Please take note that his specific situation is not selling a company - which would qualify him for a reduced tax burden, but selling assets as a private person.
I am unsure if this would be taxed differently in any other country.
The Hidden Tax Trap for SaaS Founders in Germany
31–40 of 115 posts
Re: The Hidden Tax Trap for SaaS Founders in Germany
#32The disclaimer is absolutely right, you should consult a qualified accountant because the rest of the article is wrong. First of all, it's not just about SaaS, but all GmbH. I don't see any reason why Germany should make exceptions for software companies as the author wishes for in the second-to-last paragraph. In regards to taxation of a sale I can only point to this first google result: https://www.rosepartner.de/b…
Thanks for sharing that link, but it actually confirms my point. That article is about selling GmbH shares ("Share Deal"), but as explained in my post, buyers of smaller SaaS companies ($1-10M) almost never want to do share deals - they want asset deals.
Okay, so they don't want to buy the obligations. Why should the German state encourage and subsidize that behaviour?
Re: The Hidden Tax Trap for SaaS Founders in Germany
#33> Structure larger exits through international holding companies (complex and expensive) Setting up an LLC in a low-regulation US state is simple and inexpensive.
For a German business, setting up a holding company in Estonia would be much better. Still in the EU, no onerous American reporting requirements, everything is fully online and cheap, and taxes aren't super high (20% capital gains, up to 7% on dividends if I'm reading things correctly).
Re: The Hidden Tax Trap for SaaS Founders in Germany
#34This is a lot of words trying to explain that in Germany the system is designed that poor remain poor. First 40% of gross salary on contributions, then 30% of net salary on rent. Dynasties with their VW-Porsche-VW-Porsche quadruple currywurst burger-sandwich need the society to be poor.
At least we still have inheritance tax, though it's somewhat broken for those you mentioned who are far too good at avoiding that tax.
Yeah the Lichtenstein based charities and trusts are very afraid of your inheritance tax.
Re: The Hidden Tax Trap for SaaS Founders in Germany
#35I made a rather stupid mistake recently, as an American. I put $30k or so of my Roth IRA into BMW stock, since it was paying something close to 8% annual dividends. Once a year. I suppose I should have looked at this more closely. When the dividend was paid, the German government took about 30% of it right off the top in taxes... for a foreign investor. Still not a bad return, but I won't be buying any German stocks…
Sorry to "but actually" you, but that is just because you did not claim the treaty benefits. Pedantic, it is also 26%, not 30%.
You should be able to get 15% tax on dividends, which also count towards your US taxes which you stil have to pay.
It is also exactly the same for foreign investors from Germany investing in US companies. We have to file a W-8BEN, otherwise the US takes 30% on dividends and even on capital gains!
Re: The Hidden Tax Trap for SaaS Founders in Germany
#36[flagged]
Why would a person who founded a startup, and put countless unpaid hours into building it, then have to pay for the sale as if it were employee income? What would be the incentive for them to have done anything more than be someone else's employee? Taxes are incentivizing or disincentivizing, so policy should mirror what you want out of your economy. If the goal is not to have people create startups, there you have i…
> and put countless unpaid hours into building it
Oh, just don’t mention that to the authorities because they will make you pay for breaching their working hours act. How dare you have a dream and a drive. Get back in line.
Authorities in Germany don’t care. They are the Beamte, the have a special legal status, barely removable from their positions and with a guaranteed high pension. There are two classes of people in Germany: Beamte and everyone else.
Re: The Hidden Tax Trap for SaaS Founders in Germany
#37[flagged]
>Sorry you don‘t get a free ride for being rich. That's the problem with European way of thinking. Entrepreneurs and start-up founders taking on huge workloads and risk to start a business and create jobs, are automatically demonized as "rich freeloaders exploiting the system", to support this ideologically driven class warfare in hopes of getting more votes, where the ruling elite take 9 pieces of the economical pie…
Yep, this is the right take. Somehow entrepreneurs are perceived in the EU as tich freeloaders and not as job and innovation creators who tend to take a lot of risk and go through tremendous pressure while running their companies. I feel the influx of VC money skewed the vision of what it entails to start a company: it is true that the investment slightly "de-risks" founders (emphasis on double quotes!) but that's often an illusion - I don't think people who never ran a company understand the pressure of a founder's responsibility towards their employees, investors, etc... most of the generally very risk-averse Europeans will never grasp this
Re: The Hidden Tax Trap for SaaS Founders in Germany
#38[flagged]
Most small business owners make much less than the "normal" people. They work harder and take more risks. On the off chance that they are successful it looks like Germany takes over half what they have earned.
It's a strange world where creativity, boldness and acumen are punished and the public applauds for it.
Not every business is a large international mega-corp. Some are just a couple of individuals building a dream. These people can't afford expensive advisors or attorneys.
Re: The Hidden Tax Trap for SaaS Founders in Germany
#39This is a lot of words trying to explain that in Germany the system is designed that poor remain poor. First 40% of gross salary on contributions, then 30% of net salary on rent. Dynasties with their VW-Porsche-VW-Porsche quadruple currywurst burger-sandwich need the society to be poor.
More like the system wasn't set up with the expectation that people will become rich by creating a SaaS and selling it, because it predates those concepts by at least a few decades.
Porsche, Siemens, Krupp, Thyssen, Bosch were all startups back in the day, just in hardware
Re: The Hidden Tax Trap for SaaS Founders in Germany
#40[flagged]
Why would a person who founded a startup, and put countless unpaid hours into building it, then have to pay for the sale as if it were employee income? What would be the incentive for them to have done anything more than be someone else's employee? Taxes are incentivizing or disincentivizing, so policy should mirror what you want out of your economy. If the goal is not to have people create startups, there you have i…
> If the goal is not to have people create startups, there you have it.
That only makes sense if you think the only reason anyone ever founds a business is to sell it to someone else...