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The Germans aren't wrong to see it as income from work though, because software is an example of crystallised work. This is why it has had unfavourable treatme

The Germans aren't wrong to see it as income from work though, because software is an example of crystallised work. This is why it has had unfavourable treatment in Europe. If you allow people to build software and sell it for capital gains rates, then if you're consistent you allow people to build anything and sell them for capital gains rates, which means that the 'real' tax on labour if you structure your work as leading to something which can be sold, is the capital gains rate. This is the problem for software in Europe: when you tax work, the one who build something through work retains a smaller fraction of it, so he has less money to invest in expanding the work.

oytis 2y ago
> software is an example of crystallised work. Yes, but if the software was written by salaried employees then this work has already been taxed. Say if you buy stocks, then sell them at higher price, one could argue that it's someone's work that made them cost more.
- impossiblefork 2y ago
  Yes, which is why this only matters when the person in questions works in the company. In the Swedish system there's a rule whereby you accumulate something based on wages paid, and where you can thus avoid part of the sale counting towards income, provided that you've paid people so much in salaries that your work can be seen as a small part. What I'm sort of arguing for though, is to tax work less, so as to encourage it.
mytailorisrich 2y ago
The software aspect is quite irrelevant, and I believe that what is described is simply how GmbH companies work. If you own a company and sells it, what you are doing is selling your shares in the company. In many jurisdictions this is capital gain (or loss) for accounting and tax purposes since you are selling an asset. Ultimately I suppose the issue is the tax rate, not the "implementation details".
- impossiblefork 2y ago
  But often there's a special rule when you work in the company in question, in which case you have to pay income tax on a certain fraction of dividends, with something similar for the sale of the company.
  - mytailorisrich 2y ago
    We're not talking about dividends here but about selling shares, which is completely different.
    - impossiblefork 2y ago
      Yes, but in order to prevent people from bypassing the rules similar rules almost always apply to sales. It's a system made to ensure that income from work is taxed as work, whether you extract the money by dividends or through a sale. For example, in Sweden we have a set of rules called 3:12 rules, which govern people who simultaneously own parts of a company and also work in it. In Sweden we have an exemption for large sums, for which ordinary capital taxation rules are applied, and the German law is very similar, only with a much higher exemption.

oytis 2y ago

> software is an example of crystallised work. Yes, but if the software was written by salaried employees then this work has already been taxed. Say if you buy stocks, then sell them at higher price, one could argue that it's someone's work that made them cost more.

impossiblefork 2y ago
Yes, which is why this only matters when the person in questions works in the company. In the Swedish system there's a rule whereby you accumulate something based on wages paid, and where you can thus avoid part of the sale counting towards income, provided that you've paid people so much in salaries that your work can be seen as a small part. What I'm sort of arguing for though, is to tax work less, so as to encourage it.

mytailorisrich 2y ago

The software aspect is quite irrelevant, and I believe that what is described is simply how GmbH companies work. If you own a company and sells it, what you are doing is selling your shares in the company. In many jurisdictions this is capital gain (or loss) for accounting and tax purposes since you are selling an asset. Ultimately I suppose the issue is the tax rate, not the "implementation details".

impossiblefork 2y ago
But often there's a special rule when you work in the company in question, in which case you have to pay income tax on a certain fraction of dividends, with something similar for the sale of the company.
- mytailorisrich 2y ago
  We're not talking about dividends here but about selling shares, which is completely different.
  - impossiblefork 2y ago
    Yes, but in order to prevent people from bypassing the rules similar rules almost always apply to sales. It's a system made to ensure that income from work is taxed as work, whether you extract the money by dividends or through a sale. For example, in Sweden we have a set of rules called 3:12 rules, which govern people who simultaneously own parts of a company and also work in it. In Sweden we have an exemption for large sums, for which ordinary capital taxation rules are applied, and the German law is very similar, only with a much higher exemption.