17 ms·

Why a GmbH in Germany? Sorry, that was not a good idea and will costs you money and nerves to fix that. Now you are locked into Germany even if your business ca

by muhaaa 3y ago

Why a GmbH in Germany? Sorry, that was not a good idea and will costs you money and nerves to fix that. Now you are locked into Germany even if your business can be operated from everywhere around the globe. If you move the GmbH out of Germany you have to pay GmbH fair value ; fair value according to German Tax Authority! Do a Holding GmbH + Operative GmbH to accumulate wealth tax efficiently. You could have your company on your name (Personengesellschaft) and operate from across the globe, especially with cheaper taxes and living expenses OR even found a GmbH-like company in a cheap tax haven and do vacation in Germany.

p00dles 3y ago
You seem very knowledgeable about this… do you have any resources that you could point me to, or a Steuerberater that you would recommend?
- muhaaa 3y ago
  I will write you an email to support@stagetimer.io later tonight.
pudo 3y ago
I think the days when you could just set up a company in some random country and run it from Germany are pretty over, the Finanzamt will just treat it as a domestic entity unless you can prove you've gone full nomad.
- throwaway60722 3y ago
  You don't need to go full nomad, just spend half a year + 1 day out of Germany.
  - dappermanneke 3y ago
    the center of life criterion is much more encompassing than that if you get a serious audit
    - jkaplowitz 3y ago
      If you're talking about income taxation of individuals and would otherwise be dual resident in Germany and another country with which Germany has a typical set of tax treaty residency tiebreakers, then the top criterion in the list is where you have a permanent home available to you. If you have a permanent home available to you in the other country but not in Germany, you are by treaty a tax non-resident of Germany regardless of days in Germany or center of life. That does raise the question of what does it mean to have a permanent home available to you. And that's a much harder conversation as applied to the edge cases. But one can certainly construct viable enough scenarios where it would not be a close call even if one spends more than half the year in Germany, and then arrange one's reality to genuinely match the constructed scenario. Explaining to the Finanzamt (tax office) might need a Steuerberater (tax advisor) to argue with them, of course.
  - germanier 3y ago
    You have to cleanly separate personal and company taxes. If the managing director makes significant decisions (as in forming the will, not as in executing) while on German soil, the company is taxed like any other German capital company. Btw. despite the myth, just being 182 days outside of Germany doesn't get you out of German personal taxes. It just stops taxation of foreign-derived income.
codebastard 3y ago
That is not true. It easy to create a holding on top of your GmbH in which case you only pay for 5% of the revenue taxes. The only shoot in the foot is the higher cost of declaring taxes being it in time or in fee for a specialist. And as long you are working from Germany you have to pay taxes for any kind of money you are going to take out from the company, being ist as dividend or salary. The only exception is when you are not residing in one country in the EU for longer than 6 Months than you can play around with a LLC construct or other Holding structures from countries that have a double-tax avoidance agreement.
varispeed 3y ago
Why would you look to avoid paying tax though? I can understand doing so in a country that is squandering money - like the UK, where you pay through the nose and get very little in return, but Germany? I heard public services and basically what you get for your tax is pretty decent.
- LeanderK 3y ago
  why is this even the first thing that comes to mind when thinking about the legal form? This is highly unethical in general and really just super selfish. F*k you if you avoid taxes, especially in a country like Germany where society paid for your university studies etc.
  - wiseowise 3y ago
    > F*k you if you avoid taxes, especially in a country like Germany where society paid for your university studies etc. People can move in from other countries, you know.
    - Lacerda69 3y ago
      and they would also benefit from the social net the state provides plus everything else taxes pay for, so your point is what exactly?
    - LeanderK 3y ago
      > People can move in from other countries, you know. You can also move away from germany. But you can't move to germany and avoid taxes while creating a company here (OP was literally: Bootstrapping a SaaS Business in Germany)
      - wiseowise 3y ago
        I’m not saying that you should avoid taxes.
  - throwaway60722 3y ago
LeanderK 3y ago
I don't know how to judge this comment? Is this essentially recommending dodging the taxes via a more complicated holding situation and the "do vacation in Germany", so essentially operate from germany? If so, I think this is highly unethical. Corporations have to pair their share to keep the society functioning...not just "normal" peoples with their salaries while all the profits get sucked into a foreign black hole.
