About Us
FAQ
Global Law Experts Logo
Global Law Experts Logo

Find a Global Law Expert

Specialism
Country
Practice Area

Awards

Since 2010, the Global Law Experts annual awards have been celebrating excellence, innovation and performance across the legal communities from around the world.

BSG on mandatory social security contributions for managing directors

posted 6 years ago

Mandatory social security contributions for managing directors are a controversial subject. The Bundessozialgericht (BSG), Germany’s federal supreme court in relation to social security matters, recently ruled that managing directors shall, as a rule, be deemed to be employees of a GmbH.
The issue of mandatory social security contributions for managing directors can sometimes give rise to significant supplementary contributions. In its judgments from March 14, 2018 (Az.: B 12 KR 13/17 R and B 12 R 5/16 R), the BSG held that managing directors of a GmbH, a type of German private limited company, shall, as a rule, be deemed to be employees of the GmbH and thus subject to mandatory social security contributions. The Court set forth strict requirements for a managing director to be classified as self-employed. In particular, we at the commercial law firm GRP Rainer Rechtsanwälte note that it is essential that the managing director has sufficient legal scope for action for the purpose of determining the fate of the company. 
In the first case, the managing director bringing the legal action owned a 45.6 per cent interest in the registered share capital. Additionally, there was a so-called “Stimmbindungsabrede”, i.e. a voting commitment, with the GmbH’s second shareholder. In the other case, the managing director held only 12 per cent of the registered share capital. In both cases, the BSG ruled that the managing directors were to be deemed to be employees of the respective GmbHs and thus subject to mandatory social security contributions.
In its reasoning, the BSG noted that shareholder-managing directors of a GmbH shall only not be classified as employees if they have the legal authority to determine the fate of the company by exerting influence on the general meeting of the shareholders. This was said to be generally possible if the managing director holds more than 50 per cent of the registered share capital and is thus the majority shareholder. The Court went on to say that if the managing director holds only 50 per cent of the shares in the registered share capital or less, an employee relationship can then only be ruled out if the managing director has a full blocking minority stake as per express provisions in the articles of association and he or she is therefore able to prevent instructions being issued by the general meeting of the shareholders. 
The BSG also stressed that it is not a matter of which powers the managing director has with respect to the GmbH’s external relations or how much latitude he or she has in carrying out their activities, e.g. with regard to working hours; the decisive factor is that the managing director has sufficient legal authority.
Lawyers who are experienced in the field of company law can advise managing directors and shareholders in relation to mandatory social security contributions.
https://www.grprainer.com/en/legal-advice/company-law.html

Author

Find the right Legal Expert for your business

The premier guide to leading legal professionals throughout the world

Specialism
Country
Practice Area
0
LAWYERS RECOGNIZED
0 m+
EVALUATIONS OF LAWYERS BY THEIR PEERS
0
PRACTICE AREAS
0
COUNTRIES AROUND THE WORLD

Join

0
who are already getting the benefits

Sign up for the latest legal briefings and news within Global Law Experts’ community, as well as a whole host of features, editorial and conference updates direct to your email inbox.

Naturally you can unsubscribe at any time.

Newsletter Sign Up

About Us

Global Law Experts is dedicated to providing exceptional legal services to clients around the world. With a vast network of highly skilled and experienced lawyers, we are committed to delivering innovative and tailored solutions to meet the diverse needs of our clients in various jurisdictions.

Contact Us

Stay Informed

Join Mailing List

GLE