Company investment account: when a German GmbH invests in shares

Technically, a company account works like your private one. The difference: it does not belong to you, but to a corporation, usually a GmbH or a UG (haftungsbeschränkt), the German limited companies. The company buys shares or ETFs with its money, and the income is company profit. So the 25 % flat tax for private investors does not apply; corporate tax law does. That can be cheaper, but also much more expensive, depending on what is in the account. It is typical for self-employed people who already have a GmbH and leave profits there instead of distributing them. Some set up a GmbH just for investing, often as a holding company.

A GmbH pays corporate income tax: 15 % plus solidarity surcharge, 15.825 % together. It has been passed into law that the rate falls by one point each year from 2028, down to 10 % from 2032. On top comes trade tax. It depends on the municipality's multiplier: 3.5 % times the multiplier. At a multiplier of 400 % that is 14 %. So the combined burden today is around 30 %. A GmbH always pays trade tax, even if it only invests money, and it has no trade tax allowance. It has no €1,000 saver's allowance either.

If the GmbH sells shares at a profit, that gain stays tax-free under § 8b KStG. But 5 % counts as non-deductible expenses and is taxed. At a 400 % multiplier, the GmbH pays roughly 1.5 % on the price gain instead of 26.4 % privately. That is why company accounts are recommended so often. Dividends are different. If the GmbH holds less than 10 % of the company at the start of the calendar year, which is almost always the case with listed shares, the dividend is fully subject to corporate tax. For trade tax the threshold is 15 %. These portfolio dividends cost about 30 %, more than privately. And the exemption has a flip side: the GmbH cannot deduct losses on shares for tax.

Funds and ETFs are not covered by § 8b KStG but by the Investment Tax Act. For equity funds (more than 50 % shares), 80 % of the income is free of corporate tax for a GmbH. For trade tax, though, the exemption counts only by half, so 40 %. For mixed funds it is 40 % and 20 %. That makes ETF income in a GmbH noticeably more taxed than directly held share gains, roughly 11 to 12 % at a 400 % multiplier. The advance lump-sum tax (Vorabpauschale) applies in a GmbH too. So the claim "almost tax-free in a GmbH" only fits price gains on single shares, not ETFs.

What sits in the GmbH is not your private money. To use it privately, the GmbH has to distribute it. As a shareholder you then pay the flat tax again, 25 % plus solidarity surcharge. So the main advantage of a GmbH is deferral: you can leave profits taxed at a low rate and reinvest them. On top come costs you do not have privately. A GmbH needs €25,000 share capital (a UG from €1), must draw up a balance sheet and file tax returns every year. A tax adviser can easily cost several thousand euros a year. For small amounts it hardly pays off.