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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

#371

Post by KaiserPro »

ralferoo wrote: post #269
KaiserPro wrote: post #253

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.

Agree about a specialist, but probably moving an existing company into an umbrella structure is likely to be considered similarly to a sale for tax purposes. In the UK, you have to specifically request HMRC to authorise any such plans if you want to avoid paying tax on it, and even then I believe it's only (relatively) simple if you're doing a straight share swap - so the existing company becomes fully owned by a new…

The mechanics of changing ownership under umbrella corporations is somewhat of a mystery to me, I have seen it done as part of a complex buyout of a small multinational.

However that was UK/US and some EU but non-german subsidiaries.

I suspect you are right about movement being considered a sale. My assertion was imprecise as I suspect it requires an upfront company layout, rather than post-hock.

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

#372

Post by FredPret »

saubeidl wrote: post #212
jeofken wrote: post #194

Earlier quoted context omitted.

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.

In what way does inequality break society?

I’ve frequently heard this article of faith bandied about.

But if the rich get 10X richer, and the poor get 2X richer, then everybody is better off.

The stagnant, ultraconservative, ultracentralized economic systems tankies like to propose always end up leaving everyone 100X poorer. But at least they’re equal, right!?

Seems like cutting off your nose to spite your face.

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

#373

Post by bluecalm »

carlosjobim wrote: post #339
Wobbles42 wrote: post #289

Earlier quoted context omitted.

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…

> That's the reasoning we're applying if we tax unrealized gains on stocks (or any other asset). We take what the highest bidder is willing to pay for some tiny percentage of an asset, and assume that means everyone else could get the same price, yielding these theoretical valuations that have no bearing on reality. We take what the highest bidder is willing to pay, as well as what the lowest seller is willing to sel…

Because different market participants have different views, risk tolerance and needs. The market argument only works for very high liquidity public stocks. Even then it's unlikely Musk or Zuckerberg can sell their equity at the price of the day. It completely fails for smaller businesses.

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

#375

Post by pc86 »

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…

No reasonable person on the planet can look at that table showing a €700k exit tax on a company making €200k/yr profit and think "yeah that sounds fair."

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

#376

Post by philwelch »

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…

At some point wouldn’t it just be simpler to set up your company in the first place in some other EU country with less onerous laws?

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

#377

Post by philjohn »

notTooFarGone wrote: post #156
laurencerowe wrote: post #149

Earlier quoted context omitted.

Double taxation treaties negate this somewhat, but there are a bunch of edge cases.

You have to file your taxes every year in the US either way. You can't even renounce your citizenship without paying a lump sum.

And because the tax years don't line up, it's more costly than filing just in the US, or just in the EU, plus if you moved with a company and were granted RSU's in the US, or keep property or assets in the US ... it's just a pain to calculate properly.

Have friends who regularly spend 10x more than I do my accountant for my tax return because of this.

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

#379

Post by philjohn »

FirmwareBurner wrote: post #318
ivankra wrote: post #238

Earlier quoted context omitted.

Or, alternatively, the bureaucrats in charge would argue that all EU countries need to implement similar exit taxation laws - that's where it seems to be heading lately.

When you start to run out of other people's money.

[flagged]

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

#380

Post by pc86 »

pembrook wrote: post #345
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 di…

Germany seems like a great country to be an employee as long as you're happy with making a fraction of what you'd make in any other country and have no designs of doing anything more with your professional life. Provided you can even get a full-time job since they seem to treat keeping your job as a civil right.
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