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enormous exit taxes Huh? Can you speak more about that? much of the western world in a similarly bad state That is the real crux. The only chance so to s

enormous exit taxes Huh? Can you speak more about that? much of the western world in a similarly bad state That is the real crux. The only chance so to speak is to go to a western country that's in better state, though it's not necessarily gonna be a good state. The US honestly seems like the best option right now That probably depends on various things. Are you a white male with the right job? Not too bad. Are you male and the wrong job or you might like other men? Much less good. Are you female or non-white? You may want to reconsider. Not that the AfD isn't gonna be problematic in those regards but the US is definitely going into a bad direction that way.

gndk 2y ago
> Huh? Can you speak more about that? If you give up residency in Germany and own company shares over 1%, you are taxed as if you sold them at the current value. For private companies, this value is calculated by the tax authority with a procedure called "Vereinfachtes Ertragswertfahren" ("simplified income approach"), where they basically take the average post-tax profit of the last three years and multiply it by 13,75. The tax you pay on that varies based on your personal circumstances (personal tax rate, church tax etc) but is around 30%. So, the tax authority values your small company with 100k€ average yearly profit at 1,37m€ and wants you to pay roughly 400k€ exit tax for the privilege of moving out of Germany. You already paid around 50k€ corporate tax per year to get to that 100k€ post-tax profit. And to pay out the 100k€ as dividends from the company to yourself, you pay another 25% capital gains tax on it, being left with 75k€. So to afford the exit tax, you'd have to save 100% of your profits for roughly 5 years, or less if you are able to save something from your regular salary. This is very hard to afford under most circumstances, even with installments, and means that Germany quickly becomes a prison for even mildly successful entrepreneurs. https://en.wikipedia.org/wiki/Expatriation_tax#Germany https://en.wikipedia.org/wiki/Expatriation_tax#Germany https://de.wikipedia.org/wiki/Vereinfachtes_Ertragswertverfahren https://de.wikipedia.org/wiki/Vereinfachtes_Ertragswertverfa...
- tharkun__ 2y ago
  Thanks for the clarifications, since I don't think this is widely known (outside of entrepreneurial circles). That makes a lot of sense then. So, as a "regular bloke" you can leave Germany for better pastures, no problem. But if you are "independently wealthy-ish", they really want to keep you there, to pay more taxes / employ people that pay taxes. Or take the money anyway, make sure they get their "capital gains taxes" so to speak? 25% capital gains tax is actually not that bad other than that Germany has no equivalent of an RRSP and TFSA. Capital gains are taxed as regular income in Canada for example. Your marginal tax rate is quite probably gonna be greater than 25%. To be fair, you only get taxed on half of the gains in many cases. Quoting https://www.wealthsimple.com/en-ca/learn/capital-gains-tax-canada#how_to_calculate_tax_on_a_capital_gain https://www.wealthsimple.com/en-ca/learn/capital-gains-tax-c...: As of June 25, 2024, however, you will be taxed on 50% of your annual capital gains up to $250,000. For any capital gains over $250,000, that ratio increases to two-thirds, or approximately 66.67%. Here’s how that would look in real life: Suppose one year you sell stocks for $300,000 more than you paid for them. 50% of the first $250,000 of those gains ($125,000) would be taxed as income. 66.67% of the remaining $50,000 ($33,335) would be taxed as well. So on the $300,000 gain, only $158,335 counts toward your taxable income. For corporations and trusts, there’s no such threshold: regardless of the total capital gains, 66.67% are taxable Like, if I was to sell my investments and move to Germany from Canada :) and let's say I had your 5 year example worth of 100k profit i.e. capital gains, to dispose of, even if you made zero other money that year for example would mean you pay $113,685 of taxes that year (in Ontario, just to make an example). That's an average tax rate of ~22.75%, marginal rate of ~53.5%. Like it does sound like Canadian departure tax basically. And it's not just about companies as the example above shows. That was just me owning stocks. Any Canadian leaving has to pay departure tax. Basically, when you leave Canada you have to pay tax on any of your investments. A "deemed disposition". Pay taxes as if you had sold, even if you keep ownership. Which if you think about it, makes some sense. For all the country knows, you've accumulated wealth without ever paying capital gains tax, because you never sold and now you leave the country (potentially never to come back but who knows?!), and sell shortly after leaving. Leaving to a country with no capital gains taxes. A year later you come back and retire in Canada like you always planned. Deemed disposition prevents that. Makes sense actually. If you do stay in the other country afterwards, that's none of Canada's business any longer. The good thing here is that we do have the RRSP and TFSA. So hopefully before leaving Canada I would've paid myself dividends over the years, in a tax efficient way and put those into a TFSA to grow tax free and I won't have to pay departure tax on that (or anything in an RRSP). And an RRSP would AFAIK even be tax sheltered as a "retirement account" under Canada - Germany tax treaties. (fun thought experiment to move from each of these countries to the other :) )
marky1991 2y ago
"Are you male and the wrong job or you might like other men? Much less good. " Could you explain what you're talking about here? "It sucks to be poor", that makes sense. But being gay doesn't matter imo and I fail to see how other (western) countries are much different. I generally have similar feelings about your other points, but don't have personal experience there.
- tharkun__ 2y ago
  Donald Trump and especially the people that voted for him are not so sweet on gays (well I guess some might tolerate gay women on a porn site, but not so much living right next to them). It would absolutely not surprise me if after the repeal of abortion rights, gay marriage rights will be next. Now to be fair, some of the states did vote for better abortion rights after the repeal (and during this presidential election), so there's that. But the tendencies and what Trump stands for in general don't bode well. I wouldn't bet on it so to speak. That said, we are talking about this in context of Germany, where you are correct in that women's rights are less enshrined than one might think of in such a country. And especially in AfD country you don't want to be seen going off to party at CSD. Being gay in the middle of Berlin I guess is akin to being gay in the middle of a metro city in California, while being gay in the middle of the Thuringian forest is like being gay in the middle of certain "flyover states".
  - ywvcbk 2y ago
    Most people aren’t moving into any of the red states, though (maybe Texas)? And with the all states right thing that they are pushing hopefully Trump will be dead by them time they have enough political capital to restrict stuff on a Federal level.
    - marky1991 2y ago
      That's objectively not true: https://en.wikipedia.org/wiki/File:Annual_population_growth_rate_by_U.S._state.svg https://en.wikipedia.org/wiki/File:Annual_population_growth_... . Hoping someone is dead is very much in poor taste imo. "And with the all states right thing that they are pushing hopefully Trump will be dead by them time they have enough political capital to restrict stuff on a Federal level." This sentence doesn't make any sense to me, 'states rights' is a federalistic concept, it's inherently against adding new restrictions at the federal level.

