The Hidden Tax Trap for SaaS Founders in Germany

The software aspect is quite irrelevant, and I believe that what is described is simply how GmbH companies work. If you own a company and sells it, what you are doing is selling your shares in the company. In many jurisdictions this is capital gain (or loss) for accounting and tax purposes since you are selling an asset. Ultimately I suppose the issue is the tax rate, not the "implementation details".

Move to Belgium and get a whopping 0% capital gains tax

As someone who has run a small business in an EU country for 10 years and is in a process of relocating to a low tax jurisdiction I wonder what EU's endgame on this one is.

It's not like EU countries offer a potential founders anything of substance. You can just as well run your company from abroad. Most of your customers are going to be outside of EU (most likely), you will be buying services from outside of EU, hire/work with people from various countries. There is just no reason to be in Germany, France, Spain, Italy when you don't get anything but bureaucracy burden and high taxes.

I paid my (admittedly quite low by EU standards) taxes honestly but right now savings on capital gain tax alone are enough for me to buy a beach house in a country with a better weather and still save some. My country wants to charge >1% of my wealth every year just to be there not even going into business taxes. The incentives are right there to leave. If I ever start another business it will be in my new tax friendly country. A lot of people are like me and will realize what terrible deal they are getting. Out of those who stay a smaller number is going to be successful because of all the tax/bureaucracy burden. Is the endgame to just give up on IT? Introduce tariffs on everything? Forbid foreign corporations to sell in EU?

I just don't see how EU isn't going to be left in the dust in technology sector with their current policies.

It is definitely a weird cultural thing. I can speculate a bit.

It might have some roots in social well fare. But I've also lived in Sweden and Finland which have a very different attitude towards building tech companies. Especially Finland is quite successful at doing startups and scaleups. Especially considering its small population. And of course both countries have a strong social well fare culture. And Germany is actually fairly conservative on the spectrum. E.g. minimum wage did not even exist here until fairly recently. State pensions aren't that great, etc. I'm from the Netherlands originally, our social security is a lot better and more efficient. And so is our economy, infrastructure, healthcare system and all the other things that are clearly very broken and neglected in Germany. It's very visible when you cross the border. The state of the roads is very different on both sides of the border. That's true for most countries that border Germany.

Germans just seem very reluctant to change anything. There's a lot of hesitation doing anything. That's also why their infrastructure is such a mess. Big investments are risky. So they prefer not to. Their default attitude to almost anything is "no". Modernizing anything is frowned upon. So they still bank like it's the nineteen eighties, which is stupidly annoying. They stubbornly stick with a lot of paper based processes. And they employ a lot of pencil pushers, accountants, lawyers, etc. that actually rely economically on things not changing.

And of course they refuse to modernize rules that flat out barely make any sense. It's always been this way, it can't be that bad, etc. They are very proud of keeping their national debt low. But that also means they've been neglecting their infrastructure for decades. Which is now affecting them economically.

The way out would be massive investments. But that requires changes they are not comfortable making. So they are just dilly dallying and going around in circles.

With startup culture, their own rules are stopping foreigners from investing in their german companies. Too hard. too risky, etc. That's irrational. They should be welcoming that cash. Not putting up lots of obstacles. That money would go directly into their economy. But instead it's going elsewhere. Lots of German companies with their headquarters in Amsterdam, Dublin, London, etc.

Yes, which is why this only matters when the person in questions works in the company.

In the Swedish system there's a rule whereby you accumulate something based on wages paid, and where you can thus avoid part of the sale counting towards income, provided that you've paid people so much in salaries that your work can be seen as a small part.

What I'm sort of arguing for though, is to tax work less, so as to encourage it.