Voting shareholders of a gGmbH can also change the causes it funds and have the ability to dissolve the entity and transfer its assets into another tax-exempt structure. Gollan said she knew of at least one case of a gGmbH eliminating its tax-exempt status.
There is no legal precedent of dissolving a gGmbH to fund commercial pursuits. Any attempt to do so, Stolte said, would result in the need for the founder to pay retroactive income, gift, inheritance and value-added taxes.
Traditional foundations and gGmbHs in Germany don’t have minimum annual giving requirements. They are required to spend any profits by the end of the fiscal year it was accrued, and are allowed to build capital reserves totaling 10 percent of annual donations or 33 percent of dividends received.
In Europe, there are several varieties of stiftungs, which are the equivalent of foundations or trusts in the U.S. In Liechtenstein and Austria, the structure exists to keep assets from flowing to other countries, Stolte said.