Investor Guide
2026-10-10 08:29

Gesellschafterdarlehen (shareholder loan): Interest That Can Leave Germany Untaxed — on Four Conditions

A Gesellschafterdarlehen is a loan from a shareholder to its own company — in our experience, how most international buyers fund a supermarket GmbH (Part 9). Its interest is deductible for the GmbH at an arm's-length rate and, paid to a lender abroad, stays free of German tax only if all four conditions hold; in an insolvency the loan ranks behind other creditors.

What it is

Insolvency. A claim to repayment ranks behind the company's other creditors (§ 39(1) no. 5 InsO), unless the lender is a non-managing shareholder holding 10% or less (§ 39(5) InsO). Repayments in the year before the insolvency petition, and security granted in the ten years before it, can be contested (§ 135(1) InsO).
Tax. Interest that a German GmbH pays to a lender resident abroad is taxable in Germany only in the cases listed in § 49(1) no. 5 EStG and, for lenders in listed tax havens, under § 10 StAbwG. It stays free of German tax and withholding tax only if all four conditions hold:
  • the loan is not secured, directly or indirectly, on German real estate — not even by a second-ranking land charge (§ 49(1) no. 5 lit. c aa EStG);
  • it is not profit-participating (§ 49(1) no. 5 lit. a and lit. c bb EStG);
  • the rate is at arm's length and documented; any excess is a hidden profit distribution, not deductible and taxed as a dividend (§ 8(3) sentence 2 KStG);
  • the lender is not resident in a jurisdiction on the German tax-haven list (StAbwV, currently including Russia); otherwise 15% German withholding tax applies (§ 10 StAbwG).

Why it matters to investors

In Part 11's example, a GmbH borrows €10.9 million at 3.0%. With the four conditions met, €327,000 of interest a year reaches the investor free of German tax. Equity funding, by contrast, would cost some €68,000 a year in German tax if the profit were paid out. The saving stops at the border. Most countries tax their residents' interest income; if the home country taxes interest at 40%, the €327,000 costs about €131,000 there.
Lending does not lower the risk: limited liability protects the investor's other assets, not the money lent to the company (Part 9). A shareholder who is also managing director contracts with himself and needs a release from § 181 BGB; in a single-shareholder GmbH the agreement must also be recorded in writing (§ 35(3) GmbHG).

What to check

• A written agreement — amount, arm's-length rate, term, ranking, repayment — signed before any funds move.
• No security on the property for the shareholder, and no link between interest and profit.
• The lender's tax residence, and advice there on how the interest is taxed.
• For a group company lending from abroad, proof that the GmbH could service the loan over its full term (§ 1(3d) AStG).
Related terms: GmbH · Zinsschranke · Grundschuld
Sources: InsO §§ 39, 135; BGB § 181; GmbHG § 35; EStG §§ 43, 49(1) no. 5; KStG § 8(3); AStG § 1(3d); StAbwG § 10; StAbwV § 2; Gordon Real Estate Group, "German Prime Retail", Parts 9 and 11. Legal position as of 10 October 2026.
Photo: Peter Herrmann / Unsplash
This entry is general information and not legal or tax advice.