board — the smallest possible AG thus consists of four people.

The process of establishing an AG can be divided into two phases: the internal establishment of the AG and the external establishment of the AG.

Phase 1 — Preparation & Foundation (Internal Relations)

You establish your stock corporation internally. The most important step is first and foremost the drafting of the articles of association, which must be notarially certified by a notary. For the formulation of the articles of association, all founding members must be present, as well as the future management board and supervisory board.

Content of the articles of association (mandatory under § 23 of the Stock Corporation Act):

• Company name and registered office
• Business purpose
• Amount of share capital (minimum 50,000 €)
• Face value and number of shares
• Type of shares (bearer or registered shares)
• Number of board members
• Form of announcements

From bearer shares to nominal value shares — learn more about the different types of shares here:

• Types of shares — Transferability, scope of rights & division of share capital

In the second step, the acquisition of shares and the appointment of the organs of a stock corporation follows, which must be notarially certified. Optionally, the auditor for the annual financial statements can already be appointed here. The supervisory board then appoints the management board as the first official act. No later than now, the contributions must be deposited into the business account, with at least a quarter of the share capital (i.e., at least 12,500 €) being recorded.

Phase 2 — Registration in the Commercial Register (External Relations)

Zum Abschluss des Gründungsprozesses muss dein Unternehmen ins Handelsregister eingetragen werden. Dieser Schritt rüstet die Aktiengesellschaft mit einer eigenen Rechtspersönlichkeit aus. Die Gründungsmitglieder, Aufsichtsrat und Vorstand führen die Anmeldung gemeinsam aus. Es bedarf einer Übersicht zu allen Aufsichtsräten und Vorständen, diverser Urkunden und notarieller Beglaubigungen, sowie eines Gründungsberichts und ggf. einer Gründungsprüfung durch einen externen Wirtschaftsprüfer (bei Sachgründung oder qualifizierter Bargründung).

Das Registergericht beurteilt nach Vorlage aller Dokumente, ob die Errichtung der Aktiengesellschaft ordnungsgemäß erfolgt ist. In einem letzten Schritt wird die Eintragung ins Handelsregister vorgenommen — deine Aktiengesellschaft gilt damit offiziell als gegründet.

The Founding Process at a Glance

• Phase 1 — Construction in the internal relationship
  • Determination of the bylaws (notarially certified)
  • Share acquisition
  • Order of the company organs (notarially certified)
  • Possibly ordering the final examiner
  • Einzahlung der Einlagen (mind. 1/4 Grundkapital = 12.500 €)
    ]]> https://lukinski.com/organs-of-a-gmbh-managing-director-supervisory-board-company-meeting/ Mon, 08 Mar 2021 14:48:20 +0000 https://lukinski.de/organs-of-a-gmbh-managing-director-supervisory-board-company-meeting/ A limited liability company consists of several bodies. 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 a controlling body of the company 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. Here you can find all legal forms and here, you can go back to the overview GmbH.

    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

    

    ]]> https://lukinski.com/capital-gains-tax-kapest-how-much-allowance-gmbh-shares-law/ Mon, 08 Mar 2021 14:00:24 +0000 https://lukinski.de/capital-gains-tax-kapest-how-much-allowance-gmbh-shares-law/ Capital gains tax – Most legal forms of business are subject to tax. Depending on the legal form, income tax, corporate income tax, sales tax, trade tax and/or capital gains tax are due by law. Under certain circumstances, it is possible for some companies to be exempt from one or more of these types of tax. What percentage is capital gains tax? What is the capital gains tax exemption amount? When is capital gains tax payable? How much is capital gains tax? An overview! Back to: Taxes.

    Capital gains tax (KapESt) – tax on profit distribution

    Tax law provides that – in addition to the income tax of any natural person with shareholder status – capital gains tax is levied on all natural persons resident in Germany who benefit from a distribution of profits. As a result, the recipient – but not the corporation – is burdened. The capital gains tax burdens both the profit income of shareholders of a GmbH and the distribution of dividends to shareholders of a stock corporation.

    Other taxes for businesses:

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

    If you want to learn more specifically about taxes for real estate companies, you can learn more here:

    • Save taxes on real estate

    Capital gains tax in detail – collection, levy & special cases

    For the sake of simplicity, 25 percent of the dividend is withheld directly by the AG for share holders, similar to the way regular employers withhold wage tax (LSt) for their taxable employees. Capital gains tax – abbreviated to KESt, KapESt, KapErtSt or KapSt – is a special form of income tax levied here: Once the tax burden has been withheld, the income tax is deemed to have been paid and the income does not have to be declared in more detail – at least insofar as no other type of income applies or the special tax rate applies.

    If, on the other hand, the registered office of a shareholder is abroad, the so-called withholding tax comes into effect and the provisions of the double taxation agreement (DTA) of the respective country must be taken into account. The final withholding tax is also levied on shares held as private assets within Germany.

    Allowance for single persons & partners

    The banks grant different options so that taxpayers can use tax-free amounts for themselves and, if necessary, distribute them. The so-called saver’s allowance is generally available to everyone and currently amounts to €801 per year for single persons and double that amount for spouses and registered partners: €1,602. The first euro above the exemption limit and all subsequent amounts are taxed as usual at 25 percent.

    Which companies are subject to capital gains tax?

    Most natural persons are subject to income tax. If they are also shareholders in a corporation – for example, a limited liability company (GmbH) or a stock corporation (AG) – capital gains tax also applies in many cases. The capital gains tax is also commonly referred to as the flat rate withholding tax (Abgeltungsteuer) and primarily taxes dividends and interest income at a flat rate of 25 percent. Usually, the tax office is informed automatically by the banks, similar to the way an employer pays the wage tax for his employees.

    Overview of company law forms

    You can find more information about the different legal forms under the following links. Starting with the sole proprietorship and the registered traders… to the various partnerships and corporations… to other companies such as the family foundation – all the essential aspects of formation, liability, tax burden and more explained simply and understandably! First of all, an overview of the individual legal forms of companies:

    • Sole proprietorship (EU)
      • Freelancer
      • Small business
      • Registered traders (e. K.)
    • Silent partnerships
    • BGB companies / civil law partnership (GbR)
    • Partnerships
      • Limited partnership (KG)
      • General partnership (OHG)
      • Limited Liability Company and Company Limited Partnership(GmbH & Co KG)
      • Limited Liability Company and Compagnie General Partnership(GmbH & Co OHG)
    • Corporations
      • Stock corporation (AG)
        • AG & Co KGaA
      • Partnership limited by shares (KGaA)
      • Limited liability company (GmbH)
        • GmbH & Co KGaA
      • Entrepreneurial company / UG (limited liability)
      • European Company / Societas Europaea (SE)
        • SE & Co KGaA
    • Other companies
      • Foundations / Family Foundations
      • Insurances
      • Partnerships
      • Registered associations (e. V.)
      • Registered cooperatives (e. G.)

    Taxes in Germany: List

    Corporation tax (KSt), income tax (ESt), capital gains tax (KapESt), turnover tax (USt), trade tax (GewSt) – who pays what? In this overview of the different types of taxes / tax forms in Germany, you will find relevant taxes for you as an individual and for your company, depending on which legal form you have chosen. In addition, after the tax list: How does the tax cycle work around monthly financial statements, annual financial statements and balance sheets? A little insight for those starting their first company. What taxes are there? Simple explanations, definitions, tax optimization, an insight into taxes.

    • Taxes: List

    

    ]]>