5 ms·

There is also a brutal and inflexible exit tax. Should you decide to leave Germany, even temporarily, you will be faced with a tax of ~30% of the current valuat

by hnhg 3y ago

There is also a brutal and inflexible exit tax. Should you decide to leave Germany, even temporarily, you will be faced with a tax of ~30% of the current valuation of your worldwide shareholdings (in companies in which you have >1% ownership). I commented on this in more detail in another post a while back: https://news.ycombinator.com/item?id=39786934#39788110 https://news.ycombinator.com/item?id=39786934#39788110 In the author's case, because he is using a holding company, his exit tax burden will be doubled!

_Microft 3y ago
If this reply [0] to a comment of yours is true, then you’re allowed to „temporarily“ leave Germany for 7-12 years before being affected by this. [0] https://news.ycombinator.com/item?id=39790138 https://news.ycombinator.com/item?id=39790138
- hnhg 3y ago
  I answered later in the thread: "Unfortunately, so far that deferral will most likely come with the requirement for a security, typically cash. That is the prevailing view of tax specialists right now, but will depend on each individual's experience with their local tax authorities." Sadly, you cannot just leave and think it would be automatically deferred. You must apply for the deferral before you leave and the local tax authorities can ask for a security in cash for the entire amount owed. It is absolutely kafkaesque. As with many German corporate tax matters, if you think you are affected by this, you should really speak with a tax advisor who has strong experience working with people in your particular situation. You cannot just read the rules and figure it out.
  - _Microft 3y ago
    What would prevent anyone making off with the money owed if they didn‘t require that?
    - hnhg 3y ago
      It depends where you go. I believe (but could be mistaken) that there are agreements between countries, especially within the EU, that enable them to go after you. I am also not sure what the statute of limitations is regarding tax-related crimes. But it could be a valid strategy, I guess!
toast0 3y ago
From the article you linked in that comment[1], it seems like this exit tax only applied to companies where you own 1% or more? and it's structured as the capital gains tax, but due now, so on the current value minus your cost basis. The US has an exit tax if you renounce citizenship, and it's assessed on your entire net worth. If the article you linked is accurate, this german tax seems much more reasonable. EDIT: actually, I reviewed, and I think it's broadly similar --- treat all assets as if sold at market value on the date of exit. Thus, any deferred taxes from unrealized capital gains need to be paid when you exit the taxing jurisdiction. Although, again, if the linked article is correct, it only happens to assets where you own >= 1% of the company when exiting Germany, and all capital assets if you qualify in the US. [1] https://www.winheller.com/en/tax-law-tax-advisory/international-tax-planning/exit-taxation.html https://www.winheller.com/en/tax-law-tax-advisory/internatio...
- klohto 3y ago
  how are you comparing renouncing citizenship with temporarily leaving the country
  - pests 3y ago
    I think the wording was unclear as that's what I thought too, that "leaving" meant for good, and maybe there was a way back - hence the temporary part. A tax on simply exiting the country is a very foreign concept to Americans I would assume.
    - freyfogle 3y ago
      Hah! Americans have to file US tax whether they live in the US or not.
      - pests 3y ago
        Only for higher income individuals. We get a Foreign Tax Credit for taxes already paid where we live/work. Looks like the limit last year was $120k. Only 17% of Americans make more than $100k/year. Only ~5million Americans living abroad, or 1.5% of the population. I'm sure those numbers are correlated, but I'll bet its under a few hundred thousand of people who are burdened with the tax. Even then, the benefits also are pretty nice.
pingou 3y ago
There may be something new now: https://winheller.com/blog/en/no-more-immediate-german-exit-taxation-within-europe/ https://winheller.com/blog/en/no-more-immediate-german-exit-...
- hnhg 3y ago
  The issue is with the requirement of a security. Winheller do phrase it carefully as "in their view" a security is not required, but that would have to be agreed with the tax authorities in advance and there are different opinions on how likely this is without a firm legal ruling from the law courts. (What I find concerning is the attitude of the German tax authorities in their continual attempts to strengthen and increase the scope of this law. They are always trying to broaden it leaving it to individuals and the courts to push back on them.)
personomas 3y ago
I believe that the exit tax is usually never actually collected due to double taxation agreements between countries. Source: https://de.wikipedia.org/wiki/Wegzugsbesteuerung#Derzeitige_Rechtslage_nach_dem_Au%C3%9Fensteuergesetz https://de.wikipedia.org/wiki/Wegzugsbesteuerung#Derzeitige_...
- hnhg 3y ago
  That is an understandable but incorrect conclusion. That should be the case, especially with freedom of movement within the EU, but the German tax authorities are essentially violating those agreements (which will inevitably get challenged in the law courts, but that will take some years). As I said elsewhere, please consult an experienced tax advisor for your particular circumstances as you cannot just figure this out for yourself, unfortunately.
  - personomas 3y ago
    Do you have any sources? So I can do further research.
csomar 3y ago
This is the new modern version of the Berlin wall; trying to hold hostage the productive tax payers because you can't create or attract new ones. It didn't work for the Soviet Union and it's not going to work for Germany.

