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[flagged]

wmf 1y ago
In many cases people want to move precisely because Germany doesn't provide as good infrastructure for startups as other countries. Also, the "you can't leave because you owe society" argument, while not necessarily wrong, is strongly associated with the abuses of Communism.
ghufran_syed 1y ago
Perhaps you would apply the same logic to a family car, or the clothing you bought? Should they tax the value of your medical degree when you leave the country?
- toast0 1y ago
  I would assume that logic is applied. Exit taxes are generally applied as if the taxpayer sold all capital assets on the day of leaving. At least in the US taxation regime (I'm unfamiliar with others), family cars don't qualify for a capital loss, and rarely appreciate. Clothing would be similar. But it doesn't seem unreasonable that a country should want to be paid tax on unrealized gains as you're leaving. It would probably be more fair to wait until the gains were realized and then apportion the gains among the countries of residence, but if you're leaving, it's going to be hard to compel your participation later, so it makes more sense to do it as you're leaving.
- neves 1y ago
  Yes. Remember that in Germany you don't pay for University degrees. High education isn't just for a wealthy minority.
  - pigeonhole123 1y ago
    That doesn't make the degree worthless, surely
    - neves 1y ago
      Sure. I just want to say that your educated workforce is part of the infrastructure provided by the "evil" government.
olieidel 1y ago
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 accident insurance, etc., etc. - a significant chunk of state-associated infrastructure is a part of your business, and was a part of your business when you built it. But for software companies? I mean, you need a stable internet connection, good mobile phone coverage (tricky in Germany sometimes), rule of law, efficient bureaucracy (e.g. when hiring people), good banks which don't lose your money, electricity, etc. - none of these "infrastructure factors" feel as big as the ones for a hardware business. On the contrary, for a software business, one could argue that Germany is actively hostile to you: Founding a company takes weeks / months and is expensive (notary), most processes are still paper-based, hiring people (especially internationally) is a huge pain, mobile internet is spotty, residential internet has outages. Charging customer credit cards via Stripe exposes you to a rabbit hole of VAT bureaucracy - all companies I've met so far rolled their own, broken software stack to somehow match up their Stripe + VAT charges with their internal bookkeeping software (e.g. Datev). A huge mess. It doesn't end there. But I may be wrong.
- carstenhag 1y ago
  "If you comply here, you will be compliant in almost all EU countries or even around the world" situation, many qualified students, international talent pool due to attractive cities, quality of life, startup grants/funding, hotspot for B2B fairs...
- mensetmanusman 1y ago
  You need peace, law enforcement, trust in others to lower stress and increase creativity, good teachers and education. Someone growing up in a society is strongly an outcome of that society.
  - olieidel 1y ago
    What about a software company founded in Germany by someone who grew up in another country, and accordingly got their education elsewhere? What if that company is a remote company which hires people all over the world, and none of those people benefited from the {education|peace|law enforcement|trust} in Germany? I do agree with you, in principle, that a company is somewhat coupled to the country it was founded in. The exact nature of that coupling, however, is not that simple, I would say. Reality is complicated, I suppose :)
hasnd 1y ago
You talk as if society and the infrastructure society paid for somehow belonged to the state.
bigstrat2003 1y ago
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?
- nbadg 1y ago
  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.
  - olieidel 1y ago
    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 company, and "normal" people don't have this sort of cash on hand. Other countries have "smarter" exit tax implementations and only charge you when you actually sell your company in the future. I think that's pretty fair. It also doesn't hinder people from leaving the country.
    - mitthrowaway2 1y ago
      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.
    - nbadg 1y ago
