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The main points of profit distribution in the GmbH

To understand exactly how the profit distribution of the GmbH is calculated, here is an overview of the most important points:

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The profit distribution of a GmbH is based on the proportion of shares held by the shareholders

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You need a shareholder resolution to determine the appropriation of profits

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The shareholders' meeting decides on the distribution of profits

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The profit of the GmbH is recorded in a balance sheet by means of a profit and loss account and is subject to corporation tax

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Shareholders can agree an incongruent/disproportional profit distribution in the GmbH

How is the profit distributed in the GmbH and who decides on the distribution of the GmbH profit?

The distribution of profits in the GmbH is usually pro rata.

However, different arrangements can also be made. This requires a shareholder resolution that determines the distribution of profits or the appropriation of profits. However, a portion can also be left in the GmbH and used as a so-called profit retention reserve.

You are not sure how you should organise your profit distribution in your GmbH? The lawyers at Digitale Gründung are at your side and can also advise you on your articles of association.

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How is the profit of a GmbH calculated?

The profit is calculated as part of the annual financial statements. A balance sheet and a profit and loss account are prepared here.

The profit of the GmbH is subject to corporation tax. It is possible to offset existing losses from previous years against current profits, even up to an amount of EUR 1 million!

After the profit statement and the resolution on the appropriation of profits, the profit can be distributed to the shareholders if the profit carried forward is positive.

Taxes are not your topic? Digitale Gründung offers you the best tax and legal advice or let us coach you on the subject of corporate tax!

Calculate GmbH profit distribution: An example

A GmbH is founded with share capital of EUR 100,000. The shares are held by three shareholders:

Shareholder A: 15,000 euros (15 %)
Shareholder B: 25,000 euros (25 %)
Shareholder C: 60,000 euros (60 %)

The net profit for the financial year after deduction of taxes amounted to EUR 200,000. In the shareholders’ resolution, EUR 50,000 is left in the GmbH as a reserve. The remaining EUR 150,000 will be distributed pro rata to the shareholders. The result of the calculation for the profit distribution of the GmbH thus looks like this:

Shareholder A: 22,500 euros
Shareholder B: 37,500 euros
Shareholder C: 90,000 euros

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What is incongruent or disproportionate GmbH profit distribution?

The incongruent or disproportionate distribution of profits is a deviating distribution of profits. This profit distribution then provides for a profit distribution that is not based on the share of the contributions made. Within the disproportionate profit distribution, for example, a shareholder could participate in the profit with a higher percentage share.

The deviation must be specified in the articles of association.

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FAQ

Why set up a GmbH?

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Founding a GmbH is attractive for entrepreneurs who do not want to jeopardise their private assets. For security purposes, a share capital of EUR 25,000 is paid into a business account when the GmbH is founded, but this may be used in the normal course of business. The GmbH makes sense for founders who have a high level of private assets and want to protect them well. If you want to attract investors, the GmbH is often the most attractive legal form.

What is the difference between a GmbH and a UG (haftungsbeschränkt)?

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The biggest difference between a UG (haftungsbeschränkt) and a GmbH is the amount of share capital required to set up the company. A GmbH requires 25,000 euros in share capital, half of which must be paid in when the company is founded. In the case of the UG (haftungsbeschränkt), on the other hand, EUR 1 is sufficient as share capital, provided the capital requirement does not necessitate a higher sum. In the case of a UG (haftungsbeschränkt), reserves must be formed from profits which may not be distributed to the shareholders. In addition, the UG (haftungsbeschränkt) can also consider increasing its capital and changing its name to a GmbH. Otherwise, the UG (haftungsbeschränkt) has the same rights and obligations as a GmbH in terms of shareholder, accounting and liability requirements. The UG (haftungsbeschränkt) must also pay corporation tax and trade tax in the same way as the GmbH.

When does it make sense to set up a GmbH?

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A GmbH always makes sense when entrepreneurs want to limit their liability. While sole proprietors are liable with their private assets, the liability of a GmbH is limited to the company's assets. In addition, the legal form of the GmbH generally has a good reputation with banks and other companies. For this reason, it is often chosen as the legal form, as the company appears more trustworthy to the outside world. It is also suitable for investors.