Profit distribution (Gewinnausschüttung)
Also: Gewinnausschüttung, dividend, distribution
In short
In a profit distribution, a corporation pays out all or part of its profit to the shareholders, on the basis of a resolution on the use of profits. Private individuals pay 25% flat-rate withholding tax on it, plus solidarity surcharge and, where applicable, church tax.
Profit distribution (Gewinnausschüttung) explained
The shareholders decide on the use of profits (Sec. 46 no. 1 GmbHG). Only what is not needed to maintain the share capital may be distributed (Sec. 30 (1) GmbHG). A UG must also put a quarter of its annual net profit into the reserve, and a gGmbH may not distribute anything to its shareholders at all. If a holding company holds the shares, 95% of dividends are exempt from corporation tax at the holding level, provided it held at least 10% at the start of the calendar year (Sec. 8b (1), (4) and (5) KStG). Whether salary or distribution is cheaper for you is something to clarify with your tax adviser.
