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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

#431

Post by LadyCailin »

piker wrote: post #328
LadyCailin wrote: post #270

Earlier quoted context omitted.

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 re…

PFIC taxation, of which some pension accounts qualify, as well as all mutual funds and ETFs, is absolutely punitive, and does in fact charge taxes on unrealized gains. Even if you don't have any PFICs, or even owe taxes to the US, the fact that you need to pay an accountant ~$500+, just to file the taxes, is in my opinion punitive as well.

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

#432

Post by bluGill »

reaperducer wrote: post #390
lenerdenator wrote: post #387

Earlier quoted context omitted.

Who's the German equivalent of the American Certified Public Accountant? Those shouldn't be prohibitively expensive; even small businesses in the US can typically afford one. Just go ask them.

Those shouldn't be prohibitively expensive; even small businesses in the US can typically afford one. Having an accountant is one of the hallmarks of a legitimate business. If you're doing it on your own without a professional to watch out for you, and advise you, and take care of the details so you can do more important things, it isn't a company, it's a hobby.

Even hobbies are sometimes better done with an accountant. if you sell your garden surplus at a farmers market for example. They are not expensive if you only need a little help and can save a lot of trouble.

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

#433

Post by avar »

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…

Let's be fair here, the GP is comparing this to the complexity of other bureaucracy in Germany. In that context this does sound easy, e.g. here's how you form a GmbH: https://major-grooves.medium.com/just-how-complicated-could-...

    > Snark aside, this chart makes total sense
    > to me now: https://i.redd.it/fxks3skmvt4e1.png
Not that we're doing all that great here in Europe, but this list is somewhat an artifact of strong US financial markets, and skews against European innovation.

E.g. Booking.com isn't there because it's now ... an American company on paper, but it was started in Europe, has most of its operations there, and (last I checked) Europe was its most important market.

But because the US stock market and US capital dominates globally, companies like that tend to be sold to a US company, and become American on paper. But that financial arrangement doesn't really reflect the overall state of European innovation.

Similarly, there's countless European startups that would have probably had a NASDAQ listing if they'd been US-based, but were instead sold to some of the larger European incumbents in their sector.

The overall amount of innovation delivered to consumers etc. might be the same, so that's more of an artifact of how capital flows in the US v.s. the EU generally.

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

#434

Post by BobaFloutist »

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…

How on earth are Tesla, Uber, and T-Mobile not "high-tech"?

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

#435

Post by WalterBright »

pyrale wrote: post #142
WalterBright wrote: post #108

Earlier quoted context omitted.

> As USA is the main destination for IPO Why do you think that might be? Perhaps the Germans could make their IPOs more business friendly, so they have no reason to flee.

> Why do you think that might be? This kind of rethorical question is annoying. If you have an opinion, state it. > Perhaps the Germans could make their IPOs more business friendly The main reason companies tend to get listed in the US (or, in the case of many large existing companies, to get listed there on top of their existing listing in their home country) is that the US stock market is the largest in the world,…

> If you have an opinion, state it.

My opinion is obvious. Not as business friendly as the US. Make Germany a more attractive place for business than the US.

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

#436

Post by zwnow »

oaiey wrote: post #428
zwnow wrote: post #410

Germany is probably the last country on earth you want to found a business in. Bureaucracy Bureaucracy Bureaucracy and these damn workers rights, arrrr those evil Germans!

I am more and more convinced to found a company with the sole purpose of earning money to pay people. Sound strange but the current climate of being evil to employees no matter what is ripe for disruption.

While I like the idea you'll have to compete with exploitative companies. Won't be easy.

But I just see working world as a net negative to my life. Being forced to work makes me hate it, doesn't matter if it's in a job that allows me to do whatever the f i want or if I had a very strict plan. It's still being forced to do shit I dont want to do in the first place. It's still taking away tons of time from my one life, just so I can afford food.

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

#437

Post by diggan »

pc86 wrote: post #400
diggan wrote: post #391

Earlier quoted context omitted.

> 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 punishm…

> Also good and lawful is moving a company somewhere where you'll pay less in taxes

Agree, to an extent. You (the company) should still pay taxes on profits made within the country, before they can move out the company from the country, anything else would be unfair.

> 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 move company for any reason. If you're moving the company because the taxes are high, it sounds perfectly reasonable that you'd pay taxes before moving the company, otherwise it becomes a tax hole. And I don't think they're adding these taxes to stop them from moving, if that was the goal then they would just make it outright illegal. Instead they're trying to make sure you can't avoid paying taxes you should have paid.

> anything other than Germany punishing corporations for leaving.

Almost right, they're trying to stop companies from leaving the country without first paying their fair share of taxes. Once that's done, they're free to move wherever. Sounds reasonable to me, although I don't agree with the exact rates either.

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

#438

Post by WalterBright »

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)

In the 80s, I traveled in Germany and visited with friends. I was running my own company, and they asked me how hard it was to set up a business. I replied that it required filling out a one page form and sending $30 to the state.

They were shocked at how easy it was.

I'm not terribly familiar with the business environment in Germany, but I hear things like it's really hard to fire someone.

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

#439

Post by WalterBright »

littlestymaar wrote: post #150
gopher_space wrote: post #147

Earlier quoted context omitted.

[flagged]

I'm afraid he's not (that was pretty much Milton Friedman's position as well as all of his UChicago fellow, which is the reason why we're back to the gilded age with robber barons all around)

I actually read the book "The Robber Barons". The author's conclusions do not match the facts he presents.

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

#440

Post by WalterBright »

vjvjvjvjghv wrote: post #129
WalterBright wrote: post #107

Earlier quoted context omitted.

Of course. And historically, US health care costs rose at about the rate of inflation until the late 1960s, where the curve tilted strongly upwards at a much higher rate, and continues today. What happened in the late 1960s? The advent of "free" healthcare!

Which free health care caused US healthcare to get so expensive?

Free healthcare was part of LBJ's "Great Society".
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