Paying Money Out of Your Holding Company Privately: Planning Retirement Provision and Succession

Why the holding account and your private account are not the same

At company level, investment income arises, for example dividends from the subsidiaries. At the holding, such income from shares in corporations is in principle left out of account when determining income under § 8b(1) KStG. However, § 8b(5) KStG treats 5 percent of this income as non-deductible business expenses, and for portfolio holdings of directly less than 10 percent at the beginning of the calendar year the exception in § 8b(4) KStG applies. This money initially sits in the company. It is not yet net money available to you privately.

Only when the company pays you does a separate tax treatment arise at your private level. The difference between the holding account and net money in your private hands is therefore the second layer of taxation plus the specific reason for payment. For good reason, we deliberately do not state any single combined tax burden figure for both levels here, because it depends on the route and on your personal circumstances.

Three routes by which money reaches the shareholder

1. Open profit distribution

The basis is the shareholders' claim to the net profit for the year or the balance sheet profit and the resolution on the appropriation of profits under § 29 GmbHG. Capital maintenance must be observed: under § 30(1) GmbHG, the assets required to maintain the share capital may not be paid out to the shareholders.

On your side, the distribution belongs to income from capital assets under § 20(1) no. 1 EStG. For the privately participating shareholder, the separate tax rate of 25 percent under § 32d(1) EStG (final withholding tax, Abgeltungsteuer) generally applies. The capital gains tax is already levied at source by deduction from the capital income, namely at 25 percent under § 43(1) sentence 1 no. 1 in conjunction with § 43a(1) sentence 1 no. 1 EStG. The tax deduction is based on the full capital income without deduction (§ 43a(2) EStG).

A common misconception is important here: the partial-income method with a 40 percent tax-free portion (§ 3 no. 40 EStG) and the corresponding deduction of only 60 percent of expenses (§ 3c(2) EStG) is not the standard for a private shareholding. § 3 no. 40 sentence 2 EStG ties this exemption for dividend income to § 20(8) EStG, that is, to business income. The partial-income method is accessible only upon application under § 32d(2) no. 3 EStG if you hold at least 25 percent or at least 1 percent with significant professional influence. The application is binding for the relevant assessment period and the following four assessment periods.

A hidden profit distribution (verdeckte Gewinnausschüttung) must also be examined. It does not reduce the company's income (§ 8(3) sentence 2 KStG) and, on your side, belongs to the other income under § 20(1) no. 1 sentence 2 EStG.

2. Repayment of a genuine shareholder loan

If you have granted the company a loan, its repayment to you is a separate transaction. Under § 488 BGB, the loan agreement obliges payment of interest and repayment when due. For tax purposes a distinction must be made: the repayment of the documented principal amount is not taxable capital income for you, whereas agreed interest belongs to income from capital assets under § 20(1) no. 7 EStG. There is therefore no blanket tax exemption for the entire payment stream.

No tax trick in the other direction. A loan from the company to you as a shareholder is not a permanent tax-free withdrawal. Without a serious agreement on arm's-length terms, there is a risk of it being treated as a hidden profit distribution, and capital maintenance under § 30 GmbHG must be observed. For such payments, § 30(1) sentence 2 GmbHG requires a full-value consideration or repayment claim against the shareholder. Whether and under what conditions a loan from the company to you is recognised in the individual case or is deemed a hidden profit distribution depends on arm's-length terms, seriousness, creditworthiness, and the repayment arrangement. We deliberately do not settle this point in a blanket manner here; it must be examined individually.

3. Repayment of capital contributions (Einlagenrückgewähr)

A repayment of capital contributions concerns amounts that you or former shareholders paid into the company in excess of the nominal capital and that are recorded in the tax contribution account (steuerliches Einlagekonto) under § 27 KStG. It is not automatically tax-free, but tied to a fixed order and to formalities.

• Order: Under § 27(1) sentence 3 KStG, payments reduce the tax contribution account only to the extent that they exceed the distributable profit determined at the end of the preceding financial year. The distributable profit is therefore deemed to be used first.
• Effect on you: Only to the extent that the contribution account is deemed used does the payment not count as your income under § 20(1) no. 1 sentence 3 EStG.
• Assessment and certificate: The balance of the contribution account is assessed separately (§ 27(2) KStG), and the company must certify the repayment of capital contributions (§ 27(3) KStG).
• Strict consequence if the certificate is missing: If no tax certificate has been issued by the day the first assessment is announced, the amount of the repayment of capital contributions is deemed certified at 0 euros under § 27(5) sentence 2 KStG. The payment is then treated like a taxable profit distribution.

