Bitcoin in a GmbH: Opportunities and Pitfalls

Short answer: For your private savings, a GmbH in Germany is almost always the worse wrapper for bitcoin. Privately, price gains are tax-free after one year; in a GmbH they cost around 30 % tax, and when the profit is distributed to you, a good 26 % comes on top. A GmbH mainly makes sense when the money is already there: as taxed profit of your company that you don't need privately.

This article is not tax advice. It shows you the mechanics so that you can ask your tax adviser the right questions. How bitcoin appear and are valued on the balance sheet is explained in Bitcoin accounting for companies; we don't repeat it here. Why companies hold bitcoin as a reserve at all is covered in Bitcoin as a treasury asset.

Why the one-year rule does not apply in a GmbH

Privately, you sell bitcoin tax-free after more than one year. That is governed by § 23 EStG, which only covers private disposals. A GmbH has no private assets. Everything it owns is business assets, and every gain from them is profit of the company.

On top of that, a GmbH is always a commercial business, simply because of its legal form. Even if it does nothing but hold bitcoin, it pays trade tax (Gewerbesteuer). The trade tax allowance of 24’500 € only exists for sole traders and partnerships, not for a GmbH.

What the GmbH pays on a price gain

The tax has two parts:

• Corporate income tax: 15 % plus the 5.5 % solidarity surcharge on it, together 15.825 %.
• Trade tax: depends on your municipality's multiplier (Hebesatz). At 400 % it is 14 %, at the legal minimum multiplier of 200 % it is 7 %.

In a typical city you end up at around 30 %. In a municipality with a low multiplier it can be around 23 %. That only holds if the GmbH really is based and managed there; a letterbox is not enough.

The balance sheet only shows gains when you sell

Under HGB, bitcoin appear on the balance sheet at no more than their purchase price. Price gains therefore stay invisible and untaxed until the GmbH sells. Price losses at year end, on the other hand, often have to be written down in the commercial accounts, while for tax they usually only count if they are permanent. The details are in Bitcoin accounting for companies.

For a long-term holder this has one advantage: as long as the GmbH doesn't sell, it pays no tax on the bitcoin either. The tax is only deferred, not cancelled. It comes due on the sale, at the latest when the GmbH is wound up.

Distribution: the second layer of tax

As long as the profit stays in the GmbH, it has been taxed once. If you want to spend it privately, the GmbH has to distribute it. As a shareholder you usually pay the flat tax of 26.375 % on that, a little more with church tax. If you hold at least 25 %, you can instead opt for the partial-income method: then 60 % of the distribution is taxed at your personal rate. Which is cheaper depends on your income.

Skipping the distribution does not get you around the tax. If the GmbH transfers bitcoin to you below value, lets you use them privately or lends you money without adequate interest, the tax office treats it as a hidden profit distribution (verdeckte Gewinnausschüttung). You pay the tax anyway, often with interest.

Contributing private bitcoin to a GmbH?

Some people consider putting their private holdings into a GmbH. It is usually a bad trade:

• If you contribute bitcoin to the GmbH, it counts as a disposal for you privately. If you bought them less than a year ago, the gain is taxable.
• If you bought them longer ago, the contribution is tax-free. But from then on the bitcoin sit in the GmbH, and every further price gain is taxable there. Privately it would have stayed tax-free.
• The value at which the GmbH books contributed bitcoin depends on the type of contribution. Clarify that with your tax adviser beforehand, not afterwards.

In short: tax-free private bitcoin become taxable in a GmbH. How it works privately, with holding period, FIFO and exemption limit, is covered in the guide Bitcoin taxes in Germany.

Worked example: private or GmbH

Two cases, both with the same assumption: the bitcoin price triples over the years. That is an assumption for the calculation, not a forecast. Tax rates as above: 29.825 % in the GmbH, 26.375 % on distribution, no church tax.

The calculation shows the pattern: a GmbH only pays off for money that stays in the company. As soon as it flows to you, the second layer of tax more than wipes out the advantage.

What a GmbH costs

A GmbH is not a brokerage account. It is a company with obligations:

• Share capital: at least 25’000 €, of which at least 12’500 € paid in at formation. The Unternehmergesellschaft (UG) starts at 1 €, but has to set aside a quarter of its profit.
• Formation: notary and commercial register, roughly a few hundred to a little over a thousand euros.
• Every year: double-entry bookkeeping, annual accounts with a balance sheet, publication in the company register, corporate, trade and VAT returns, entry in the transparency register, chamber of commerce (IHK) fee.
• Tax advice: for a small GmbH a few thousand euros a year is common, more depending on scope.

Assume 3’000 € of costs a year, and the GmbH eats 30’000 € over ten years. For small amounts that alone rules it out.

When a GmbH makes sense and when it doesn't

Rather yes:

• You already have a GmbH with profits you don't need privately. The company can hold part of its reserve in bitcoin, with a treasury policy as described in Bitcoin as a treasury asset.
• You have a holding GmbH above your operating GmbH. Profits flow from the operating company to the holding almost tax-free (95 % exempt under § 8b KStG, effectively around 1.5 %). The holding can hold bitcoin, separated from the risk of the business. The 95 % rule only applies to dividends and shares, though, not to bitcoin themselves: the holding pays full tax on their gains.
• The company receives bitcoin as payment or runs mining. Then the bitcoin are business assets anyway.

Rather no:

• You want to hold private savings for the long term. Privately the gain is tax-free after one year; no GmbH can beat that.
• You want to spend the money privately later, for example in retirement. Then you end up paying around 48 % instead of 0 %.
• The amounts are small. The running costs eat the return.
• You want to trade short-term frequently. Here the GmbH at 30 % is cheaper than a high personal tax rate, but that is a trading question, not a saving one.

Inheritance and gifts are not automatic either: the tax reliefs for business assets are meant for companies with a real business. A GmbH that only manages assets cannot simply count on them. How gifting and inheriting work privately is explained in Giving and inheriting bitcoin.

Austria: a GmbH at 23 %

In Austria the calculation looks different, because bitcoin are taxable privately too. Bitcoin you bought after 28.02.2021 are taxed privately at 27.5 %, however long you hold them. Older holdings bought before that are tax-free after one year.

An Austrian GmbH pays 23 % corporate income tax, so less than the 27.5 % privately. On distribution, however, 27.5 % KESt is added. Together that is around 44 %:

So the GmbH is only cheaper as long as the profit stays in the company. On top come a minimum corporate income tax, payable even in loss years, and the cost of bookkeeping and accounts. Old holdings certainly don't belong in a GmbH: privately they stay tax-free. More in Bitcoin taxes in Austria.

Switzerland: GmbH or AG

In Switzerland, private capital gains on bitcoin are tax-free as long as the tax authority does not classify you as a professional trader. Privately you only pay wealth tax.

A GmbH or AG, on the other hand, pays profit tax to the federal government, canton and municipality on every gain, roughly 12 to 21 % depending on location, plus a capital tax on its equity. Distributions are taxable income for you, only partly so with a stake of 10 % or more. The minimum capital is 20’000 CHF for a GmbH and 100’000 CHF for an AG.

One special feature: under Art. 960b OR the company may value bitcoin at the market price on the balance sheet date. Because profit tax is based on the accounts, a book gain shown this way is generally taxed too, even though nothing was sold. If the company values at cost, the gain waits until the sale. For private investors the same applies here: in Switzerland, private bitcoin belong in private assets. Details in Bitcoin taxes in Switzerland.