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Exit Tax: Leave Germany before your business gets big

eidel.io

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

#61

Post by merek »

There's a note at the end

> You could, of course, sell or wind down your company, which would solve all problems outlined here. But this is not an option for most entrepreneurs.

For a software business, you could presumably:

- Incorporate a company in your country of choice

- Transfer subscribers from German company to new foreign company (depending on payments provider, this can be a massive effort, for example, not a simple form field in Stripe).

- If new company incorporated in a country you want to live in, use it to obtain an investor Visa

- German company now has 0 in revenue, wind it down and leave.

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

#62

Post by abtinf »

cherryteastain wrote: post #57
olieidel wrote: post #21

Earlier quoted context omitted.

While rather sarcastic, your comment does hit an interesting point: How much does the infrastructure and society of any given state contribute to the "building" of a company? I'd argue that, for software companies, not very much; at least if you contrast it with a hardware company. If you're, say, forging steel, you're using roads, trains, a lot of electricity, you've got an industrial plant, worker unions, public ac…

> I'd argue that, for software companies, not very much If you build any successful business, including a software business, in a lawless and corrupt country you will have local mafias try to extort you for money the moment they hear about it. In especially corrupt countries, corrupt cops/prosecutors etc will be in on it so there will be nothing to protect you. Blackouts will be common due to a poor power grid. Likew…

> If you build any successful business … you will have local mafias try to extort you for money the moment they hear about it.

Precisely how is this different from mixed economies, like the US or Germany?

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

#66

Post by WalterBright »

elpocko wrote: post #48
bigstrat2003 wrote: post #35

Earlier quoted context omitted.

Presumably you paid for that infrastructure in the form of taxes while you did business in the country. Why, then, should the state have additional claims on the money you made? Were the taxes they collected already not enough?

In Germany only 40+% of your income goes to taxes and social security. Plus another meager ~20% on most things you buy. Plus a small tax on many things that are supposedly bad for you, like ~70% on cigarettes. Death is taxed at a discount, only 15-40% depending on how rich you were. "Free" healthcare though. It's a bargain!

"Free" healthcare always turns out to be the most expensive healthcare.

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

#68

Post by bravesoul2 »

psychoslave wrote: post #9

[flagged]

In the article it shows that very rich owners can evade the tax (probably they've already planned and left!), while middle class people the tax wipes out their business and probably send them bankrupt. It's more like handcuffs than socialism.

I am sure they could achieve the same goals of fair tax but learn some game theory before doing so.

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

#69

Post by mitthrowaway2 »

olieidel wrote: post #50
nbadg wrote: post #38

Earlier quoted context omitted.

That's not what the exit tax is, though. The German exit tax is effectively just a way to give the existing capital gains tax a way to tax unrealized gains when you leave the country, to prevent you from dodging taxes on capital gains by simply leaving the country. In other words, it's not an additional claim. It's simply an enforcement mechanism for the money you already hypothetically owe.

Yes, that's true, but the implementation is.. not very elegant. In theory, the exit tax should ensure that Germany gets the taxes of the sale of your company. So, if you ever sold your company once you're no longer in Germany, Germany wouldn't get those taxes, so it charges you immediately once you leave Germany in a sort-of "virtual" sale. This, of course, sucks tremendously because you actually haven't sold your co…

Another reasonable implementation would be for the government to accept payment in the form of shares of your company. Personally I think this is how all taxation of illiquid assets should be done, but I suppose it could get complicated.

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

#70

Post by typewithrhythm »

psychoslave wrote: post #9

[flagged]

The idea that a company is "siphoning out" value is fundamentally flawed. The company is creating value, and society enables it. This enablement is ongoing, and should be paid for with ongoing tax. If the actual value creator decides that they can get a better deal somewhere else, then barriers to exit come in because the government is trying to get more out of a company than it provided. (Since if there are superior places to operate, the worth of what the state you are leaving provides must be overvalued, otherwise you wouldn't leave).
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