Social security obligation - yes or no? This question is important in practice because the answer to it determines whether the managing director must pay social security contributions and employer contributions to the social security system in addition to income tax. Ultimately, employee and employer contributions can account for up to 40% of the salary.
When is the managing director subject to social security contributions?
In principle, the following applies: If the managing director of a GmbH is employed by the GmbH he represents and is dependent on it, he is also subject to social security contributions. However, if there is also a shareholding in the company, exceptions may apply. If it is no longer possible to speak of an authority of the GmbH to issue instructions to the managing director due to the shareholding, the question of the obligation to pay social insurance is not clear. Ultimately, the managing director could decide alone. In this case, he would not qualify as an employee and would therefore not be subject to social security contributions.
There is a social security obligation:
- An external managing director, and therefore not a shareholder, is without exception a dependent employee
- Integration into the work organization specified by the company
- Agreed non-competition clause
- Agreed annual leave
- Fixed annual salary
- Prohibition of self-contracting
- Subordination to other managing directors
There is no social security obligation:
- Managing director holds more than 50% of the share capital and is majority shareholder
- Managing director holds exactly 50% of the shares, i.e. even if both managing directors hold exactly 50%
- Although the managing director holds less than 50% of the shares, he can prevent instructions from the shareholders' meeting on the basis of the articles of association, keyword: comprehensive blocking minority
- Performance-related annual salary
- Right of the managing director to directly and solely represent the GmbH
The decisive factor for classification is therefore always the managing director's obligation to follow instructions and his shareholding.
What are the legal consequences of an incorrect classification of social security obligations?
If no social security contributions are paid by mistake despite the obligation to take out insurance, the GmbH is liable as the employer for the unpaid contributions. If, on the other hand, social security contributions are paid without compulsory insurance, these will only be reimbursed within the limitation period.
In case of uncertainty, the clearing office of the German Federal Pension Insurance (DRV Bund) offers an investment procedure to clarify the managing director's social security obligation. The resulting decision is binding and is always made on a case-by-case basis. If, for example, the health insurance fund becomes aware of a shareholder-managing director activity, this procedure is also carried out ex officio.
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