Anyone who manages the business as a shareholder of a GmbH must hold a comprehensive blocking minority. Otherwise, they are subject to social security contributions. (Photo: © auremar/123RF.com)
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The Federal Social Court ordered several companies to pay back social security contributions for their managing directors. A comprehensive blocking minority was crucial.
Managing partners have been a focus of German pension insurance audits for several years , says Andreas Islinger , tax advisor and head of pension consulting at Ecovis. In three rulings, the Federal Social Court (BSG) has now sided with the German pension insurance: companies had to pay back contributions for managing partners . The expert explains here why exactly and what affected companies can do.
Case law assumes that the legal authority of managing directors derives from their shareholding in the GmbH (limited liability company). If a shareholder-managing director holds 50 percent or more of the shares in the GmbH, they are considered self-employed for social security purposes. If the shareholder-managing director holds less than 50 percent of the shares, they are generally considered an employee and therefore usually have to pay social security contributions. "An exception is the so-called blocking minority ," adds Islinger, "it is a right granted in the articles of association that prevents resolutions despite a minority shareholding ."
The three rulings primarily concerned the required structure of such a blocking minority . In one of the cases, the managing shareholder held a minority stake of 49 percent . However, certain company decisions required a 75 percent majority . The managing shareholder with the 49 percent stake could therefore have blocked these decisions . Consequently, the GmbH treated him as a self-employed individual exempt from social security contributions.
The German Pension Insurance Fund demanded contributions , as it assumed dependent employment. In its view, the blocking minority was insufficient to classify the managing shareholder as having a controlling interest.
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The Federal Social Court (BSG) ruled in favor of the German Pension Insurance. A blocking minority must be comprehensive and not limited to specific resolutions . This applies even if the managing shareholder can prevent their own dismissal , the judges stated. Furthermore, the controlling influence must derive from the articles of association and not from the managing director's service contract (Federal Social Court, judgment of February 1, 2022, case no. B 12 KR 37/19 R ).
Managing directors who are also shareholders should always have their social security status carefully assessed, warns Islinger. This applies not only at the beginning of their tenure but also whenever there are significant changes . "In practice, incorrect assessments occur time and again. Especially for high-earning managing directors, an incorrect classification can lead to back payments amounting to several tens of thousands of euros," he cautions.
Practical tip: Companies should always initiate a status determination procedure when a managing shareholder begins working for them , in order to eliminate these risks. "This procedure allows companies to protect themselves legally ," explains the pension expert, "such a status determination notice has already saved us from additional claims in many company audits." In two further cases, the Federal Social Court (BSG) issued similar rulings with the same reasoning (Case Nos. B 12 R 19/19 R and B 12 R 20/19 R ).
Source: Ecovis
New status determination procedure from April 2022 : The status determination procedure will change significantly from April 2022. You can read what you need to know > here.
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