      As an immigrant to Germany, I've often made the observation that Germany frequently has a really severe implementation problem. So I'm generally very sympathetic to that idea. That being said, I'm not entirely sure that's the case here, and this is often also brought up in the context of strengthening the inheritance tax in Germany. In both the inheritance tax and the exit tax, the inherent applicability conditions are such that the end result is that there simply aren't that many people in a situation where it actually has a measurable impact. For the exit tax, you'd need to find people who 1. want to leave Germany, 2. already started a company here, 3. that company grew large enough that the Wegzugssteuer would really be a burden, and 4. that don't have enough liquidity, or cannot raise enough liquidity by selling some of their ownership, to cover the tax. That ends up being a really small number of people, which always eases questions about the reasonability (Angemessenheit) of the law. And in the context of inheritance tax, there's the added point that there's a floor to its application. As another commenter mentioned, even for those situations where the exit tax actually is burdensome, just as with inheritance tax, there are two really simple solutions: first, create a floor for the minimum valuation by which the exit tax is actually assessed, and second, allow you to "sell" shares to the German government as a means of paying the tax, turning the Finanzamt into a silent shareholder in the company. I think both of these would be substantial improvements to both the German exit tax and inheritance tax.
wagwang 1y ago
Yes globalism is bad :) outside of certain forms of trade. Next up, remittances.
msukkarieh 1y ago
I think most people would be okay with an exit tax if it's reasonable. Requiring the owner of a business generating €20k in profit to then pay €70k in taxes is not reasonable. Canada also has an unreasonable exit tax. Canadian founders are taxed on 50% of the FMV of their shares on departure. So if you own half of a company that is worth $50m, your taxable income for the year of departure is increased by $12.5m.
- olieidel 1y ago
  Agreed. As mentioned in another comment, I think it'd be fair to levy the exit tax when you actually sell your company in the future. Like, if I ever sell my business, I'd be happy to pay my fair share of German taxes on said business, even if I'd no longer be a tax resident of Germany. The current implementation which essentially simulates a "virtual" sale of your business once you leave the country is pretty terrible, as most normal humans don't have that sort of cash on hand because, well, they actually didn't sell their business at that point in time. Interesting pointer on Canada - thanks!
tticvs 1y ago
You'd have a point if Germany did anything to actually support businesses scaling instead of trying to kneecap them at every turn
dzhiurgis 1y ago
> State that let you build Excuse me, why I need state permission for building business?
dash2 1y ago
Man soll den Flüchtlingen aus Deutschland keine Träne nachweinen, eh?
toofy 1y ago
yep, there’s a reason these people start their businesses in stable economied countries, yet certain groups of them do everything to pretend they owe nothing back. i’d love to see a comprehensive study on how much corporate tax avoidance costs a country vs food stamps so we can get an accurate view on who leeches/gains more. my suspicion is corporate wage theft/tax avoidance/evasion/subsidies are significantly higher, particularly if we add in executives and major stock holders.
grassen 1y ago
[flagged]
- tomhow 1y ago
  This comment is in breach of several guidelines. I understand these are important topics and it's fine to raise these points, but HN can only be a good place for discussing difficult topics like these if people make the effort to avoid inflammatory rhetoric. Please take a moment to read the guidelines and make an effort to observe them in future, particularly these ones: Be kind. Don't be snarky. Converse curiously; don't cross-examine. Edit out swipes. Comments should get more thoughtful and substantive, not less, as a topic gets more divisive. When disagreeing, please reply to the argument instead of calling names. "That is idiotic; 1 + 1 is 2, not 3" can be shortened to "1 + 1 is 2, not 3." Please don't fulminate. Please don't sneer, including at the rest of the community. Please respond to the strongest plausible interpretation of what someone says, not a weaker one that's easier to criticize. Assume good faith. Eschew flamebait. Avoid generic tangents. Omit internet tropes. Please don't post shallow dismissals, especially of other people's work. A good critical comment teaches us something. Please don't use Hacker News for political or ideological battle. It tramples curiosity. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
bravesoul2 1y ago
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.
typewithrhythm 1y ago
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).
tomhow 1y ago
This comment breaches the guidelines and is not conducive to the kind of discussion we're trying to cultivate on HN. It's an important and difficult topic, and thus care needs to be taken to avoid getting activated, then commenting in ways that activate charged reactions in those who see things differently, as this is what takes threads into flamewar hell. Please take a moment to read the guidelines and make an effort to observe them in future, particularly these ones: Be kind. Don't be snarky. Converse curiously; don't cross-examine. Edit out swipes. Comments should get more thoughtful and substantive, not less, as a topic gets more divisive. Please don't fulminate. Please don't sneer, including at the rest of the community. Eschew flamebait. Avoid generic tangents. Omit internet tropes. Please don't use Hacker News for political or ideological battle. It tramples curiosity. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html

