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

321–330 of 567 posts

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

#321

Post by bluecalm »

croes wrote: post #117
rvz wrote: post #95

I wasn't joking at all when I previously said in [0], moves like this is how to lose and now this is another reason why tech founders do not start companies in Europe and when a company gets too big, especially in Germany. Just don't be surprised to see a decline in tax revenue when countries like Germany chase the wealth creators out of the country with high taxes + exit taxes. [0] https://news.ycombinator.com/item?…

Wealth creators? I would attribute that term to the workers who work 1.3 billion hours overtime, most of them unpaid https://dailywrap.net/en-gb/unprecedented-unpaid-overtime-re... And then the company owner whine when they habe to pay their share?

If it was just about workers then we would have comparable tech industry to USA. Yet we don't and that's because hostile culture and regulations.

Abusing workers and but paying overtime is bad and it's a completely separate issue. It's also not a big issue in tech.

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

#322

Post by FirmwareBurner »

tonyhart7 wrote: post #128
WalterBright wrote: post #123

Earlier quoted context omitted.

Germany has been an enormous economic powerhouse in the past. It can be so again.

why you acting like its not true now??? it still economic powerhouse (at least best on continent)

All major German companies have been bleeding money and announcing layoffs like crazy in last years.

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

#323

Post by mytailorisrich »

carlosjobim wrote: post #320
mytailorisrich wrote: post #313

Earlier quoted context omitted.

No, a mortgage is a loan. You don't "make" any money by taking a loan since you obviously have to pay the money back. Don't worry that if a loan was considered "making money" it would be taxed as income... which would make no sense at all. In fact, disguising transactions as loans while not intending to repay the money is a well-known tax evasion scheme, which tax authorities always keep an eye on.

You made money before taking the loan, as your property increased in value. Taking a loan is a way of realizing the profit, but you can of course also sell your real estate. The money is paid back during the course of decades, when that money will be worth 1/4, 1/3 or half to what it is worth now. And your real estate is ripe to be mortgaged again for another jackpot payout. Hundreds of millions of people all over th…

> You made money before taking the loan, as your property increased in value. Taking a loan is a way of realizing the profit, but you can of course also sell your real estate.

That's incorrect on both counts. You did not make money and the loan is not a way to realize the profit since you have to pay it back, as explained before.

I think this illustrates that finance and accounting are very poorly understood topic and are easily used for sensationalism.

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

#324

Post by zarzavat »

graemep wrote: post #283
digianarchist wrote: post #199

Earlier quoted context omitted.

Canada does this too. Don’t most countries?

I do not think so. It varies a lot. The last time I looked at UK law you were liable for CGT for a long time after you left the country just to stop people leaving for a short time to evade CGT, but it was not the case a few decades ago. With all countries you need to check the provisions of double tax treaties. There is likely to be somewhere that has no or low CGT that has a double tax treaty with where-ever you ar…

I believe in the UK it works like this: if you leave the country you are not liable for CGT even if you realise gains, unless you return within 5 years then you have to pay tax on any gains you realised while you were away. With some caveats.

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

#325

Post by FirmwareBurner »

bluecalm wrote: post #256
saubeidl wrote: post #237

Earlier quoted context omitted.

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 l…

Thank you. Couldn't have said it better myself.

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

#326

Post by jillesvangurp »

mschuster91 wrote: post #276
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…

> That's not to say that Germany is not a huge PITA when it comes to managing all these constructions, dealing with the bureaucracy, and the maze of silly government agencies that refuse to share even the most basic information with each other so you are stuck in ground hog day providing the same information over and over again (who are you, where do you live, what is your company registration, etc.). That's where yo…

I'm not complaining about the taxes but the bureaucracy. And the taxes definitely require an accountant here because of the complexity of the tax law and all the intentional loopholes in there for people that can afford an accountant. Accountant lobbies are fierce in this country and they like being necessary. So a lot of sane things that other countries are doing to keep things simple haven't really happened here. I never lived in the US but from what I know of it, it's actually one of the countries that is worse on this front. So, if you move here from there, it might be an upgrade.

Anyway, I call the German attitude to this topic Stockholm syndrome. The thing is, I've lived in four countries in the EU so I know how things can be different, more efficient, etc. When I say Germany is a PITA, that is relative to the Netherlands, Sweden, and Finland and based on my experience with those countries. Which isn't even that recent. Those countries were miles ahead of how things are in Germany today decades ago. And I wouldn't exactly refer to Finland and Sweden as tax havens.

Taxes are quite high here. Fun fact: when I moved to Germany from Finland, it was an internal transfer for Nokia. My salary was compensated up because of the higher tax and insurance cost in Germany. From Finland! Of course, the cost of living is quite a bit lower here. So this was a nice thing for me. But it's not a cheap country.

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

#327

Post by forty »

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.

You should probably look up what the word "slave" is about, and you'll probably realize that it refers to a situation very different from yours.

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

#328

Post by piker »

LadyCailin wrote: post #270
somedude895 wrote: post #250

Earlier quoted context omitted.

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.

I know of at least 4 countries that have exit taxes, and while the US doesn’t have an exit tax if you simply move abroad (it does if you renounce citizenship) it has other very punitive taxes for expats. So, it isn’t a unique thing to Germany or, assuming you’re correct, China.

It's not that it has punitive taxes for expats, it's just that as a US citizen, the US doesn't care where you live -- you're subject to US tax. It has rules for everyone that prohibit deferring income taxes which implicate non-US tax-opaque entities, but that's not so much of a capital gains concern as a timing issue.

It's much simpler in many ways, although it creates its own issues with juggling tax treaties and realization timing.

Forcing you to pay a tax on unrealized gains is anathema to the US system, and would definitely burden founders to the extent they'd be well advised not to form in that jurisdiction in the first place.

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

#329

Post by BillyTheKing »

tomschwiha wrote: post #308

I think the numbers in the article are mixed up. Earnings 200k. Wage 120k. So the profit is 80k for the calculation. 80×13,75=1.100k. 60% of it = 660k. Personal tax at 120k income = 45%. More likely less as for health insurance, etc. 660k×45% = 297k exit tax. Which can be paid in 7 yearly rates. So 42k per year. You still have a company that has earnings of 200k.

This means the person has to move to a country with 0% income tax for this to make any economic sense, so that's either Monaco or the UAE then. Very difficult for me to understand why someone is supposed to pay this tax in the first place, the business paid a whole bunch of other taxes in its lifetime.

I would understand if they'd tax the sale of the business.

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

#330

Post by jen20 »

Wobbles42 wrote: post #289
mytailorisrich wrote: post #208

Earlier quoted context omitted.

Capital gain is the profit made on the sale of a capital asset. There is no gain or loss until the asset is sold. Taxation is not deferred, it applies when the gain is made, i.e. upon sale.

This needs to be repeated more often. If I buy a house for $100k, and next year some idiot pays $1M for a very similar house three streets down, did I just magically make $900k? Should I be taxed on that gain immediately? Should I be forced to sell part of my property to cover it? What happens when that sale occurs at a much lower price, due to my need to liquidate, did that lower the prices of all the houses in the…

> Should I be taxed on that gain immediately? Should I be forced to sell part of my property to cover it?

In much of the US, you made a loss, since your property taxes will go up the next year.

> I'd love to live in a world where the local tax assessor is obligated to purchase your property on demand for 80% of what they say it is worth -- surely they would jump at the chance to realize an instant profit, right?

Absolutely.

Post reply on HN