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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

#251

Post by bluecalm »

olieidel wrote: post #25
lifestyleguru wrote: post #4

also buy fax machine, dozen ring binders, and paper shredder before you start that business

Also: - A printer (the most important equipment of any German startup founder) - Envelopes for letters - A stamp with your company name (some companies and agencies you deal with require you to stamp things, because a stamp obviously proves, beyond any doubt, that you are acting on behalf of your company, because obviously no one would be able to create a similar stamp with your company's name on it, right) - A virtu…

A good one! I remember I needed a stamp when I started a business in Poland as well! I've never used it and never was asked to so I guess the regulations no longer apply.

Poland is pretty good at digitalizing bureaucracy as well. You can do most things online including talking to the tax office and solving problems with your tax declarations.

Taxes are reasonable but I am still bitter about cap gain tax as it's a form of a wealth tax for someone that invest in equities - at some point moving to more tax friendly jurisdiction saves enough that you can fund your comfortable life and save 100% of your income.

I also think tax burden is going to increase significantly there in coming years.

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

#252

Post by pydry »

bluecalm wrote: post #202
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…

Capital gain tax is stupid anyway. It's one of the first tax that should be removed. You can tax business at home by land/revenue/resources usage/ip protection taxes. As it is owners in different jurisdictions pay a different (or sometimes no) tax on selling shares. Selling itself is something you want to encourage, not discourage. It's a pointless tax that penalizes exactly the things you want to encourage. You thin…

It is at least not wildly regressive like consumption taxes are.

It would be better to tax IP protection, inheritance, resource use and land only but realistically if we get rid of capital gains the tax burden will land squarely on wage earners doing all of the actual work who are already taxed more than the people who own their productive output.

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

#253

Post by KaiserPro »

This is one of those cases where you really need to hire a specialist, rather than listen to the internet.

Sure, you can't port your company out of germany, but there is nothing stopping you re-structuring so that you have an umbrella company based in the country of choice.

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

#255

Post by ivankra »

jwr wrote: post #195
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)

The US does not have an exit tax for businesses, but has an absolutely horrible tax system in which expats are treated badly. The reporting requirements for expats are insane: all bank/brokerage/whatever accounts with max levels during the year, FATCA and FBAR forms, and the cherry on top: Form 8858 ("Foreign Disregarded Entities", whatever that is) which is needed for your self-employment and for each of your rental…

US totally does: https://www.irs.gov/individuals/international-taxpayers/expa... - long-term (8y+) green card holders may need to pay up.

One big difference is that the clock only start ticking after you get green card, whereas with Germany any residence year counts. Oh, and citizens of course aren't affected - since US continues to tax them wherever, but Germany like almost all other countries practices residence-based taxation.

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

#256

Post by bluecalm »

saubeidl wrote: post #237
bluecalm wrote: post #232

Earlier quoted context omitted.

If duties are unreasonably bothersome then it's a trap.

Who are you to decide what is reasonable and what is unreasonable over the democratically elected lawmakers? This is a deeply anti-democratic attitude.

Democracy in most EU countries is messed up. People don't get to vote on stuff. There are usually 2-3 major parties that campaign on this or other hot issue. There is nothing that can be done about most issues even if vast majority of citizens support them.

Parliamentary indirect democracy is an illusion. It's just a capture by the political class. Will of the people has very little to do with what is done. I would love to live in actual democracy where we get to vote on stuff and popular policies are implemented while unpopular get struck down. It's even worse than American system where at least you can vote for your representative who has some independence. Here they are just a party official and if they don't vote along the party lines the party will run someone else next time around. Their loyalty is not to the electorate.

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

#257

Post by octo888 »

ExpertAdvisor01 wrote: post #233
kanbara wrote: post #125

Earlier quoted context omitted.

not sure how useful this is. germany is a great place to live, safe, with great infrastructure and access to europe, good food, lots of personal freedoms, orderly society, few overtouristic’ed cities, and a thoughtful populace for the most part.

No it's not . If you are young you are a slave for the elderly. Personal freedom is also very questionable. Good Food haha

We feel exactly the same in the UK. Except personal freedom isn't questionable, it's in the gutter

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

#258

Post by throw9349494 »

jacquesm wrote: post #246
jillesvangurp wrote: post #225

Earlier quoted context omitted.

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 i…

Crazy theory: most posts here are from German Tax office. They give a "free" advice, and send a fat tax penalty 5 years latter! Suprise: you never left!

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

#259

Post by mijoharas »

hiAndrewQuinn wrote: post #161
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…

> 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.

To be clear, this is if you move _your company_ out of Germany (which I don't think the article makes very clear). In those terms it seems to make a little more sense. As outlined in this comment.[0]

The double income taxation of their expats that America, Eritrea, and Myanmar do is a bit different, but I think they have double taxation agreements with most countries. So in actuality most Americans don't have to fully pay the double tax (depending on where they live, and how much they earn) though they still have to file and everything.

[0] https://news.ycombinator.com/item?id=44834878

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

#260

Post by robocat »

_petronius wrote: post #217
tebbers wrote: post #213

Earlier quoted context omitted.

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…

> benefitted from Irish government services, schools, police, fire services, etc. You participated in the community (hopefully), used roads

That is a terrible basis for argument: we mostly each get similar usage of services (roads, police, yadda yadda) which should be an argument for a fixed amount of tax per person (a poll tax).

If you wish to argue that we get what we pay for: then rich people pay wayyyyyy more so they should get more government services???

The wealthy surely don't get better policing: instead the wealthy pay heaps for their own insurance and security systems.

Be careful making any argument based on services received for money spent because the well off pay a lot and don't receive a lot for it.

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