gndk 2y ago

> Huh? Can you speak more about that? If you give up residency in Germany and own company shares over 1%, you are taxed as if you sold them at the current value. For private companies, this value is calculated by the tax authority with a procedure called "Vereinfachtes Ertragswertfahren" ("simplified income approach"), where they basically take the average post-tax profit of the last three years and multiply it by 13,75. The tax you pay on that varies based on your personal circumstances (personal tax rate, church tax etc) but is around 30%. So, the tax authority values your small company with 100k€ average yearly profit at 1,37m€ and wants you to pay roughly 400k€ exit tax for the privilege of moving out of Germany. You already paid around 50k€ corporate tax per year to get to that 100k€ post-tax profit. And to pay out the 100k€ as dividends from the company to yourself, you pay another 25% capital gains tax on it, being left with 75k€. So to afford the exit tax, you'd have to save 100% of your profits for roughly 5 years, or less if you are able to save something from your regular salary. This is very hard to afford under most circumstances, even with installments, and means that Germany quickly becomes a prison for even mildly successful entrepreneurs. https://en.wikipedia.org/wiki/Expatriation_tax#Germany https://en.wikipedia.org/wiki/Expatriation_tax#Germany https://de.wikipedia.org/wiki/Vereinfachtes_Ertragswertverfahren https://de.wikipedia.org/wiki/Vereinfachtes_Ertragswertverfa...