- urduntupu 3y ago
  Nothing against paying some taxes. But keep in mind that Germany is among the top ranking highest tax paying countries. And there are better "society functioning" countries than Germany, at much lower tax rate. Not every tax rate is fair. Some tax rates are unethically high b/c due to a overloaded govt. apparatus.
  - anonyfox 3y ago
    Not OP but I understand the point. Still for me building up a company is not only for maximizing personal profit by any means, it’s also a social construct that should be valuable for the society. Paying taxes on economic activity, provide jobs and therefore a living for people, and ideally by producing something actually valuable for society itself (not just exploiting natural resources or siphoning off money from other players). Also every country has tradeoffs one way or another. And by far not everyone has the same ideal of solidarity or wants to give back to the society that invested quite a lot in the person before he/she got into the situation of making a lot of money. Still some people (like me) notice it and it’s much more respectable than any billionaire.
  - mqus 3y ago
    > some taxes Not just "some taxes", but all of them. Keep in mind the author probably studied in germany and never had to pay any substantial fees to the university, his parents got money during his childhood and he will get money even if he does not immediately find a job after he closes his business. Taxes do go both ways. And just because you think the government is too big, you don't get to decide how much you pay for it, thats what a social welfare state is. If you want to change things, you have to vote, lobby and/or take part in political processes.
Makanantaa 3y ago
Leave that person alone. I also createda GmbH in germany and i tell you a thing: I don't care to optimize every single shit for the optimum. If i would, i would go to USA and accept that the social scissor is so crazy wide that not every USA citizen can't just go to a dentist. I live in germany, thats how it is and i'm fine with it. Your moral and ethics don't stop at the law.
Roritharr 3y ago
What most people do not understand about muhaaa's comment is the dry-income problem. How to bankrupt yourself in 3 easy steps: 1. Incorporate a UG (small limited liablity entity, sometimes called baby GmbH) with 100€ capital base and you owning 100% of stock. 2. Raise Venture Capital, let's say 1M€ for 10%, making your company worth 10M€. 3. Move out of Germany. 4. Receive a letter from the Tax Authority that you are liable for Exit Tax (Wegzugsbesteuerung) and irregardless of your lack of revenues because of your recent capital raise your company is estimated at 10M€, making your personal holdings in the company 9M€ worth, of which the Tax Authority wants 60% of your personal income tax on, which varies but to be optimistic let's say you get taxed 30%, which is among the lower bound. Now you owe the German Tax Authority 2,7M€ without having made a single € and your company only having 1M€ in liquid cash. It's literally the reason why I will never incorporate a company in Germany again.
- jkaplowitz 3y ago
  How would that be different if you did all steps 1-2 with a foreign corporate entity while being personally tax resident in Germany? Step 4 would be the same except if you were hiding the existence of the foreign corporate entity from the German tax authorities - but my understanding is that reporting steps 1 and 2 to the German tax authorities is legally mandatory for any German tax resident.
  - Roritharr 3y ago
    Correct, there is no way to escape this if you have made this mistake of being either born as a german tax resident (your tax number is the first document you receive from the government) or having made the weird choice of choosing to become a german tax resident. Personally this specific situation is in the top 3 reasons for me to leave Germany as soon as possible.
    - jkaplowitz 3y ago
      Most people don’t choose where to live based on taxes, including me. Healthcare, lifestyle, family, political climate, job opportunities, overall affordability, safety, the rule of law, and other similar factors matter far more to me. But you do you. But moving countries often won’t solve your problem, unless you pick one country before starting your business and reside there indefinitely thereafter. Why? Because the big picture of the tax regime you describe isn’t unique to Germany, though of course the precise details are unique in each country. It’s broadly common for countries with residency-based taxation for individuals, so basically everywhere but the US and Eritrea, to have some form of exit tax for individuals who relocate abroad that includes the value of corporate shares held at the time of the move. Even the US has such an exit tax for many cases (not all) of renouncing citizenship or abandoning long-term permanent residence.

