Buying Property through an Asset-Management GmbH
When Does It Make Sense?
An alternative to private real estate ownership is an asset-management GmbH. But what exactly is the difference compared to a holding company? And when does it make financial sense? Here's a summary:
An asset-management GmbH offers an efficient way to reduce taxes—provided you generate sufficient surplus income. As a rule of thumb, it becomes worthwhile when you achieve a five-figure annual cash flow surplus. However, caution is advised when it comes to property sales, furnishing, or special rental models, as these can quickly lead to a reclassification as commercial activity, which would increase the tax burden. To ensure that all individual circumstances are fully taken into account, it is strongly recommended to seek professional tax advice.
Differences Between a Holding Company and an Asset-Management GmbH
An asset-management GmbH is primarily focused on directly managing its own real estate assets, whereas a real estate holding company holds and manages equity stakes in other property companies. As a result, these two structures differ significantly in both complexity and tax treatment.
Buying Property through an Asset-Management GmbH
Hold Privately or Use a GmbH: When Does What Make Sense?
Another alternative to private property ownership is the asset-management GmbH. But what’s the difference compared to a holding company? And when does it pay off? We answer these and other questions in today’s article.
Differences Between a Holding Company and an Asset-Management GmbH
The asset-management GmbH focuses primarily on managing one’s own assets directly, whereas a holding company holds and manages interests in other real estate companies. This leads to significant differences in both complexity and taxation between the two structures.
When Is an Asset-Management GmbH Worth Considering?
Switching from private ownership to an asset-management GmbH makes particular sense when the goal is tax optimization. Many use this structure specifically as a tax-saving model—which only applies if you are generating taxable income in the first place, i.e., when you have a positive cash flow.
As a private individual, income is taxed at your personal income tax rate, with the top rate of 42% applying to incomes just over €67,000 per year. In contrast, profits in an asset-management GmbH are taxed at a flat 15% corporate tax rate, which is significantly lower.
Costs and Benefits of an Asset-Management GmbH
A GmbH also comes with its own costs, such as preparing and filing annual financial statements and hiring a tax advisor. Therefore, this structure usually only becomes worthwhile when you have—or expect to have—a five-figure annual cash flow surplus. This surplus could also come from property sales, but care must be taken not to cross the line into property trading.
Tax Considerations When Selling Property
When selling property as a private individual, profits can be tax-free under certain conditions.
Owner-occupiers must have lived in the property for at least three consecutive calendar years.
Investors must have held the property for at least ten years.
If sold earlier, capital gains are subject to tax—but these are typically taxed at lower rates within a GmbH.
Distinction from Real Estate Trading
The asset-management GmbH must not sell so many properties that it is considered a trader. Otherwise, in addition to corporate tax, trade tax becomes due, significantly increasing the tax burden. If the company is classified as conducting commercial real estate activity, it becomes fully taxable under commercial tax law. That said, even with trade tax, the overall tax burden might still be lower than under private ownership.
Property Sales and Structural Costs
If the asset-management GmbH holds no property at a certain point in the year, it may be treated as a standard GmbH, increasing the tax liability. Therefore, it’s important to monitor your tax rate and planned surpluses carefully in order to fully benefit from the GmbH structure and justify the additional administrative costs.
Different Property Types and Furnished Rentals
Certain types of real estate and business models—such as fix-and-flip strategies or furnished rentals—are challenging to implement within an asset-management GmbH. These activities are considered typical of commercial operations and may result in a different tax classification.
Withdrawing Funds from the GmbH
There are several ways to withdraw funds from an asset-management GmbH. For instance, investors can provide their GmbH with a shareholder loan to supply equity for property purchases and then repay themselves the loan principal or interest. This repayment is tax-free. However, it is generally more efficient to leave funds within the GmbH and use them for further investments.
