> 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://de.wikipedia.org/wiki/Vereinfachtes_Ertragswertverfa...
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://de.wikipedia.org/wiki/Vereinfachtes_Ertragswertverfa...