How are advisory board members usually remunerated

How to use the full deductibility of an advisory fee correctly!

Like the old sung, so the young should keep it. An advisory board should ensure this, especially when the company is transferred to the next generation. For this he receives remuneration. Care must be taken here! Otherwise there is a risk of the full tax deduction.

Who is on such an advisory board?

Mostly Experts |, partly in a completely different direction. The appointment of an advisory board is usually one voluntary decision of the entrepreneur or the shareholders.

What is this advisory board good for?

He is supposed to be the business owner or managerprovide flexible long-term support. It can help to better cope with business challenges. His tasks, functions and competencies are tailored to the company. They are based, for example, on

  • Company size
  • Ownership structures
  • economic situation
  • existing or to be established network of the company.

What are his duties?

The structuring of rights and obligations is very flexible. The range goes from At sight to counselor. The company is largely free to decide which tasks the respective advisory board members take on. Advisory board rules are often drawn up to lay down the tasks, rights and obligations.

Does the Advisory Board Work for God's Wages?

Mostly probably not. He gets one Advisory board remuneration.

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Is the advisory board fee deductible from tax as a business expense?

To do this, we first have to clarify the term “business expense”. “Business expenses” are all operationally induced expenses. Is the remuneration due to the company? At least that seems to be indisputable. The works council serves the management of the company. This is an operating issue. If you come to this result, you should check: is this business expense taxable?

  • fully deductible,
  • not deductible at all or
  • partially deductible.

This basically applies to the GmbH Corporate Income Tax Act (KStG). This regulates in § 8that the income tax law applies to the determination of the taxable income of the GmbH, modified by the special regulations of the corporation tax law. There are no restrictions on the deductibility of the advisory board remuneration in income tax law. However, corporate income tax law contains a special provision for the deduction of supervisory board remuneration. Section 10 of the KStG regulates other “non-deductible expenses”. It says:

"The following are also non-deductible: [...] 4. Half of the remuneration of any kind that is granted to members of the supervisory board, administrative board or other persons charged with monitoring the management."

The case law broadly interprets the non-deduction rule or the non-deduction of 50 percent of the remuneration. Advisory boards that only make suggestions for the development of the company are also affected. The case law assumes that to develop proposals First of all, what has been used in the company has to be checked and thus “monitored”.

Can that always be determined so precisely in practice?

No, it is not always easy to restrict the area of ​​responsibility of an advisory board in such a way that it does not involve supervision of the management. Exceptions would only confirm the rule here.

What should you as a GmbH do in this situation?

For clarity about deductibility, consider getting one Apply for binding information from the tax office. Or you can at least exchange information with the responsible clerk about it, even if that would not be legally binding. A full deductibility is therefore only conceivable if there is no supervision of the management.