Family offices
and taxes.

A family office has no tax rules of its own. What matters is where the assets are held: privately or in a company. An overview for Germany.

By Dr. Jürgen Lange, Managing Director of JSLM Products & Services GmbH

A family office is not a legal form and is therefore not taxed as such. How income, costs and transfers are taxed depends on where the assets are held: in the family’s private assets or in a company, for example an asset-holding GmbH (vermögensverwaltende GmbH). This overview describes the legal position in Germany as of October 2026. It is general information and does not replace tax advice. Your adviser will clarify which structure makes sense in your case.

Assets held privately

Interest, dividends and capital gains are generally subject to the flat-rate withholding tax (Abgeltungsteuer) of 25% under § 32d of the German Income Tax Act (EStG), plus the solidarity surcharge and, where applicable, church tax. The actual costs of administration cannot be deducted: for income from capital assets, only the saver’s lump sum (Sparer-Pauschbetrag) of €1,000 applies, or €2,000 for spouses assessed jointly (§ 20(9) EStG).

There are exceptions, and they affect families with their own companies in particular: 60% of the gains from selling shares in a corporation (Kapitalgesellschaft) in which you held at least 1% within the last five years are taxed at your personal tax rate (§ 17, § 3 no. 40 EStG). Interest on loans to a company in which you hold at least 10% is, under certain conditions, likewise not subject to the flat-rate withholding tax (§ 32d(2) no. 1 EStG).

Rental income is different. There, expenses connected with the rental income are in principle deductible as income-related expenses (Werbungskosten, § 9(1) EStG), for example costs of administration, maintenance or interest on loans.

Assets in an asset-holding GmbH

Many families hold investments, securities or real estate through a GmbH. Its profits are subject to corporate income tax (Körperschaftsteuer), the solidarity surcharge and trade tax (Gewerbesteuer). This is because under § 2(2) of the German Trade Tax Act (GewStG), the activity of a GmbH always counts as a commercial business, even if its only activity is the administration of assets.

Dividends and gains on disposal

Under § 8b of the German Corporate Income Tax Act (KStG), dividends and gains from selling shares in corporations are, in effect, 95% exempt from corporate income tax, because 5% are treated as non-deductible business expenses. For dividends, this only applies if the direct shareholding was at least 10% at the start of the calendar year; otherwise they are fully taxable. Investment funds and ETFs follow their own rules (German Investment Tax Act, Investmentsteuergesetz).

Trade tax has its own threshold: there, dividends are, in effect, 95% exempt only if the shareholding was at least 15% at the start of the year (§ 9 no. 2a GewStG; for foreign companies, with further conditions, § 9 no. 7). Otherwise they are fully subject to trade tax (§ 8 no. 5 GewStG).

Tax rates

Corporate income tax is 15% up to and including 2027 and then falls gradually by one percentage point a year to 10% from 2032 (§ 23 KStG). On top of this come the solidarity surcharge, which is 5.5% of the corporate income tax, and trade tax, the amount of which depends on the municipality’s multiplier (Hebesatz).

Extended reduction for property companies

A company that exclusively administers and uses its own real estate, or its own capital assets alongside it, can apply for what German law calls the extended reduction (erweiterte Kürzung) under § 9 no. 1 sentence 2 GewStG. Trade tax then no longer applies to the part of the trade income that is attributable to administering and using its own real estate. The conditions are strict: the reduction does not apply, for example, if the real estate serves the commercial business of a shareholder.

The tax effect of family office costs

Whether fees for a multi-family office, your own staff, advisers or software reduce your tax also depends on where the assets are held:

Private assets, investment income: The costs are generally covered by the saver’s lump sum and do not reduce your tax. One exception is the partial income method (Teileinkünfteverfahren, see below).
Private assets, rental: Costs attributable to the let properties can be income-related expenses.
GmbH: Costs for staff, advisers or software are in principle business expenses insofar as they relate to the administration of the company’s assets. If the GmbH bears costs for the family’s private assets, this can be a hidden profit distribution (verdeckte Gewinnausschüttung) that does not reduce the GmbH’s income (§ 8(3) KStG).

