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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

#341

Post by u_sama »

tcfhgj wrote: post #245
kmlx wrote: post #181

Earlier quoted context omitted.

> 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?

Idk what world you live in, but Germany has clearly been in recession, unemplyment rose over the last few years and the rest of the Eurozone is in a similar condition

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

#342

Post by seabass-labrax »

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…

If your mortgaged house depreciates while you are still paying off the mortgage, you still need to pay the original, un-depreciated amount. You'll also probably need to pay interest accumulated during the time the property was mortgaged, which means you can't use it to avoid inflation.

What lender do you know of who will voluntarily reduce your mortgage obligation if the property depreciates?

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

#343

Post by ExpertAdvisor01 »

octo888 wrote: post #257
ExpertAdvisor01 wrote: post #233

Earlier quoted context omitted.

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

Social Contributions + taxes are rising and benefits get worse and worse ... Pretty sad what happened/happens to Europe

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

#344

Post by knorker »

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 should be added that the US taxes you worldwide even after you leave, so I would file the US as even worse in this regard.

In that they tax you when you stop being tax "resident", just like the others.

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

#345

Post by pembrook »

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…

Ah great, not so bad then! So you just need to:

- Form a German holding company to manage the business

- Deal with any conflicting taxation/regulatory issues when operating a german holding company from your new country of residence (in some countries this is not trivial)

- Visit Germany twice per year and potentially more to deal with German authorities that require things be done on paper and in person (hope you didn't move too far away and hopefully you don't have small children!)

- Hire an abnormally expensive tax advisor, hope he is good

- Sell a large portion of the company to fund a giant exit tax bill (!!!!). For many companies this is likely a 1-2 year minimum process, and that's IF they can find a buyer. Not as many PE funds in Europe. Good luck on valuation when the buyer knows you're in this situation.

- Hope the government gives you a reasonable valuation on your company, and hope their decision is similar to that of your buyer (and the timelines for both line up), which I'm sure is a super easy and not at all complicated process.

Fun! I can't possibly see what people are complaining about.

One of the weirdest things about Europe is the irrational nationalism that arises when you tie a language, ethnic-identity, government and country into one thing. Anecdotal, but it feels like this leads to more of an inability to reflect on and criticize things. Americans have far thicker skin when it comes to criticizing themselves.

Can you not see how this incentivizes entrepreneurs to leave or start their companies outside Germany (not sure if you're aware the EU exists). Is this really how you think things should work in a non-authoritarian regime with democratic freedom of movement?

Snark aside, this chart makes total sense to me now: https://i.redd.it/fxks3skmvt4e1.png

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

#346

Post by csomar »

ivankra wrote: post #284
throw9349494 wrote: post #230

Earlier quoted context omitted.

> be in Germany twice a year to sign off on having done the management within Germany. Pretty stupid. You are signing paper that claims you never left Germany!!! You are opening up yourself to personal German tax residency, with all pleasures it brings. Payable 10 years back! And do not believe that 185 days bs. Correctly losing tax residency in state like Germany, Denmark, Norway or Australia is very difficult. You…

> You can not keep any assets like company or house there! Alternatively, simply keep both the house and company in Germany. No exit tax since, thanks to that house, you haven't technically exited, right?

You could technically do that but then you’d have to keep paying taxes to Germany on your income in the other country. And the other country will consider you a resident too and will want a chunk of that…

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

#347

Post by tmtvl »

eqvinox wrote: post #304
throw9349494 wrote: post #275

Earlier quoted context omitted.

This, and barnevernet has reputation similar to gestapo in East Europe.

You might've mixed up your analogy there, Gestapo was a German 3rd Reich thing… NKVD would be the Soviet one.

Or the Stasi (Staatssicherheit) for the DDR.

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

#348

Post by csomar »

cdeez wrote: post #196
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…

Australia has a "good" system for this (or fair system) - when you leave the country you either choose to pay CGT based on the value at that date, or Australia has a claim on the assets when you eventually sell. Source -> https://www.ato.gov.au/individuals-and-families/coming-to-au... If you cease to be an Australian resident while overseas, we deem some of your assets – generally those not taxable Australian propert…

How will you reconcile with your new jurisdiction though? What if you move to 4-5 countries during that time…

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

#349

Post by mytailorisrich »

carlosjobim wrote: post #336
mytailorisrich wrote: post #323

Earlier quoted context omitted.

> 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 an…

There's nothing sensational about it, and I'm disappointed that you cannot see this thing for what it is. Ask people among your relatives who own real estate and you will realize that a lot of them mortgaged their real estate to pay for new cars, vacations, investment in a business, kid's education. The money is paid back over a long period of time, while the currency depreciates in value and the real estate apprecia…

> I can sell the real estate or I can mortgage it and borrow against its value

You make money if you sell. You don't if you use the asset as security for a loan.

This has been explained several times.

A loan is a loan, whether it is a secured loan or not. A mortgage is a secured loan whose security is real property.

You are effectively claiming that getting a loan is making money. Obviously you do not see that this is clearly not the case when thinking about it through a mortgage, but would you make the same claim with credit cards or a personal loan to buy a car, or a secured loan against, say, your car? My guess is that you wouldn't although it is the same thing as getting a mortgage.

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

#350

Post by csomar »

somedude895 wrote: post #250
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.

China doesn’t have an exit tax.
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