gUG formation in Germany – setting up a German non profit Entrepreneurial company
Advantages and disadvantages of forming a gUG
Duration of gUG formation
Vorbereitung der gUG Gründung
Forming a gUG in 11 steps – step by step
Process of forming a gUG
Taxes of a gUG
No corporation tax for the gUG
If its non-profit status is recognised by the tax office, the company does not have to pay corporation tax. This results in a saving of 15% on operating profit, which in turn can be invested in the charitable area. However, it must be noted that non-profit status is recognised independently for each year by the tax office. If the status expires, corporation tax must be paid. For this reason, tax consultancy support is particularly important for the gUG.
No trade tax
The gUG is also exempt from paying trade tax. Although it must register a business with the relevant office, it does not have to pay taxes if the non-profit status is maintained.
The gUG also does not have to pay the solidarity surcharge.
Capital gains tax
It is not exempt from capital gains tax. However, the gUG may not pay out any profits to its shareholders, as this would threaten its non-profit status. Otherwise, capital gains tax of 25% would have to be paid.
Salaries may only be paid within reasonable limits
In order to maintain non-profit status, the appropriateness of salaries paid is of particular importance to the gUG. The amount of the salary must always be in proportion to the services rendered. Otherwise, the tax office could interpret this as a hidden profit distribution, which would lead to the loss of non-profit status and the associated tax exemptions.
Exemption from other taxes
The gUG, just like the gGmbH, is exempt from property tax on real estate used for the company’s charitable purpose. Gift and inheritance tax are also not applicable.
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