If a family office looks after several areas, for example securities and real estate, or private and company assets, the costs must be split in a traceable way. Agree with your adviser how the split should look.

Distributions to the family

A GmbH’s profits are taxed twice: first in the company and again when they are distributed to the family. If family members hold the shares privately, distributions are income from capital assets (§ 20(1) no. 1 EStG) and are generally subject to the flat-rate withholding tax.

On application, the partial income method can apply instead if the person holds at least 25% of the company, or holds at least 1% and, through their professional activity for the company, can exert significant entrepreneurial influence on it (§ 32d(2) no. 3 EStG). In that case 40% of the distribution is tax-free, the rest is taxed at the personal tax rate, and 60% of the income-related expenses are deductible (§ 3 no. 40, § 3c(2) EStG). The application also covers the following four years; once it has been revoked, no new application is possible for this shareholding. Whether this is more favourable depends on the personal tax rate and the costs.

Succession: inheritance and gift tax

In Germany, lifetime gifts and inheritances are subject to the same tax: inheritance and gift tax (Erbschaft- und Schenkungsteuer). Where there is unlimited tax liability, these personal tax-free allowances apply (§ 16 of the German Inheritance and Gift Tax Act, ErbStG):

Recipient	Tax-free allowance
Spouse or registered civil partner	€500,000
Children and stepchildren, grandchildren whose parent has died	€400,000
Grandchildren whose parent is alive	€200,000
Other persons in tax class I, for example great-grandchildren, or parents in the case of an inheritance	€100,000
Tax classes II and III, for example siblings, unmarried partners or unrelated persons	€20,000

The allowances apply per person from whom you receive something. Several acquisitions from the same person within ten years are added together (§ 14 ErbStG). If more than ten years pass between two acquisitions, the earlier one is no longer added, and the allowance is available again.

Business assets and administrative assets

For business assets (Betriebsvermögen), for example your own business or shares in a corporation in which the donor or deceased held a direct stake of more than 25%, there are far-reaching relief rules (§§ 13a, 13b ErbStG). They are subject to conditions, for example a five-year retention period. As a rule, they do not apply to assets that are merely administered: let real estate and securities count as administrative assets (Verwaltungsvermögen), and these are generally not eligible for relief. This also applies if these assets are held in a company: if administrative assets make up at least 90%, the assets are not eligible for relief at all (§ 13b(2) ErbStG). There are exceptions only in a few cases, for example for certain residential property companies.

On 12 and 13 October 2026, Germany’s Federal Constitutional Court (Bundesverfassungsgericht) heard two cases on inheritance tax: one on the relief for business assets, and one on the tax-free allowances, the tax rates and the valuation of real estate. A judgment is still pending (as of 23 October 2026). After it, the rules may change, including the allowances listed above. So have your adviser review planned transfers in good time.

Obligations: record retention and bookkeeping

With high private income, keeping records in order becomes an obligation: if the total of positive surplus income (Überschusseinkünfte), for example from letting or salary, exceeds €500,000 in a year, then, from the following year onwards, the documents relating to this income and the related income-related expenses must be kept for six years (§ 147a German Fiscal Code, Abgabenordnung). For married couples, each spouse counts separately. From 1 January 2027, the threshold is €750,000. Your adviser will clarify which income counts in your case.

Every company comes with its own obligations: bookkeeping, tax returns, annual financial statements and record retention. The more levels your structure has, the more important it is to keep receipts and figures separate for each company while still keeping sight of the overall picture. How to do this is described in the guide Holding company assets: structure and reporting.

Where Finaure helps

Finaure does not prepare tax returns and does not give advice. But it makes sure your adviser receives complete documents: the AI reads receipts and suggests which company and asset they belong to; you review and confirm. The handover uses formats such as DATEV. For succession, you record family relationships and gifts. For each relationship, the tax-free allowance calculator shows which allowances have been used in the last ten years by the gifts recorded. It applies to Germany and is a basis for the conversation with your adviser. More on this under Features.

Sources

More guides

Last updated: 6 November 2026

Family offices and taxes.