SI contributions of a shareholder-director

Good News: Social security contributions are also business expenses of the shareholder-director within the scope of his basic lump sum if they are paid by the GmbH.

In a recent ruling of the Administrative Court (VwGH), it had to decide whether social security contributions of a shareholder-director also count as business expenses within the framework of his basic lump sum if they are paid by the GmbH. This has now been confirmed by the Administrative Court (VwGH). Thus, the managing director can additionally claim the social security contributions paid on his behalf as business expenses within the framework of a basic lump sum.

Basic flat rate for traders and self-employed persons

Tradespeople and self-employed persons can apply a basic flat rate for the determination of their business expenses. The prerequisites for this basic flat-rate method are that

  • there is no obligation to keep accounts,
  • double-entry bookkeeping is not kept voluntarily,
  • the previous year’s turnover did not exceed € 220,000 and
  • it is clear from the tax return that the flat rate is being applied.

In this case, the business expenses can be assessed at a percentage of the turnover. For a shareholder-managing director with a significant shareholding (shareholding in the corporation greater than 25%), the percentage is 6% of the turnover, but not more than € 13,200 per year. The lump sum for business expenses covers in particular: Depreciation for wear and tear (“AfA”) of investments, expenses for energy purchases, rent, repairs, telephone, interest, tools, consumables, insurances, etc.

In addition to the flat-rate expenses of 6% of turnover, certain other business expenses may be deducted. For a shareholder-managing director, this would be, for example, social security contributions.

Save taxes and time with lump-sum taxation

If you calculate your business expenses on a flat-rate basis, you can not only save taxes, but also a lot of time. We will be happy to advise you on whether lump-sum accounting is advantageous for you personally under tax law. As there may be time-related binding effects with regard to the change between complete income/expenses accounting on the one hand and lump-sum accounting on the other, a forecast calculation for several years must be prepared for this.

Do you have questions about this or similar topics? We are happy to be there for you! 

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