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Exit Tax: Leave Germany before your business gets big

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Re: Exit Tax: Leave Germany before your business gets big

#161

Post by hiAndrewQuinn »

profstasiak wrote: post #138

Isn't USA even worse? If you move as US citizen to EU, you would need to pay bot h local EU tax and USA tax right? (I am not a USA citizen, this is legit question)

US-EU transplant here. No, the United States does not have anything even vaguely similar like this. Seriously putting forward the idea of an exit tax on anyone who owns more than 1% of any LLC worldwide would in all likelihood be deeply politically unpopular. It goes against the very name and spirit of a limited liability company, for one. For two (real ballpark number here) about 1 in 10 Americans would actively be subject to a German style exit tax like this, concentrated among working adults.

You're probably instead thinking of income tax, which the US does levy worldwide contrary to virtually every other nation on Earth and is, I can tell you from personal experience, not fun. There is a a much narrower exit tax for US citizens who wish to actually give up their citizenship outright (not just move out) but that generally only comes into play for anyone with $2 million or more in net worth, and exists probably to discourage tax evasion, to my understanding. There is truly nothing remotely like the "you have to pay us if you own 1% of any LLC anywhere and move out" approach Germany has.

Re: Exit Tax: Leave Germany before your business gets big

#162

Post by Shorel »

tonyhart7 wrote: post #127
croes wrote: post #120

Exit Tax: Leaving the USA before you become too rich https://www.greenbacktaxservices.com/knowledge-center/exit-t...

Yeah but most people want to do business in US, its all the money goes

Not worth the hassle anymore.

Re: Exit Tax: Leave Germany before your business gets big

#163

Post by oulipo »

weinzierl wrote: post #155
WalterBright wrote: post #67

When businesses are fleeing, you're doing something very wrong.

As a German I couldn't agree more. I am your age and even I consider leaving. If I was still young I wouldn't be here anymore. I think the combination of capital and skilled labour fleeing is very concerning and a trend that could end up self-reinforcing and hard to stop.

[flagged]

Re: Exit Tax: Leave Germany before your business gets big

#164

Post by rs_rs_rs_rs_rs »

bmacho wrote: post #136
geff82 wrote: post #126

The crazy thing is that as a business owner (GmbH/AG) you can’t even move to another EU country any more since 2022. As the owner of such a company it feels like I have become a slave of the government.

Why can't businesses be owned by people that: - enjoy owning and managing a business - do think that owning and managing a business should come with the same compensation as any other dayjob (hairdresser or whatever) While managing a large amount of money naturally lead people to have enough to buy luxury items, IMO, this is just a sad fact of our world, and we should fight against it.

>While managing a large amount of money naturally lead people to have enough to buy luxury items, IMO, this is just a sad fact of our world, and we should fight against it.

Ironically some of the biggest european companies are related to luxury items.

Re: Exit Tax: Leave Germany before your business gets big

#165

Post by hiAndrewQuinn »

bmacho wrote: post #136
geff82 wrote: post #126

The crazy thing is that as a business owner (GmbH/AG) you can’t even move to another EU country any more since 2022. As the owner of such a company it feels like I have become a slave of the government.

Why can't businesses be owned by people that: - enjoy owning and managing a business - do think that owning and managing a business should come with the same compensation as any other dayjob (hairdresser or whatever) While managing a large amount of money naturally lead people to have enough to buy luxury items, IMO, this is just a sad fact of our world, and we should fight against it.

Because it shouldn't come with the same compensation as any other day job.

Let's say you can make $80,000 as a hairdresser. You are seriously proposing that someone who takes all of the risk of

* Renting their own hair salon,

* Building up their own clientele,

* Taking out loans to purchase hair dressing equipment, and

* The thousand other things the business owner has to do in addition to actually dress hair themselves,

should walk away with the same amount we the person who just gets hired to dress hair.

No one would ever start a legal business under such a regime. It's all downside! Which is why you never see people actually owning and running businesses (successful ones at least, and most unsuccessful ones too) with the mindset you describe.

Re: Exit Tax: Leave Germany before your business gets big

#166

Post by lazide »

Shorel wrote: post #160
lazide wrote: post #151

Earlier quoted context omitted.

Huh? Why take all that risk, for no additional reward? If the business fails, is the gov’t going to keep paying them like a hairdresser or whatever?

That's not that bad an idea, with some caveats. An incentive for entrepreneurs? It can help kickstart a stagnant economy.

Why not just be a hairdresser? Way less stress.

The economy is stagnant for a reason. At some point, the juice isn’t worth the squeeze.

Re: Exit Tax: Leave Germany before your business gets big

#167

Post by enricozb »

chaosprint wrote: post #154

Norway also has crazy exit tax and wealth tax. I heard lots of complaints that this system makes it almost impossible to build a decent vc-driven tech startup.

However it also prevents hoarding wealth, which in turn prevents special interest groups and some forms of election manipulation.

Balancing taxes for fairness and innovation is quite tricky...

Re: Exit Tax: Leave Germany before your business gets big

#168

Post by laurencerowe »

notTooFarGone wrote: post #156
laurencerowe wrote: post #149

Earlier quoted context omitted.

Double taxation treaties negate this somewhat, but there are a bunch of edge cases.

You have to file your taxes every year in the US either way. You can't even renounce your citizenship without paying a lump sum.

It would be a bureaucratic pain but if I were to move back to Europe (having become a US citizen) I don’t expect I would end up paying any tax to the US after applying the foreign tax credit.

But there could be a whole lot of complexity around stuff like ETFs and mutual funds and whether they were recognized by both countries.

Re: Exit Tax: Leave Germany before your business gets big

#169

Post by kriops »

bmacho wrote: post #136
geff82 wrote: post #126

The crazy thing is that as a business owner (GmbH/AG) you can’t even move to another EU country any more since 2022. As the owner of such a company it feels like I have become a slave of the government.

Why can't businesses be owned by people that: - enjoy owning and managing a business - do think that owning and managing a business should come with the same compensation as any other dayjob (hairdresser or whatever) While managing a large amount of money naturally lead people to have enough to buy luxury items, IMO, this is just a sad fact of our world, and we should fight against it.

Risk. There is nothing to fight against, but "we" might consider educating ourselves so that we understand why the calculation that happens through the price mechanism benefits all, and moreso than any alternative.

Re: Exit Tax: Leave Germany before your business gets big

#170

Post by logicchains »

oulipo wrote: post #159
WalterBright wrote: post #67

When businesses are fleeing, you're doing something very wrong.

The business owners are doing something very wrong. They are failing to recognize that their business is successful in large part because of the infrastructure in their country, the educated people they can hire, the healthcare, etc So when you get money out of this, you pay your fair share of taxes, like everyone.

>They are failing to recognize that their business is successful in large part because of the infrastructure in their country, the educated people they can hire, the healthcare, etc

Empirically that seems to be false, given the number of successful businesses created in Europe in the past couple decades is way way less than in the US or China, even though Europe has better infrastructure, education and public healthcare.

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