Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Exit Tax: Leave Germany before your business gets big

eidel.io

Post reply on HN
Print view View original

211–220 of 567 posts

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

#211

Post by swexbe »

procaryote wrote: post #191
enricozb wrote: post #167

Earlier quoted context omitted.

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...

An exit tax in itself does nothing to prevent hoarding of wealth. It might enable you to deploy other taxes that would make rational people leave the country, but it's a bit of a "lock the doors and rob people" strategy. If you have good advisors as a wealthy person you know this and leave as soon as an exit tax is on the table. If you start new businesses you start them outside of the country If you're a regular non…

Most businesses are not as portable as a tech startup.

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

#212

Post by saubeidl »

jeofken wrote: post #194
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.

Norway has a high wealth tax (it’s gonna be 1.1% of total wealth per year in normal cases), high capital gains tax, and an exit tax treating moving abroad as a capital gains event. This means, if you start a not-yet-publicly-listed company, get investment at a high valuation (on paper), you must pay wealth tax as if you had that money liquid in your own name. But you don’t have it liquid, it’s yet just a valuation of…

It's also an attractive destination for people wanting to live in a society that's not completely broken by inequality and are willing to pay their membership dues for living in such a society.

Not everyone's top priority is building a big ol' dragon pile of gold.

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

#213

Post by tebbers »

derriz wrote: post #187

It’s not as crazy as it initially seems. It’s because of a fundamental difference between how capital gains tax and income tax are collected. Capital gains are deferred - so as years pass you’re working up a tax liability but most countries recognize that forcing collection every year is not practical given the often illiquid nature of capital gains and the difficulty around valuation. I’m from a country which has no…

What did the Irish government do to entitle itself to a chunk of the appreciation of your equity portfolio of presumably non-Irish companies? What did they do to contribute to that equity growth?

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

#214

Post by cess11 »

derriz wrote: post #187

It’s not as crazy as it initially seems. It’s because of a fundamental difference between how capital gains tax and income tax are collected. Capital gains are deferred - so as years pass you’re working up a tax liability but most countries recognize that forcing collection every year is not practical given the often illiquid nature of capital gains and the difficulty around valuation. I’m from a country which has no…

Where I live we have the option to put capital holdings in flat-rate taxed accounts, based on the size of the investment. I thought this was common elsewhere too.

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

#215

Post by saubeidl »

jeofken wrote: post #207
xenospn wrote: post #139

Doesn’t every country have an exit tax, tho? Some are worse, some are better, but this is always the case.

The EU forces every member state to implement an exit tax to trap entrepreneurs in a disadvantageous situation (Anti-Tax Avoidance Directive). Some countries such as Sweden implements this only minimally - making capital gains of Swedish companies you hold realised within 10 years of moving abroad are taxed, so just don’t sell in 10 years but take out credit with those assets as collateral. Of course outside the EU,…

The reframing of anti tax avoidance to be a "trap", a "disadvantageous situation" is egregious.

Like maybe just pay your dues? Contribute back to the society that enabled you to become rich in the first place instead of parasitically extracting value?

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

#216

Post by dandellion »

tebbers wrote: post #213
derriz wrote: post #187

It’s not as crazy as it initially seems. It’s because of a fundamental difference between how capital gains tax and income tax are collected. Capital gains are deferred - so as years pass you’re working up a tax liability but most countries recognize that forcing collection every year is not practical given the often illiquid nature of capital gains and the difficulty around valuation. I’m from a country which has no…

What did the Irish government do to entitle itself to a chunk of the appreciation of your equity portfolio of presumably non-Irish companies? What did they do to contribute to that equity growth?

I mean, other than give access the infrastructure, the people and the rule of law... what did the romans ever do for us?

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

#217

Post by _petronius »

tebbers wrote: post #213
derriz wrote: post #187

It’s not as crazy as it initially seems. It’s because of a fundamental difference between how capital gains tax and income tax are collected. Capital gains are deferred - so as years pass you’re working up a tax liability but most countries recognize that forcing collection every year is not practical given the often illiquid nature of capital gains and the difficulty around valuation. I’m from a country which has no…

What did the Irish government do to entitle itself to a chunk of the appreciation of your equity portfolio of presumably non-Irish companies? What did they do to contribute to that equity growth?

If you lived in Ireland in that period, you benefitted from Irish government services, schools, police, fire services, etc. You participated in the community (hopefully), used roads, bought things in shops, so and on so forth.

Regardless, the idea that the government can only tax you if it directly gave you sufficient benefit, _in your assessment_, is of course nonsense. Taxes are what you owe to the society you live in, not about what society owes to you.

If you are lucky enough to be internationally mobile, this does not exempt you from contributing to the communities you spend time in as you travel around the world. You cannot expect to arrive in a country, earn money from it, and depart again without paying your fair share of taxes.

If you do not like how a country has structured its tax law and what priorities it has as a society, you are of course always free to not move there in the first place.

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

#218

Post by hiAndrewQuinn »

DrBazza wrote: post #176
hiAndrewQuinn wrote: post #161

Earlier quoted context omitted.

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…

> 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. That's certainly what I was thinking of, given I have a few US friends here in the UK. Isn't the way to stop that to simply give up dual citizenship?

From one perspective, yes, you can get around this by simply giving up dual citizenship.

From the perspective of one's whole life, once that US citizenship is gone, it's gone. You can't reinstate it like you can with many other nations. And losing first-class access to the world's greatest economy is a very heavy price to pay. It only makes sense if you are absolutely sure you, and by extension your children and their grandchildren and their grandgrandchildren (because they only get US citizenship at birth if you yourself are a US citizen at their birth), will never want to have anything to do with the US again.

Ultimately I decided against it. The idea that I have a country I can always move to and conservatively 3-5x my take home pay compared to even one of the best paying countries in Europe is one hell of a liberating feeling. Don't discount that kind of optionality lightly.

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

#219

Post by hiAndrewQuinn »

potatototoo99 wrote: post #210
fyrn_ wrote: post #186

Earlier quoted context omitted.

You won't be double taxed, the US taxes the difference between your local income tax rate and the US federal tax rate. So if you live in London you're not paying any US tax because the UK income tax rate is higher. It helps stop rich people from "totally live in ". If only we had that for companies.. I think where people get confused is that it's implemented as a tax credit which is equal to the income tax you pay lo…

Unless you move to a country without a tax treaty to prevent double taxation with the US.

Not "unless". You have to actively review the tax treaty to see whether it actually gives you things superior to the US's own Foreign Earned Income Exemption. Those documents aren't the hardest things in the world to read, but they're not light reading either.

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

#220

Post by derriz »

tebbers wrote: post #213
derriz wrote: post #187

It’s not as crazy as it initially seems. It’s because of a fundamental difference between how capital gains tax and income tax are collected. Capital gains are deferred - so as years pass you’re working up a tax liability but most countries recognize that forcing collection every year is not practical given the often illiquid nature of capital gains and the difficulty around valuation. I’m from a country which has no…

What did the Irish government do to entitle itself to a chunk of the appreciation of your equity portfolio of presumably non-Irish companies? What did they do to contribute to that equity growth?

I don’t understand the question.

Governments collect tax in lots of different ways: income taxes, sales/consumption taxes, import taxes, capital gain taxes, property taxes, inheritance taxes, etc,

What’s so special about capital gains taxes that requires the government to have had some sort of active involvement to be justified?

Post reply on HN