[flagged]

wmf 1y ago

In many cases people want to move precisely because Germany doesn't provide as good infrastructure for startups as other countries. Also, the "you can't leave because you owe society" argument, while not necessarily wrong, is strongly associated with the abuses of Communism.

ghufran_syed 1y ago

Perhaps you would apply the same logic to a family car, or the clothing you bought? Should they tax the value of your medical degree when you leave the country?

toast0 1y ago
I would assume that logic is applied. Exit taxes are generally applied as if the taxpayer sold all capital assets on the day of leaving. At least in the US taxation regime (I'm unfamiliar with others), family cars don't qualify for a capital loss, and rarely appreciate. Clothing would be similar. But it doesn't seem unreasonable that a country should want to be paid tax on unrealized gains as you're leaving. It would probably be more fair to wait until the gains were realized and then apportion the gains among the countries of residence, but if you're leaving, it's going to be hard to compel your participation later, so it makes more sense to do it as you're leaving.
neves 1y ago
Yes. Remember that in Germany you don't pay for University degrees. High education isn't just for a wealthy minority.
- pigeonhole123 1y ago
  That doesn't make the degree worthless, surely
  - neves 1y ago
    Sure. I just want to say that your educated workforce is part of the infrastructure provided by the "evil" government.

olieidel 1y ago

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 accident insurance, etc., etc. - a significant chunk of state-associated infrastructure is a part of your business, and was a part of your business when you built it. But for software companies? I mean, you need a stable internet connection, good mobile phone coverage (tricky in Germany sometimes), rule of law, efficient bureaucracy (e.g. when hiring people), good banks which don't lose your money, electricity, etc. - none of these "infrastructure factors" feel as big as the ones for a hardware business. On the contrary, for a software business, one could argue that Germany is actively hostile to you: Founding a company takes weeks / months and is expensive (notary), most processes are still paper-based, hiring people (especially internationally) is a huge pain, mobile internet is spotty, residential internet has outages. Charging customer credit cards via Stripe exposes you to a rabbit hole of VAT bureaucracy - all companies I've met so far rolled their own, broken software stack to somehow match up their Stripe + VAT charges with their internal bookkeeping software (e.g. Datev). A huge mess. It doesn't end there. But I may be wrong.

carstenhag 1y ago
"If you comply here, you will be compliant in almost all EU countries or even around the world" situation, many qualified students, international talent pool due to attractive cities, quality of life, startup grants/funding, hotspot for B2B fairs...
mensetmanusman 1y ago
You need peace, law enforcement, trust in others to lower stress and increase creativity, good teachers and education. Someone growing up in a society is strongly an outcome of that society.
- olieidel 1y ago
  What about a software company founded in Germany by someone who grew up in another country, and accordingly got their education elsewhere? What if that company is a remote company which hires people all over the world, and none of those people benefited from the {education|peace|law enforcement|trust} in Germany? I do agree with you, in principle, that a company is somewhat coupled to the country it was founded in. The exact nature of that coupling, however, is not that simple, I would say. Reality is complicated, I suppose :)

hasnd 1y ago

You talk as if society and the infrastructure society paid for somehow belonged to the state.

bigstrat2003 1y ago

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?

nbadg 1y ago
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.
- olieidel 1y ago
  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 company, and "normal" people don't have this sort of cash on hand. Other countries have "smarter" exit tax implementations and only charge you when you actually sell your company in the future. I think that's pretty fair. It also doesn't hinder people from leaving the country.
  - mitthrowaway2 1y ago
    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.
  - nbadg 1y ago
    As an immigrant to Germany, I've often made the observation that Germany frequently has a really severe implementation problem. So I'm generally very sympathetic to that idea. That being said, I'm not entirely sure that's the case here, and this is often also brought up in the context of strengthening the inheritance tax in Germany. In both the inheritance tax and the exit tax, the inherent applicability conditions are such that the end result is that there simply aren't that many people in a situation where it actually has a measurable impact. For the exit tax, you'd need to find people who 1. want to leave Germany, 2. already started a company here, 3. that company grew large enough that the Wegzugssteuer would really be a burden, and 4. that don't have enough liquidity, or cannot raise enough liquidity by selling some of their ownership, to cover the tax. That ends up being a really small number of people, which always eases questions about the reasonability (Angemessenheit) of the law. And in the context of inheritance tax, there's the added point that there's a floor to its application. As another commenter mentioned, even for those situations where the exit tax actually is burdensome, just as with inheritance tax, there are two really simple solutions: first, create a floor for the minimum valuation by which the exit tax is actually assessed, and second, allow you to "sell" shares to the German government as a means of paying the tax, turning the Finanzamt into a silent shareholder in the company. I think both of these would be substantial improvements to both the German exit tax and inheritance tax.

