Risk of a business split when using the home office to one’s own GmbH

Combining the registered office of the newly founded or already existing company and its management at the private residential address of the shareholder-managing director? This is not a good idea from a tax perspective. Because in this case, there is quickly a risk of splitting the business.

If the shareholder of a corporation uses an essential operating basis, a so-called business split exists for tax purposes due to a personal and factual interdependence, provided that the shareholder can exercise a controlling influence over the GmbH alone or together with others.

Office space in a family home that is otherwise used for personal residential purposes is to be regarded as an essential business asset. According to the case law of the Federal Fiscal Court (Bundesfinanzhof, BFH), the home office is regularly considered an essential business asset, especially if the company has no other rooms or if the center of management or the registered office of the company is located there.

However, if the managing director only uses a home office in addition to his office at the location of the operating company and the scope of the work carried out there is of minor importance, the home office is generally not considered to be an essential business asset.

According to the relevant literature, a temporary use of the workroom that is only intended to be transitional from the outset is considered harmless, but is not entirely without risk and should therefore be avoided if possible.

If a business split has already been (unintentionally) established, it is recommended that the termination is only implemented after consultation with the tax advisor in order to avoid possible negative consequences such as the disclosure and taxation of hidden reserves.

Victoria Lenke | TLI Steuerberater