The first financial year is closed, the GmbH account shows a surplus, and at the shareholders’ table the question comes up of who this money actually belongs to. In a GmbH profit distribution, the profit first belongs to the company. The shareholders resolve what happens to it, and as a rule it is split according to their shares. Losses do not land in private accounts.
This guide is for anyone who founds, runs or holds shares in a small GmbH or UG. It explains the rules, works through the distribution with a table and shows the taxes on both levels, plus losses and the points that belong in the articles of association.
Key points at a glance:
- The annual profit belongs to the GmbH until the shareholders’ meeting (Gesellschafterversammlung) resolves how to use it (§ 46 no. 1 GmbHG).
- Without a different rule in the articles of association, profit is split in proportion to the shares (§ 29 para. 3 GmbHG).
- Three routes are open: pay out, transfer to revenue reserves or carry forward.
- Only what leaves the share capital (Stammkapital) untouched may be paid out (§ 30 GmbHG).
- Tax is due twice: around 30% at the GmbH at a 400% multiplier, then 26.375% flat-rate tax including solidarity surcharge on the payout.
- Losses stay with the GmbH. The shareholders’ liability ends at their contribution.
What is the profit of a GmbH? From net income to balance sheet profit
In everyday speech, whatever is left at year end counts as profit. The annual accounts are more precise, and that precision decides how much may be distributed. The starting point is the net income for the year (Jahresüberschuss), the result after corporate income tax and trade tax.
| Term | What it means |
|---|---|
| Net income (Jahresüberschuss) | Result of the financial year after tax |
| Profit carried forward | Profit from earlier years that was neither paid out nor transferred to reserves |
| Loss carried forward | Loss from earlier years that is offset against new profits |
| Revenue reserves | Profit the shareholders deliberately keep in the GmbH |
| Balance sheet profit (Bilanzgewinn) | What is available for distribution after carry-forwards and reserves |
For example, the GmbH earns €60,000 net income and carries forward a €10,000 loss from the previous year. At most €50,000 can be distributed. Until the resolution, this GmbH profit remains company assets, and a claim to payment only exists afterwards.
How is profit distribution regulated in a GmbH?
By law, profit distribution in a GmbH is clearly regulated. Profit is split in proportion to the shares unless the articles of association set a different key (§ 29 para. 3 GmbHG). Whoever holds 40% of the shares receives 40% of the payout.
How much someone works in the business does not change this ratio. Work is paid through a salary, unlike in a partnership, where profit share and activity are often negotiated together.
Who decides on the profit distribution?
The profit distribution in a GmbH is decided by the shareholders’ meeting, not by the managing directors. First the shareholders approve the annual accounts, then they resolve on the appropriation of the result (§ 46 no. 1 GmbHG). Both can happen in the same meeting.
A simple majority of the votes cast is enough, and every euro of a share carries one vote (§ 47 GmbHG). A meeting in person is not mandatory. If all shareholders agree, the vote can take place in text form, by email for instance (§ 48 para. 2 GmbHG).
The timeframe is set by law as well. Small companies resolve no later than eleven months after the end of the financial year, all others after eight months (§ 42a para. 2 GmbHG). If the financial year matches the calendar year, the deadline for a small GmbH ends in late November.
Proportionate and disproportionate profit distribution
Proportionate means the payout follows the shares exactly. If two shareholders hold 50% each and €40,000 is paid out, both receive €20,000. This is the statutory default and needs no special agreement.
The profit distribution of a GmbH becomes disproportionate when the payout departs from this ratio. Shareholder A holds 50%, for example, but is to receive 70% because they brought in the clients. That requires a rule in the articles of association or an opening clause that allows a different resolution with the consent of the shareholders who receive less.
For tax purposes, the authorities recognise such payouts if they are valid under civil law. That is the position of the Federal Ministry of Finance letter of 4 September 2024, after the Federal Fiscal Court (Bundesfinanzhof) ruled accordingly in 2022. The clause is best drafted by a notary or a tax adviser.
Profit appropriation in a GmbH: payout, reserve or carry-forward?
For profit appropriation in a GmbH there are three options, and they can be combined (§ 29 para. 2 GmbHG). The profit is paid out in full or in part, transferred to a revenue reserve or carried forward to the next year.
The right mix depends on liquidity, planned investments and the shareholders’ private tax situation. A GmbH with a large order coming in spring tends to keep more. A well-funded consultancy tends to pay out.