wagwang 1y ago

Yes globalism is bad :) outside of certain forms of trade. Next up, remittances.

msukkarieh 1y ago

I think most people would be okay with an exit tax if it's reasonable. Requiring the owner of a business generating €20k in profit to then pay €70k in taxes is not reasonable. Canada also has an unreasonable exit tax. Canadian founders are taxed on 50% of the FMV of their shares on departure. So if you own half of a company that is worth $50m, your taxable income for the year of departure is increased by $12.5m.

olieidel 1y ago
Agreed. As mentioned in another comment, I think it'd be fair to levy the exit tax when you actually sell your company in the future. Like, if I ever sell my business, I'd be happy to pay my fair share of German taxes on said business, even if I'd no longer be a tax resident of Germany. The current implementation which essentially simulates a "virtual" sale of your business once you leave the country is pretty terrible, as most normal humans don't have that sort of cash on hand because, well, they actually didn't sell their business at that point in time. Interesting pointer on Canada - thanks!

tticvs 1y ago

You'd have a point if Germany did anything to actually support businesses scaling instead of trying to kneecap them at every turn

dzhiurgis 1y ago

> State that let you build Excuse me, why I need state permission for building business?

dash2 1y ago

Man soll den Flüchtlingen aus Deutschland keine Träne nachweinen, eh?

toofy 1y ago

yep, there’s a reason these people start their businesses in stable economied countries, yet certain groups of them do everything to pretend they owe nothing back. i’d love to see a comprehensive study on how much corporate tax avoidance costs a country vs food stamps so we can get an accurate view on who leeches/gains more. my suspicion is corporate wage theft/tax avoidance/evasion/subsidies are significantly higher, particularly if we add in executives and major stock holders.

grassen 1y ago

[flagged]

tomhow 1y ago
This comment is in breach of several guidelines. I understand these are important topics and it's fine to raise these points, but HN can only be a good place for discussing difficult topics like these if people make the effort to avoid inflammatory rhetoric. Please take a moment to read the guidelines and make an effort to observe them in future, particularly these ones: Be kind. Don't be snarky. Converse curiously; don't cross-examine. Edit out swipes. Comments should get more thoughtful and substantive, not less, as a topic gets more divisive. When disagreeing, please reply to the argument instead of calling names. "That is idiotic; 1 + 1 is 2, not 3" can be shortened to "1 + 1 is 2, not 3." Please don't fulminate. Please don't sneer, including at the rest of the community. Please respond to the strongest plausible interpretation of what someone says, not a weaker one that's easier to criticize. Assume good faith. Eschew flamebait. Avoid generic tangents. Omit internet tropes. Please don't post shallow dismissals, especially of other people's work. A good critical comment teaches us something. Please don't use Hacker News for political or ideological battle. It tramples curiosity. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html

bravesoul2 1y ago

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.

typewithrhythm 1y ago

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).

tomhow 1y ago

This comment breaches the guidelines and is not conducive to the kind of discussion we're trying to cultivate on HN. It's an important and difficult topic, and thus care needs to be taken to avoid getting activated, then commenting in ways that activate charged reactions in those who see things differently, as this is what takes threads into flamewar hell. Please take a moment to read the guidelines and make an effort to observe them in future, particularly these ones: Be kind. Don't be snarky. Converse curiously; don't cross-examine. Edit out swipes. Comments should get more thoughtful and substantive, not less, as a topic gets more divisive. Please don't fulminate. Please don't sneer, including at the rest of the community. Eschew flamebait. Avoid generic tangents. Omit internet tropes. Please don't use Hacker News for political or ideological battle. It tramples curiosity. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html