GmbH Business Expenses in Germany 2026: What's Deductible and What's Not

Business expenses (Betriebsausgaben) are all costs with a direct connection to your GmbH's operations. They reduce taxable profit and lower corporate income tax (15%) plus the solidarity surcharge. Unlike sole traders, a GmbH has no personal tax-free allowance — every euro of profit is taxed. That makes capturing every allowable deduction essential.

What Can a GmbH Deduct?

The most common deductible expense categories for a GmbH or UG:

• Salaries and wages: including employer social contributions and the managing director's salary — if it passes the arm's-length test
• Rent and utilities: office, warehouse, or production space
• Company vehicles: leasing, fuel, maintenance (private use creates a taxable benefit-in-kind)
• IT and software: hardware, SaaS subscriptions, cloud services
• Marketing and advertising: ads, website costs, trade fairs
• Travel expenses: business trips, hotel, statutory meal allowances
• Professional fees: tax advisor, lawyer, business consultant
• Insurance: business liability, D&O insurance for the managing director
• Interest: on business loans or shareholder loans at market rate
• Depreciation (AfA): on fixed assets over their useful life

What Is Not Deductible?

Not everything the GmbH pays automatically reduces taxable income:

• Personal expenses disguised as business costs: trips without a business purpose, personal purchases on the company card
• Constructive dividends (vGA): excessive director salary, interest-free shareholder loans, above/below-market rents
• Gifts above €50 per recipient per year
• Meals without a qualifying business trip
• Fines, penalties and administrative fees

The Constructive Dividend Trap (vGA)

The constructive dividend (verdeckte Gewinnausschüttung, vGA) is the most expensive tax risk for GmbH founders. It arises when the GmbH grants a shareholder a benefit it would not grant an unrelated third party. The tax authority adds the vGA back to profits and also taxes it at shareholder level as capital income (25% Abgeltungsteuer) — resulting in double taxation.

• Managing director earns €15,000/month when the industry average is €5,000
• GmbH sells goods to a shareholder significantly below market price
• GmbH provides an interest-free loan to a shareholder

For more on managing director compensation, see Managing Director Salary in a GmbH.

Company Car: Private Use and Tax

If the managing director uses a company car privately, a benefit-in-kind arises that is treated as additional taxable salary. Vehicle costs remain fully deductible at GmbH level — only the private portion is added to pay.

• 1% rule: 1% of the car's gross list price per month is treated as taxable benefit
• Logbook (Fahrtenbuch): document all private journeys — more effort, but often saves tax when private use is low

No Deduction Without a Receipt

Every business expense needs a proper invoice or receipt showing date, invoice number, names and addresses of both parties, description of goods or services, and amount including VAT.

GmbHs must use double-entry bookkeeping. GoBD rules require records to be archived promptly and in tamper-proof format. For a full overview, read GmbH Bookkeeping in Germany 2026. Accounting software like Norman lets you capture receipts by photo, auto-categorize them, and prepare everything for your tax return.

Summary

Getting business expenses right is critical for GmbH managing directors — both for tax optimization and to avoid the costly vGA trap. The golden rule: document the business purpose, keep personal and company finances strictly separate, and archive every receipt without gaps.