Profit payout to the shareholders
The payout starts with the resolution and ends with the transfer. The GmbH withholds the capital gains tax (Kapitalertragsteuer), pays it to the tax office by the 10th of the following month and transfers the rest to the shareholders. With a business account for GmbH and UG, both payments run separately and traceably.
One limit always applies. The assets needed to maintain the share capital stay in the GmbH (§ 30 GmbHG). Interim payouts during the year are possible if a corresponding profit is expected. If the annual result turns out lower, the difference flows back.
Profit carried forward and revenue reserves
The profit carried forward is the open option. The amount moves into the next year and can then be paid out or kept. Revenue reserves are more binding. The money stays in the company, as a cushion for losses or for a planned investment.
For the UG, the law prescribes a reserve: 25% of the net income, reduced by any loss carried forward (§ 5a para. 3 GmbHG). A reserve is a figure on the balance sheet, not an account of its own. To park the amount visibly as well, it can go into a sub-account with its own IBAN.
Calculating GmbH profit distribution step by step
With the finished annual accounts, calculating the GmbH profit distribution takes no longer than an hour. The order is always the same.
It appears in the approved annual accounts, with the GmbH’s taxes already deducted.
A profit carried forward from the previous year is added, a loss carried forward is deducted.
In a UG, 25% first goes into the statutory reserve, plus any reserves required by the articles.
The shareholders decide which part is paid out and which part stays in the GmbH.
The amount is divided by each shareholder’s ratio or by the key in the articles of association.
The GmbH deducts 26.375% capital gains tax including solidarity surcharge, files the return and transfers the net amount.
Example with table: profit distribution among three shareholders
A GmbH profit distribution example with round numbers. The share capital is €30,000, Anna holds €15,000, Ben €9,000, Clara €6,000. Net income is €120,000, and there is a €10,000 loss carried forward from the previous year. €30,000 of the remaining €110,000 goes into revenue reserves, and €80,000 is paid out.
| Shareholder | Share | Gross payout | Capital gains tax and solidarity surcharge | Net payout |
|---|---|---|---|---|
| Anna | 50% | €40,000 | €10,550 | €29,450 |
| Ben | 30% | €24,000 | €6,330 | €17,670 |
| Clara | 20% | €16,000 | €4,220 | €11,780 |
| Total | 100% | €80,000 | €21,100 | €58,900 |
The GmbH profit distribution table leaves out church tax and the saver’s allowance. The €30,000 reserve still belongs to all three, in proportion to their shares.
Profit distribution or salary? Managing director salary, bonus and hidden profit distribution
In small GmbHs the shareholders often run the business themselves, which opens two routes to the money. The salary for the managing director role is a business expense for the GmbH. It lowers the profit and with it corporate income tax and trade tax, while privately the personal income tax rate applies.
A bonus (Tantieme) adds a profit-linked part to the fixed salary. The tax authorities work with guideline values: total pay roughly three quarters fixed and one quarter variable, and the bonus no higher than half of the net income.
The yardstick for any pay is the arm’s length test, meaning whether an unrelated person would have received the same. Anything beyond that counts as a hidden profit distribution (verdeckte Gewinnausschüttung, § 8 para. 3 sentence 2 KStG). The amount is added back to the GmbH’s profit and taxed at the shareholder like a payout. A written employment contract signed before the first payment creates clarity.
Taxes on GmbH profit: what is left for the shareholders?
As with all corporations, the profit of a GmbH is taxed on two levels. First the company pays, then the person who receives the payout.
| Level | Tax | Rate |
|---|---|---|
| GmbH | Corporate income tax plus solidarity surcharge | 15.825% |
| GmbH | Trade tax | 3.5% times the municipal multiplier, so 14% at 400% |
| Shareholder | Flat-rate tax plus solidarity surcharge | 26.375% |
| Shareholder | Partial income method on application | 60% of the payout at the personal rate |
A short overall example at a 400% multiplier shows the scale. Of €100,000 profit before tax, the GmbH pays €29,825. If the remaining €70,175 is paid out in full, it withholds €18,508.66 flat-rate tax including solidarity surcharge. €51,666.34 arrives net, calculated without church tax.
The partial income method (Teileinkünfteverfahren) is available on application to anyone holding at least 25%, or at least 1% while exerting decisive influence on the business through a professional role at the GmbH (§ 32d para. 2 no. 3 EStG). For corporate income tax, a cut has already been passed: one point a year from 2028, down to 10% in 2032.
In short: At a 400% multiplier, the GmbH pays just under 30%, and the payout adds 26.375% on top. Of €100 profit, a little over €51 reaches the shareholder privately. Whatever stays in the GmbH carries only the first tax level for now.