tharkun__ 2y ago
Thanks for the clarifications, since I don't think this is widely known (outside of entrepreneurial circles). That makes a lot of sense then. So, as a "regular bloke" you can leave Germany for better pastures, no problem. But if you are "independently wealthy-ish", they really want to keep you there, to pay more taxes / employ people that pay taxes. Or take the money anyway, make sure they get their "capital gains taxes" so to speak? 25% capital gains tax is actually not that bad other than that Germany has no equivalent of an RRSP and TFSA. Capital gains are taxed as regular income in Canada for example. Your marginal tax rate is quite probably gonna be greater than 25%. To be fair, you only get taxed on half of the gains in many cases. Quoting https://www.wealthsimple.com/en-ca/learn/capital-gains-tax-canada#how_to_calculate_tax_on_a_capital_gain https://www.wealthsimple.com/en-ca/learn/capital-gains-tax-c...: As of June 25, 2024, however, you will be taxed on 50% of your annual capital gains up to $250,000. For any capital gains over $250,000, that ratio increases to two-thirds, or approximately 66.67%. Here’s how that would look in real life: Suppose one year you sell stocks for $300,000 more than you paid for them. 50% of the first $250,000 of those gains ($125,000) would be taxed as income. 66.67% of the remaining $50,000 ($33,335) would be taxed as well. So on the $300,000 gain, only $158,335 counts toward your taxable income. For corporations and trusts, there’s no such threshold: regardless of the total capital gains, 66.67% are taxable Like, if I was to sell my investments and move to Germany from Canada :) and let's say I had your 5 year example worth of 100k profit i.e. capital gains, to dispose of, even if you made zero other money that year for example would mean you pay $113,685 of taxes that year (in Ontario, just to make an example). That's an average tax rate of ~22.75%, marginal rate of ~53.5%. Like it does sound like Canadian departure tax basically. And it's not just about companies as the example above shows. That was just me owning stocks. Any Canadian leaving has to pay departure tax. Basically, when you leave Canada you have to pay tax on any of your investments. A "deemed disposition". Pay taxes as if you had sold, even if you keep ownership. Which if you think about it, makes some sense. For all the country knows, you've accumulated wealth without ever paying capital gains tax, because you never sold and now you leave the country (potentially never to come back but who knows?!), and sell shortly after leaving. Leaving to a country with no capital gains taxes. A year later you come back and retire in Canada like you always planned. Deemed disposition prevents that. Makes sense actually. If you do stay in the other country afterwards, that's none of Canada's business any longer. The good thing here is that we do have the RRSP and TFSA. So hopefully before leaving Canada I would've paid myself dividends over the years, in a tax efficient way and put those into a TFSA to grow tax free and I won't have to pay departure tax on that (or anything in an RRSP). And an RRSP would AFAIK even be tax sheltered as a "retirement account" under Canada - Germany tax treaties. (fun thought experiment to move from each of these countries to the other :) )

marky1991 2y ago

"Are you male and the wrong job or you might like other men? Much less good. " Could you explain what you're talking about here? "It sucks to be poor", that makes sense. But being gay doesn't matter imo and I fail to see how other (western) countries are much different. I generally have similar feelings about your other points, but don't have personal experience there.

tharkun__ 2y ago
Donald Trump and especially the people that voted for him are not so sweet on gays (well I guess some might tolerate gay women on a porn site, but not so much living right next to them). It would absolutely not surprise me if after the repeal of abortion rights, gay marriage rights will be next. Now to be fair, some of the states did vote for better abortion rights after the repeal (and during this presidential election), so there's that. But the tendencies and what Trump stands for in general don't bode well. I wouldn't bet on it so to speak. That said, we are talking about this in context of Germany, where you are correct in that women's rights are less enshrined than one might think of in such a country. And especially in AfD country you don't want to be seen going off to party at CSD. Being gay in the middle of Berlin I guess is akin to being gay in the middle of a metro city in California, while being gay in the middle of the Thuringian forest is like being gay in the middle of certain "flyover states".
- ywvcbk 2y ago
  Most people aren’t moving into any of the red states, though (maybe Texas)? And with the all states right thing that they are pushing hopefully Trump will be dead by them time they have enough political capital to restrict stuff on a Federal level.
  - marky1991 2y ago
    That's objectively not true: https://en.wikipedia.org/wiki/File:Annual_population_growth_rate_by_U.S._state.svg https://en.wikipedia.org/wiki/File:Annual_population_growth_... . Hoping someone is dead is very much in poor taste imo. "And with the all states right thing that they are pushing hopefully Trump will be dead by them time they have enough political capital to restrict stuff on a Federal level." This sentence doesn't make any sense to me, 'states rights' is a federalistic concept, it's inherently against adding new restrictions at the federal level.