Comparison of the payment routes

What remains net: a transparent worked example

The following example serves solely to illustrate the calculation method. It is not a promise of a net amount.

Assumptions (explicitly stated): domestic holding GmbH, natural person resident in Germany, share held as private assets, open profit distribution, final withholding tax of 25 percent under § 32d(1) EStG, saver's lump-sum allowance of 1,000 euros under § 20(9) EStG, unless already used elsewhere. Assumed distribution amount of 100,000 euros.

• Capital income: 100,000 euros
• less saver's lump-sum allowance: 1,000 euros
• taxable: 99,000 euros
• final withholding tax of 25 percent: 24,750 euros
• amount before solidarity surcharge and church tax: 75,250 euros

Factors not taken into account (they change the result): the solidarity surcharge and, in the case of church tax liability, church tax. Their current rates are not documented here from an official primary source and were therefore deliberately not included in the calculation. Also left open are a possible more-favourable-treatment test (Günstigerprüfung) under § 32d(6) EStG, a possible application for the partial-income method under § 32d(2) no. 3 EStG, and effects at company level (§ 8b KStG, trade tax). The stated amount is therefore an upper limit before the solidarity surcharge and church tax and not a guaranteed net amount.

Provision first, then gifting: the succession connection

Before you transfer shares or make private gifts, it is worth recording your own ongoing provision, your reserves, and planned gifts. Important: the payment to you as a shareholder and a later gift to your children are two separate transactions.

A gift is a gratuitous grant under § 7(1) no. 1 ErbStG. The personal allowances are governed by § 16 ErbStG, for example 400,000 euros for children, 200,000 euros for grandchildren, and 500,000 euros for spouses. Several acquisitions from the same person within ten years are aggregated under § 14 ErbStG. This neither makes a gift automatically tax-free, nor is a cash distribution always more favourable than other routes.

A full succession or relief optimisation is expressly outside the scope of this article. Cases of shareholdings already transferred with relief and subject to ongoing retention requirements do not belong in this worked example and must be examined separately. For the process of a handover, you will find the basics in the articles Company succession and Start succession planning early.

Documents you should check before a payout

• Current articles of association and rules on the appropriation of profits (§ 29 GmbHG).
• Annual financial statements showing the distributable profit and the share capital (§ 30 GmbHG, § 27(1) KStG).
• Resolution on the appropriation of profits or on distribution, with a specified payment date.
• Assessment notice and tax certificate for the tax contribution account, if a repayment of capital contributions is claimed (§ 27(2) and (3) KStG).
• In the case of a loan: a written loan agreement on arm's-length terms with an interest and repayment schedule, plus proof of payment (§ 488 BGB).
• An overview of gifts already made in the last ten years, if a later gift is planned (§ 14 ErbStG).

Limits of this article and individual advice

This article sets out the legal basics and does not replace individual tax or legal advice. Whether and how the norms mentioned apply in your case depends on your circumstances, the date of the applicable provisions, and the specific arrangement. The right route and the actual net amount can only be determined after reviewing your documents.

If you would like to plan your provision and a later transfer of assets calmly and in an orderly way, we are happy to go through it with you. You can reach us via Contact or via the appointment booking.

Sources and assumptions

The key statements are based on the official statutory texts in the version retrieved (retrieval date: 29 September 2026):

• § 8b KStG and § 8 KStG
• § 20 EStG, § 32d EStG, § 3 EStG, § 3c EStG, § 43 EStG, § 43a EStG
• § 27 KStG
• § 29 GmbHG, § 30 GmbHG
• § 488 BGB
• § 7 ErbStG, § 14 ErbStG, § 16 ErbStG

The case described at the outset is assumed throughout. Rates for the solidarity surcharge and church tax, as well as a possible relief under the Inheritance and Gift Tax Act, are not documented here and therefore have not been reflected in figures.