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Dividends in the GSVG Contribution Base?
Dividends paid to managing shareholders of a Chamber of Commerce‑affiliated GmbH must be taken into account when calculating the contribution base for the GSVG compulsory insurance.
In a procedure before the Administrative Court (Verwaltungsgerichtshof, VwGH) the question arose whether, for a shareholder‑managing director whose GmbH is not a member of the Chamber of Commerce, dividends are to be taken into account when determining the GSVG insurance threshold.
The person concerned was managing director of a GmbH in which she held a 100 % share. Because the GmbH was not a member of the Chamber of Commerce, the managing director was only, in the event of exceeding the relevant insurance threshold, compulsorily insured as a “new self‑employed” under the GSVG. In her income‑tax assessment she was shown earnings from self‑employment of EUR 484.82 and earnings from capital assets of EUR 520,000, which stem from dividend payments. The managing director therefore argued that only the earnings from self‑employment should be included in the calculation of compulsory insurance under the GSVG and that no compulsory insurance existed, because the earnings from self‑employment were below the insurance threshold.
In contrast, the social‑insurance provider and, subsequently, the Federal Administrative Court held that all earnings, including the earnings from capital assets (dividends), must be taken into account where they are linked to the activity as a managing shareholder.
Finding of the VwGH
If the earnings from self‑employment (= remuneration of a substantially involved GmbH managing director) on their own fall below the relevant insurance threshold, but together with the earnings from capital assets (arising from the shareholder position) they exceed the threshold (= twelve times the monthly marginal earnings limit under the ASVG), the social‑insurance provider is correct in concluding a compulsory insurance under the GSVG. The rationale is that managing shareholders can usually decide themselves to what extent their activities are compensated by dividend payments or by management fees.
The VwGH also notes that earnings from capital assets must be considered when assessing whether the insurance threshold is exceeded for managers as new self‑employed. This is affirmed, as there is no reason to see why earnings from capital assets should be included in the GSVG assessment base but not in the determination of whether the threshold has been exceeded.
The VwGH leaves open the question of whether a compulsory insurance also exists when the manager receives no management remuneration at all and is assigned only dividend payments. In this case the VwGH, however, states that there may be avoidance structures that would possibly require an assessment based on the true economic substance (i.e. a qualification of dividends as ‑ earnings from self‑employment or as earnings equivalent to a business operation ‑ management remuneration).
The person concerned was managing director of a GmbH in which she held a 100 % share. Because the GmbH was not a member of the Chamber of Commerce, the managing director was only, in the event of exceeding the relevant insurance threshold, compulsorily insured as a “new self‑employed” under the GSVG. In her income‑tax assessment she was shown earnings from self‑employment of EUR 484.82 and earnings from capital assets of EUR 520,000, which stem from dividend payments. The managing director therefore argued that only the earnings from self‑employment should be included in the calculation of compulsory insurance under the GSVG and that no compulsory insurance existed, because the earnings from self‑employment were below the insurance threshold.
In contrast, the social‑insurance provider and, subsequently, the Federal Administrative Court held that all earnings, including the earnings from capital assets (dividends), must be taken into account where they are linked to the activity as a managing shareholder.
Finding of the VwGH
If the earnings from self‑employment (= remuneration of a substantially involved GmbH managing director) on their own fall below the relevant insurance threshold, but together with the earnings from capital assets (arising from the shareholder position) they exceed the threshold (= twelve times the monthly marginal earnings limit under the ASVG), the social‑insurance provider is correct in concluding a compulsory insurance under the GSVG. The rationale is that managing shareholders can usually decide themselves to what extent their activities are compensated by dividend payments or by management fees.
The VwGH also notes that earnings from capital assets must be considered when assessing whether the insurance threshold is exceeded for managers as new self‑employed. This is affirmed, as there is no reason to see why earnings from capital assets should be included in the GSVG assessment base but not in the determination of whether the threshold has been exceeded.
The VwGH leaves open the question of whether a compulsory insurance also exists when the manager receives no management remuneration at all and is assigned only dividend payments. In this case the VwGH, however, states that there may be avoidance structures that would possibly require an assessment based on the true economic substance (i.e. a qualification of dividends as ‑ earnings from self‑employment or as earnings equivalent to a business operation ‑ management remuneration).