by Elena Weismann in News from tax law
Managing directors of a limited liability company (GmbH) are generally subject to the instructions of its shareholders and are not considered to be self-employed, thus liable to social security payments. This is a decision of the German Federal Social Court.
There is one exception that has been created for managing directors that are also shareholders in the GmbH. These are managing directors that are able to determine the fate of the company by influencing decisions made during the shareholders meeting. This situation applies when a managing director holds at least 50% of the shared capital. In the event that the managing director has lower capital participation, additional regulations in the Articles of Partnership regarding a comprehensive and irrevocable blocking minority are required. In this case the managing director has the opportunity to prevent the approval instructions and decisions arrived at during the shareholders meeting.
In addition, it does not matter whether a managing director of a GmbH has any extensive powers or freedoms, such as in the number of their working hours or their involvement in external relationships. Most important is that which is legally enforceable, in this situation it is the possibility that the managing director can influence resolutions arrived at during the shareholders meeting.