by muhaaa 3y ago

p00dles 3y ago

You seem very knowledgeable about this… do you have any resources that you could point me to, or a Steuerberater that you would recommend?

muhaaa 3y ago
I will write you an email to support@stagetimer.io later tonight.

pudo 3y ago

I think the days when you could just set up a company in some random country and run it from Germany are pretty over, the Finanzamt will just treat it as a domestic entity unless you can prove you've gone full nomad.

throwaway60722 3y ago
You don't need to go full nomad, just spend half a year + 1 day out of Germany.
- dappermanneke 3y ago
  the center of life criterion is much more encompassing than that if you get a serious audit
  - jkaplowitz 3y ago
    If you're talking about income taxation of individuals and would otherwise be dual resident in Germany and another country with which Germany has a typical set of tax treaty residency tiebreakers, then the top criterion in the list is where you have a permanent home available to you. If you have a permanent home available to you in the other country but not in Germany, you are by treaty a tax non-resident of Germany regardless of days in Germany or center of life. That does raise the question of what does it mean to have a permanent home available to you. And that's a much harder conversation as applied to the edge cases. But one can certainly construct viable enough scenarios where it would not be a close call even if one spends more than half the year in Germany, and then arrange one's reality to genuinely match the constructed scenario. Explaining to the Finanzamt (tax office) might need a Steuerberater (tax advisor) to argue with them, of course.
- germanier 3y ago
  You have to cleanly separate personal and company taxes. If the managing director makes significant decisions (as in forming the will, not as in executing) while on German soil, the company is taxed like any other German capital company. Btw. despite the myth, just being 182 days outside of Germany doesn't get you out of German personal taxes. It just stops taxation of foreign-derived income.

codebastard 3y ago

That is not true. It easy to create a holding on top of your GmbH in which case you only pay for 5% of the revenue taxes. The only shoot in the foot is the higher cost of declaring taxes being it in time or in fee for a specialist. And as long you are working from Germany you have to pay taxes for any kind of money you are going to take out from the company, being ist as dividend or salary. The only exception is when you are not residing in one country in the EU for longer than 6 Months than you can play around with a LLC construct or other Holding structures from countries that have a double-tax avoidance agreement.

varispeed 3y ago

Why would you look to avoid paying tax though? I can understand doing so in a country that is squandering money - like the UK, where you pay through the nose and get very little in return, but Germany? I heard public services and basically what you get for your tax is pretty decent.

LeanderK 3y ago
why is this even the first thing that comes to mind when thinking about the legal form? This is highly unethical in general and really just super selfish. F*k you if you avoid taxes, especially in a country like Germany where society paid for your university studies etc.
- wiseowise 3y ago
  > F*k you if you avoid taxes, especially in a country like Germany where society paid for your university studies etc. People can move in from other countries, you know.
  - Lacerda69 3y ago
    and they would also benefit from the social net the state provides plus everything else taxes pay for, so your point is what exactly?
  - LeanderK 3y ago
    > People can move in from other countries, you know. You can also move away from germany. But you can't move to germany and avoid taxes while creating a company here (OP was literally: Bootstrapping a SaaS Business in Germany)
    - wiseowise 3y ago
      I’m not saying that you should avoid taxes.
- throwaway60722 3y ago

LeanderK 3y ago

I don't know how to judge this comment? Is this essentially recommending dodging the taxes via a more complicated holding situation and the "do vacation in Germany", so essentially operate from germany? If so, I think this is highly unethical. Corporations have to pair their share to keep the society functioning...not just "normal" peoples with their salaries while all the profits get sucked into a foreign black hole.

