Can a founder of a non-profit company in Germany (gGmbH) receive a salary?

Question

Unlike a normal GmbH, a founder/partner (Gesellschafter) of a gemeinnützige GmbH (or a UG) may, according to the tax code, not receive any profits:

Die Mitglieder oder Gesellschafter (Mitglieder im Sinne dieser Vorschriften) dürfen keine Gewinnanteile und in ihrer Eigenschaft als Mitglieder auch keine sonstigen Zuwendungen aus Mitteln der Körperschaft erhalten.

-- § 55 Abs. 1 Nr. 1 Satz 2 AO

Roughly translated:

The members or partners (members within the meaning of these regulations) may not receive any portion of the profits and in their capacity as members, may not receive any other benefits from the funds of the corporation.

However, people can be hired by a non-profit company and some websites indicate that Geschäftsführer (CEOs) can be paid, and even a Gesellschafter (partner) may be a CEO, for instance:

Würde sich nun ein geschäftsführender Gesellschafter ein zu hohes Gehalt auszahlen, könnte das als verdeckte Gewinnausschüttung gewertet werden

-- firma.de - Der Geschäftsführer einer gGmbH: Das müssen Sie wissen

If a managing partner were to receive too high a salary, this could be interpreted as hidden profit distribution.

Does the tax code above not explicitly exclude a partner from receiving a salary, even as a "CEO"?

Answer 1

The crucial phrase is "in ihrer Eigenschaft als Mitglieder". This restricts the prohibition on receiving benefits from the gGmbH to benefits you'd receive because you are a partner. It is common to have more than one legal relationship with a (g)GmbH, and being a CEO or otherwise employed by one is a typical situation. The snippet from the law does not restrict what benefits you may receive in your CEO role, just those in your partner role.

The distinction is also relevant for regular GmbHs: If you are the CEO of a GmbH as well as a partner, then your salary as CEO is taxed differently than your share of the profits. But typically the tax on salary will be higher than the tax on profits, so there is little incentive here to overpay yourself.

Answer 2

The second quotation clearly contemplates that managing partners will be compensated for their work because it offers a warning about the possible consequences of a managing partner's salary being too high. If any salary were excluded they would have worded it differently and would not have mentioned the relative magnitude.

I'm less certain about how to interpret the first quotation -- the actual statute. It forbids benefits from the funds of the corporation flowing to members in the capacity of members but that is possibly not inconsistent with paying a salary to a member who is also an executive ("Geschäftsführer") because the salary is paid in that capacity (that is, it arises from a different aspect of the recipient's relationship to the company). My German isn't good enough to comment on whether "Zuwendung" even includes salaries; the definition in my dictionary is "financial support, contribution, donation," which could well be limited to unearned income.

Answer 3

Do you honestly expect the CEO of German Red Cross to work for free?

It’s a USD 41 million business with hundreds of employees. CEO salaries in Germany are lower than in the English speaking world and salaries in the charity/not-for-profit sector are usually lower overall than the for-profit sector because employees in that sector get to feel good about themselves but the salary for a CEO of a major charity like the Red Cross would be several hundred thousand Euros.

In Germany, as elsewhere, people are entitled to be paid for the work they do, even charity work.