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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

#391

Post by diggan »

pc86 wrote: post #384
diggan wrote: post #381

Earlier quoted context omitted.

That's because reasonable people don't just look at two numbers and go "That's crazy", there is context and nuance to be understood, so give reading the entire blog post through instead of just skimming tables, and come back and tell us why it's unfair.

It's a math problem - you don't need a ton of context to understand it (although I did read the entire article). This is simply the German government being petulant and punishing successful people for moving a company somewhere that understands how to create proper incentive structures for businesses to grow. If you as an individual make €100k a year in salary, saved €20k every year, and the German government wanted…

> petulant and punishing successful people

What reason could they possibly have for "punishing successful people"? You seem to still miss almost the entire context, and automatically apply some bad faith arguments because of what, you feel like paying taxes is unfair?

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

#392

Post by HSO »

> (Note on startups (group 2): If your startup raised investment, the financial authorities might take that last investment-round valuation as actual valuation, even if your company is not profitable. So that puts you into group 3 instead as you will be hit by significant exit tax.)

this is the money quote here

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

#393

Post by ExpertAdvisor01 »

tcfhgj wrote: post #388
ExpertAdvisor01 wrote: post #337

Earlier quoted context omitted.

This is only an exemption from VAT. This means you also loose the ability to claim back VAT. If you engage in b2b it is a net loss

there is more than just exemptions from VAT

Okay then list it

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

#394

Post by phyzix5761 »

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…

Did the telecom business have profits? Were those taxed?

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

#395

Post by fxtentacle »

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…

Nowadays, you can do all of the tax sign-offs purely online with Elster.

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

#396

Post by tomschwiha »

BillyTheKing wrote: post #329
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.

That is actually the intention: to tax as if you sold the business. But with a payment in 7 yearly rates. The tax intends to tax the value of the company that is not yet taxed (on a personal tax level). It does account for already paid businesses level taxes.

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

#398

Post by FredPret »

spwa4 wrote: post #365
FredPret wrote: post #364

Earlier quoted context omitted.

Or, and hear me out here, we cut state spending to sustainable levels so the government doesn’t have to regard us as walking dollar signs

The problem is that the government is financed by a ponzi scheme based on selling very steep GDP growth, very steep increases in the labor force. In other words, the German government as it functions today is financed by having sold the increased income in labor taxation of the next 10 to 30 years to the banks so they could spend it already. Only ... that income doesn't exist. The labor force is shrinking (especially…

The real problem is a social contract that was sold to people long ago without any secure funding source.

Now those social services (free healthcare, retirement benefits) are baked into entire populations' expectations and life planning. Give it 20-30 years, then these services can neither be provided nor paid for.

Our only real hope is tech progress unlocks much faster economic growth, even with dwindling numbers of people.

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

#399

Post by bluecalm »

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.

Just because it made 200k last few years doesn't mean it will continue to make that much. That is especially true in case of small companies.

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

#400

Post by pc86 »

diggan wrote: post #391
pc86 wrote: post #384

Earlier quoted context omitted.

It's a math problem - you don't need a ton of context to understand it (although I did read the entire article). This is simply the German government being petulant and punishing successful people for moving a company somewhere that understands how to create proper incentive structures for businesses to grow. If you as an individual make €100k a year in salary, saved €20k every year, and the German government wanted…

> petulant and punishing successful people What reason could they possibly have for "punishing successful people"? You seem to still miss almost the entire context, and automatically apply some bad faith arguments because of what, you feel like paying taxes is unfair?

Paying taxes is good, lawful, even patriotic. Also good and lawful is moving a company somewhere where you'll pay less in taxes and can grow faster and hire more people (and is at worst patriotically neutral).

An exit tax is a country saying "oh no that's bad, so instead of looking at our tax structure and seeing why you're leaving and trying to address that, we're going to charge you >3 years of profit as a punishment." It's simply saying that if our taxes are too high for you we're going to charge you even more to try to stop you from leaving.

You can think it's a good thing if you don't understand economics but it's hard to frame it as anything other than Germany punishing corporations for leaving.

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