urduntupu 3y ago
Nothing against paying some taxes. But keep in mind that Germany is among the top ranking highest tax paying countries. And there are better "society functioning" countries than Germany, at much lower tax rate. Not every tax rate is fair. Some tax rates are unethically high b/c due to a overloaded govt. apparatus.
- anonyfox 3y ago
  Not OP but I understand the point. Still for me building up a company is not only for maximizing personal profit by any means, it’s also a social construct that should be valuable for the society. Paying taxes on economic activity, provide jobs and therefore a living for people, and ideally by producing something actually valuable for society itself (not just exploiting natural resources or siphoning off money from other players). Also every country has tradeoffs one way or another. And by far not everyone has the same ideal of solidarity or wants to give back to the society that invested quite a lot in the person before he/she got into the situation of making a lot of money. Still some people (like me) notice it and it’s much more respectable than any billionaire.
- mqus 3y ago
  > some taxes Not just "some taxes", but all of them. Keep in mind the author probably studied in germany and never had to pay any substantial fees to the university, his parents got money during his childhood and he will get money even if he does not immediately find a job after he closes his business. Taxes do go both ways. And just because you think the government is too big, you don't get to decide how much you pay for it, thats what a social welfare state is. If you want to change things, you have to vote, lobby and/or take part in political processes.

Makanantaa 3y ago

Leave that person alone. I also createda GmbH in germany and i tell you a thing: I don't care to optimize every single shit for the optimum. If i would, i would go to USA and accept that the social scissor is so crazy wide that not every USA citizen can't just go to a dentist. I live in germany, thats how it is and i'm fine with it. Your moral and ethics don't stop at the law.

Roritharr 3y ago

What most people do not understand about muhaaa's comment is the dry-income problem. How to bankrupt yourself in 3 easy steps: 1. Incorporate a UG (small limited liablity entity, sometimes called baby GmbH) with 100€ capital base and you owning 100% of stock. 2. Raise Venture Capital, let's say 1M€ for 10%, making your company worth 10M€. 3. Move out of Germany. 4. Receive a letter from the Tax Authority that you are liable for Exit Tax (Wegzugsbesteuerung) and irregardless of your lack of revenues because of your recent capital raise your company is estimated at 10M€, making your personal holdings in the company 9M€ worth, of which the Tax Authority wants 60% of your personal income tax on, which varies but to be optimistic let's say you get taxed 30%, which is among the lower bound. Now you owe the German Tax Authority 2,7M€ without having made a single € and your company only having 1M€ in liquid cash. It's literally the reason why I will never incorporate a company in Germany again.

jkaplowitz 3y ago
How would that be different if you did all steps 1-2 with a foreign corporate entity while being personally tax resident in Germany? Step 4 would be the same except if you were hiding the existence of the foreign corporate entity from the German tax authorities - but my understanding is that reporting steps 1 and 2 to the German tax authorities is legally mandatory for any German tax resident.
- Roritharr 3y ago
  Correct, there is no way to escape this if you have made this mistake of being either born as a german tax resident (your tax number is the first document you receive from the government) or having made the weird choice of choosing to become a german tax resident. Personally this specific situation is in the top 3 reasons for me to leave Germany as soon as possible.
  - jkaplowitz 3y ago
    Most people don’t choose where to live based on taxes, including me. Healthcare, lifestyle, family, political climate, job opportunities, overall affordability, safety, the rule of law, and other similar factors matter far more to me. But you do you. But moving countries often won’t solve your problem, unless you pick one country before starting your business and reside there indefinitely thereafter. Why? Because the big picture of the tax regime you describe isn’t unique to Germany, though of course the precise details are unique in each country. It’s broadly common for countries with residency-based taxation for individuals, so basically everywhere but the US and Eritrea, to have some form of exit tax for individuals who relocate abroad that includes the value of corporate shares held at the time of the move. Even the US has such an exit tax for many cases (not all) of renouncing citizenship or abandoning long-term permanent residence.