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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

#241

Post by mytailorisrich »

saubeidl wrote: post #215
jeofken wrote: post #207

Earlier quoted context omitted.

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?

Tax avoidance is legal. Everyone has the right to minimise their taxes lawfully, arguably this is only paying your dues but not more...

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

#242

Post by jacquesm »

nolverostae wrote: post #201

I was someone who almost got hit by this tax. You don't need any offshore shenanigans to get around it. If you just want to move out of the country you can also just keep the ownership of the company within the country. You do this by putting your shares into a holding that stays in Germany even when you move out. That holding needs to be managed within Germany, so you need to assign a friend or be in Germany twice a…

In Switzerland, I would trust the mechanisms put in place for dealing with 'Treuhandlers' (trustees) to deal with this situation correctly. In Germany I would absolutely not if the stakes got high enough.

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

#243

Post by trinix912 »

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…

> This means any Norwegian trying to start eg a fast growing software biz must relocate to Sweden if they want to be close to home, or Switzerland more realistically, as swedens top income tax bracket is >50%.

There's nothing stopping them from doing that in Norway, they just have to pay their dues. Which are nowhere near the rate of those in a real communist system that people are so quick to label it as.

I find it very selfish to think that we should optimize everything to squeeze out the remaining 1.1% of the wealth, given that Scandinavia wouldn't have such a high living standard had it not been for the welfare system.

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

#244

Post by GardenLetter27 »

jmyeet wrote: post #92

The developed world is increasingly facing a funding crisis brought on by this propaganda that if we tax corporations and the very wealthy then they'll leave. One of the most farcical examples of this is the decades-long race to the bottom on business taxes and incentives between Kansas City, Missouri and Kansas City, Kansas. For the non-Americans out there, this is basically one city but it sits at the border of two…

Why are taxes so high though? Like in Sweden I'd pay literally 80% tax on extra sole trader income - 30% employer tax, 30% income tax, 20% high income tax.

But there is no Swedish moon base, or ultra high speed rail, etc. - where does it all go? We have higher taxes but less infrastructure investment than a century ago.

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

#245

Post by tcfhgj »

kmlx wrote: post #181
oulipo wrote: post #159

Earlier quoted context omitted.

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.

> their business is successful in large part because of the infrastructure in their country, the educated people they can hire, the healthcare Germany has Europe’s lowest share of entrepreneurs to workforce. So i guess the infrastructure, education and healthcare are not really factors. > So when you get money out of this, you pay your fair share of taxes, like everyone. this is already happening. people are paying t…

> cherry on top: Germany has been in recession for… 3 years now?

no?

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

#246

Post by jacquesm »

jillesvangurp wrote: post #225
nolverostae wrote: post #201

I was someone who almost got hit by this tax. You don't need any offshore shenanigans to get around it. If you just want to move out of the country you can also just keep the ownership of the company within the country. You do this by putting your shares into a holding that stays in Germany even when you move out. That holding needs to be managed within Germany, so you need to assign a friend or be in Germany twice a…

Exactly, you need to get proper advice on how to structure your business in Germany. Basically, putting your shares in holding companies is both common and not dodgy. Corporate taxes are more friendly than personal income taxes. You can do constructions with salaries, dividend, etc. Doing this is standard practice if you are founding a company. You need to plan for your startup to be actually successful and being on…

> this is a topic where LLMs can be helpful.

That's probably the very last spot where you want to use an LLM, especially not in Germany. One single mistake can cost you a fortune, and you won't be able to spot the mistake because you're not an expert. LLMs could be used to prime you for conversations with an expert (but be prepared to be corrected on points of law and fact) but they are no substitute. Corporate law is a legal minefield, tread with utmost care.

The whole proposition is in a way bizarre: if you have this problem you almost certainly can afford proper guidance and if you need to resort to an LLM for that guidance you almost certainly don't need such complex constructs in the first place!

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

#247

Post by cpursley »

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.

Don’t forget the energy suicide Germany has committed. Cheap energy was the backbone of Germanys rich industrial economy, and that rug has been (allowed and even encouraged) to be pulled by none other than the country now offering them a “very good price” on LNG…

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

#248

Post by Yoplaid »

oezi wrote: post #240
garyclarke27 wrote: post #224

One of the basic principals of the EU is freedom of movement between countries. One could argue that imposing such an onerous tax on moving to another EU country breaks this principal, so maybe worth a legal challenge - for someone with a lot to loose.

This is why this doesn't apply if you move within the EU.

It does apply

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

#249

Post by [deleted] »

GardenLetter27 wrote: post #244
jmyeet wrote: post #92

The developed world is increasingly facing a funding crisis brought on by this propaganda that if we tax corporations and the very wealthy then they'll leave. One of the most farcical examples of this is the decades-long race to the bottom on business taxes and incentives between Kansas City, Missouri and Kansas City, Kansas. For the non-Americans out there, this is basically one city but it sits at the border of two…

Why are taxes so high though? Like in Sweden I'd pay literally 80% tax on extra sole trader income - 30% employer tax, 30% income tax, 20% high income tax. But there is no Swedish moon base, or ultra high speed rail, etc. - where does it all go? We have higher taxes but less infrastructure investment than a century ago.

[deleted]

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

#250

Post by somedude895 »

cc62cf4a4f20 wrote: post #140

I'm unsure how strange this is. As a Canadian, when I left the country I had to undergo what's termed a deemed disposition - i.e., pretend you sold all your assets and then pay the relevant taxes on the net gains you've enjoyed to that point. This includes proposing a value for any companies that are not publicly traded. See: https://www.canada.ca/en/revenue-agency/services/tax/interna...

So if all your money is tied up in your company you have to sell part of your business in order to be allowed to leave the country and by the way thanks for creating all those jobs? Sounds slightly CCP to me.
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