Loss distribution in a GmbH: who bears the loss?
On loss distribution in a GmbH the answer is short. The company bears the loss. It appears as a net loss for the year on the balance sheet, is carried forward into the next year and offset against later profits.
The shareholders’ liability is limited to their contribution. An obligation to pay in more exists only if the articles of association expressly provide for it (§ 26 GmbHG). GmbH profit and loss distribution is therefore asymmetric. Profits reach the shareholders by resolution, losses sit on the GmbH’s balance sheet alone.
In a GbR, a legal form without limited liability, this works differently. There, profit and loss are split among the partners according to the agreed shareholding ratios (§ 709 para. 3 BGB), and all partners are personally liable for debts (§ 721 BGB).
Two thresholds are set by law for the managing directors. If half of the share capital is lost, a shareholders’ meeting is called without delay (§ 49 para. 3 GmbHG). In the event of insolvency or over-indebtedness, an insolvency petition is filed within fixed deadlines (§ 15a InsO).
Setting the profit distribution in the articles of association: tips for founders
The right moment for profit distribution rules is the founding. The business has not earned any money yet, and nobody is negotiating against a concrete amount. Founding with the sample protocol (Musterprotokoll) leaves no room for individual rules, so the statutory key applies.
These points belong in individual articles of association:
Later changes are possible but involve more effort. An amendment to the articles needs a majority of three quarters of the votes cast, notarisation (§ 53 GmbHG) and entry in the commercial register.
Conclusion
GmbH profit distribution follows a simple logic. The profit belongs to the company until the shareholders decide, and without another rule it is split by shares. Besides the payout, a reserve and a carry-forward are available. Tax is due on two levels, and a loss is carried forward rather than distributed.
In practice, a clean separation helps: tax reserves and planned payouts in their own sub-accounts, receipts attached directly to each transaction and an export for the bookkeeping at year end. The Vivid business account is built for exactly this kind of split.
To take away: Approve the annual accounts first, then resolve on the appropriation, then split by shares. Anyone who wants special rules sets them in the articles of association at founding.
Keep the GmbH’s profits in view
With the Vivid business account you set up reserves in sub-accounts with their own IBAN, give access with individual rights and hand over the figures via DATEV export.
Frequently asked questions (FAQ)
What is the difference between profit and loss?
Profit arises when a year’s income exceeds its expenses, a loss in the opposite case. With €200,000 revenue and €170,000 costs, €30,000 remains before tax, with €230,000 costs there is a €30,000 loss. To calculate the GmbH profit distribution, start with the net income after tax. A profit can flow to the shareholders, a loss reduces the next payouts as a loss carried forward.
Which is better, paying out profit or paying a salary?
That depends on the personal tax rate and the social security status. The salary reduces the GmbH’s profit and is taxed privately at the individual rate. The payout has already been taxed at around 30% at the GmbH, depending on the multiplier, and then carries 26.375% flat-rate tax. With profit distribution in a GmbH, the payout stays flexible because it is resolved anew every year. In practice, many combine both: an appropriate fixed salary plus a payout of the remaining profit.
How often can a GmbH distribute profits?
The norm is one payout a year, after the annual accounts are approved and the appropriation of the result is resolved. Interim payouts during the year are possible as well, even several times, if a corresponding annual profit is expected. Every payment needs a shareholder resolution and has to respect the share capital limit of § 30 GmbHG. Interim accounts provide a reliable basis for that.
How much is a GmbH shareholder paid?
Holding a share alone earns no salary, only a part of the distributed profit. A salary goes only to those who also work for the GmbH, usually as managing director. The amount depends on revenue, earnings, industry, company size and responsibility. What matters is that an unrelated person would receive something comparable for the same role, otherwise the excess is treated as a hidden profit distribution.
How is a GmbH profit payout taxed?
First the GmbH pays corporate income tax including solidarity surcharge (15.825%) and trade tax on its profit, together often around 30%. On the payout it then withholds 26.375% flat-rate tax including solidarity surcharge. From a 25% stake, or from 1% with a professional role that carries decisive influence on the GmbH, the partial income method is available on application, under which 60% of the payout is taxed as income at the personal rate. Leaving church tax aside, a €10,000 payout comes to €7,362.50 after flat-rate tax.
Please note: the content of this blog is for general information only and does not constitute legal, financial, investment or tax advice. It is not a recommendation or a basis for financial decisions. Before acting on this information, please seek advice from qualified professionals who can take your personal situation into account.