by hnhg 3y ago

_Microft 3y ago

If this reply [0] to a comment of yours is true, then you’re allowed to „temporarily“ leave Germany for 7-12 years before being affected by this. [0] https://news.ycombinator.com/item?id=39790138 https://news.ycombinator.com/item?id=39790138

hnhg 3y ago
I answered later in the thread: "Unfortunately, so far that deferral will most likely come with the requirement for a security, typically cash. That is the prevailing view of tax specialists right now, but will depend on each individual's experience with their local tax authorities." Sadly, you cannot just leave and think it would be automatically deferred. You must apply for the deferral before you leave and the local tax authorities can ask for a security in cash for the entire amount owed. It is absolutely kafkaesque. As with many German corporate tax matters, if you think you are affected by this, you should really speak with a tax advisor who has strong experience working with people in your particular situation. You cannot just read the rules and figure it out.
- _Microft 3y ago
  What would prevent anyone making off with the money owed if they didn‘t require that?
  - hnhg 3y ago
    It depends where you go. I believe (but could be mistaken) that there are agreements between countries, especially within the EU, that enable them to go after you. I am also not sure what the statute of limitations is regarding tax-related crimes. But it could be a valid strategy, I guess!

toast0 3y ago

From the article you linked in that comment[1], it seems like this exit tax only applied to companies where you own 1% or more? and it's structured as the capital gains tax, but due now, so on the current value minus your cost basis. The US has an exit tax if you renounce citizenship, and it's assessed on your entire net worth. If the article you linked is accurate, this german tax seems much more reasonable. EDIT: actually, I reviewed, and I think it's broadly similar --- treat all assets as if sold at market value on the date of exit. Thus, any deferred taxes from unrealized capital gains need to be paid when you exit the taxing jurisdiction. Although, again, if the linked article is correct, it only happens to assets where you own >= 1% of the company when exiting Germany, and all capital assets if you qualify in the US. [1] https://www.winheller.com/en/tax-law-tax-advisory/international-tax-planning/exit-taxation.html https://www.winheller.com/en/tax-law-tax-advisory/internatio...

klohto 3y ago
how are you comparing renouncing citizenship with temporarily leaving the country
- pests 3y ago
  I think the wording was unclear as that's what I thought too, that "leaving" meant for good, and maybe there was a way back - hence the temporary part. A tax on simply exiting the country is a very foreign concept to Americans I would assume.
  - freyfogle 3y ago
    Hah! Americans have to file US tax whether they live in the US or not.
    - pests 3y ago
      Only for higher income individuals. We get a Foreign Tax Credit for taxes already paid where we live/work. Looks like the limit last year was $120k. Only 17% of Americans make more than $100k/year. Only ~5million Americans living abroad, or 1.5% of the population. I'm sure those numbers are correlated, but I'll bet its under a few hundred thousand of people who are burdened with the tax. Even then, the benefits also are pretty nice.

pingou 3y ago

There may be something new now: https://winheller.com/blog/en/no-more-immediate-german-exit-taxation-within-europe/ https://winheller.com/blog/en/no-more-immediate-german-exit-...

hnhg 3y ago
The issue is with the requirement of a security. Winheller do phrase it carefully as "in their view" a security is not required, but that would have to be agreed with the tax authorities in advance and there are different opinions on how likely this is without a firm legal ruling from the law courts. (What I find concerning is the attitude of the German tax authorities in their continual attempts to strengthen and increase the scope of this law. They are always trying to broaden it leaving it to individuals and the courts to push back on them.)

personomas 3y ago

I believe that the exit tax is usually never actually collected due to double taxation agreements between countries. Source: https://de.wikipedia.org/wiki/Wegzugsbesteuerung#Derzeitige_Rechtslage_nach_dem_Au%C3%9Fensteuergesetz https://de.wikipedia.org/wiki/Wegzugsbesteuerung#Derzeitige_...

hnhg 3y ago
That is an understandable but incorrect conclusion. That should be the case, especially with freedom of movement within the EU, but the German tax authorities are essentially violating those agreements (which will inevitably get challenged in the law courts, but that will take some years). As I said elsewhere, please consult an experienced tax advisor for your particular circumstances as you cannot just figure this out for yourself, unfortunately.
- personomas 3y ago
  Do you have any sources? So I can do further research.

csomar 3y ago

This is the new modern version of the Berlin wall; trying to hold hostage the productive tax payers because you can't create or attract new ones. It didn't work for the Soviet Union and it's not going to work for Germany.