I find this website to be a much clearer resource on the issue: https://www.winheller.com/en/tax-law-tax-advisory/internatio...
Exit Tax: Leave Germany before your business gets big
11–20 of 567 posts
Re: Exit Tax: Leave Germany before your business gets big
#12Is there a look back period? What stops me from selling my business to my buddy the day I leave and then buying it back the day after?
Nothing. But you will have to pay taxes on the money you get from your buddy. If he is paying too little, you may get into additional trouble.
Re: Exit Tax: Leave Germany before your business gets big
#13also buy fax machine, dozen ring binders, and paper shredder before you start that business
And the right color pen. God forbid you fill in an official form in the wrong color pen.
I would think it's a joke but once literally had an office clerk in Germany scratching with fingernail my signature to check whether it's by pen and in the right color.
Re: Exit Tax: Leave Germany before your business gets big
#14> And then your exit tax is calculated by taking the average of the past 3 years of earnings of that company, multiplied by 13.75 (which is crazy), and then taking 60% of that which is taxed at your personal income tax rate (likely 42%; Teileinkünfteverfahren) This does not match the results from 5 minutes of googling, not for individuals at least. What is being taxed is the shares you're holding, as if you're sellin…
While that number seems to be not a general value, the "Wegzugsbesteuerung" still is significant.
https://de.wikipedia.org/wiki/Wegzugsbesteuerung
Essentially, it assumes you sell your assets at market value and taxes the difference to your expenses for it.
Re: Exit Tax: Leave Germany before your business gets big
#15[flagged]
Re: Exit Tax: Leave Germany before your business gets big
#16[flagged]
In many cases people want to move precisely because Germany doesn't provide as good infrastructure for startups as other countries.
Also, the "you can't leave because you owe society" argument, while not necessarily wrong, is strongly associated with the abuses of Communism.
Re: Exit Tax: Leave Germany before your business gets big
#17[flagged]
Perhaps you would apply the same logic to a family car, or the clothing you bought? Should they tax the value of your medical degree when you leave the country?
Re: Exit Tax: Leave Germany before your business gets big
#18> And then your exit tax is calculated by taking the average of the past 3 years of earnings of that company, multiplied by 13.75 (which is crazy), and then taking 60% of that which is taxed at your personal income tax rate (likely 42%; Teileinkünfteverfahren) This does not match the results from 5 minutes of googling, not for individuals at least. What is being taxed is the shares you're holding, as if you're sellin…
Author here. Sure, here are the sources:
- First off, your assumption is wrong that only the increase in value gets taxed. No, the entire value of your holding gets taxed, see § 6 Abs. 1 Satz 1 Außensteuergesetz (AStG) [1].
- The factor 13.75 originates from the calculation method called "vereinfachtes Ertragswertverfahren" (~ simplified earnings-based method), which itself is defined in Bewertungsgesetz (BewG), § 11 Wertpapiere und Anteile [2]
- Factor 13.75 is defined in Bewertungsgesetz (BewG), § 203 Kapitalisierungsfaktor [3]
- The tax rate of 42% is the marginal tax rate in Germany (at least below €250k income, beyond that it's 45%) - so the assumption here is that, in the year in which you leave Germany, you've already had some salary income (say, €90k) which bumps you into the marginal tax rate for any additional income on top of that.
[1] https://www.gesetze-im-internet.de/astg/__6.html
Re: Exit Tax: Leave Germany before your business gets big
#19> And then your exit tax is calculated by taking the average of the past 3 years of earnings of that company, multiplied by 13.75 (which is crazy), and then taking 60% of that which is taxed at your personal income tax rate (likely 42%; Teileinkünfteverfahren) This does not match the results from 5 minutes of googling, not for individuals at least. What is being taxed is the shares you're holding, as if you're sellin…
They basically treat you as if you sold your shares or company when leaving the country. If you run a one man company that is currently making a good profit, this can become really expensive.
Exactly. And they, by default, use a very high multiple (13.75) for calculating the value of your shares.
Re: Exit Tax: Leave Germany before your business gets big
#20Earlier quoted context omitted.
And the right color pen. God forbid you fill in an official form in the wrong color pen.
I would think it's a joke but once literally had an office clerk in Germany scratching with fingernail my signature to check whether it's by pen and in the right color.
There's a reason why Kafka wrote his novels in German.