olieidel

Because, if you want to attract founders, it's not a great proposition to state "as soon as you found a company here, leaving the country will subject you to massive bureaucratic pain with significant costs".

Many founders I've talked to opted to leave Germany before founding their companies; and many would-be founders opted to not found their company while remaining in Germany (for now).

How about we switch - you move to Germany and get barred from leaving the country.

I look forward to your blog post.

Yes, you're right, and the main point of the article indeed is that it required talking to 13 tax advisors for 1.5 years and paying them (and notaries) 18.7k€ in fees to implement this solution.

If this solution would be fast, cheap and simple, then I'd generally be fine with that. However, it is not.

Yep. The broader question for society is whether to introduce legislation which will make everyone suffer because a few individuals abused it in the past.

I don't have a perfect answer to that, but we can at least observe that most people nowadays affected by the German exit tax are not rich department store owners who planned to move to Switzerland to optimize their company sale taxation.

Most people I talk to are other founders who own a small business, and the overall bureaucratic complexity and tax advisor costs are cost-prohibitive for leaving the country.

The tax rate is one thing, but the way your companies are valued before multiplying that valuation with the tax rate is another thing.

Germany values your companies at 13.75 * earnings by default.

If you prefer to provide an alternate valuation, you're looking at valuation costs of at minimum 10k€ per company (Wirtschaftsprüfer).

Haha, thanks for linking to my website! Happy to answer any questions.

Skimmed this thread and I'm quite surprised how few people are aware of the permanent establishment problem.

Quick primer on the permanent establishment problem: You would technically have to pay taxes for your company in the place you're living (not Estonia). For example, if you're living in Germany, your Estonian OÜ would technically have to file for German taxes, too, because it's being run from Germany and it now has a permanent establishment in Germany.

So, roughly speaking, the Estonian OÜ is only useful if:

- You are in a country which doesn't have a permanent establishment problem and maybe even offers tax benefits for foreign companies (e.g. the non-dom rules of Malta, Cyprus, etc.)

- You are in a country which doesn't have a permanent establishment problem because they don't crack down on foreign company ownership (e.g. most developing countries)

In all other countries, the Estonian OÜ is likely going to cause you many tax headaches in the long run. In practice, this means:

a) Your local tax authorities don't notice or don't understand, and you're still fine, even though you'd need to file for taxes;

b) Your local tax authorities crack down on you and you need to go looking for a very expensive international tax advisor versed in Estonian and your local tax law.

A lot of slightly misleading information here.

- What you're talking about is working as a freelancer (Freiberufler), which is a subset of a sole proprietor (Einzelunternehmen); these are different business types than a GmbH, and the article is about setting up a GmbH.

- Only setting up a GmbH if you want to "invest money" is overly simplistic. People might choose a GmbH due to limited liability, a more solid shareholder structure, etc. Slightly more generalized, you do have a point that of course a sole proprietorship might be a much better and simpler choice for one-person "companies" who mainly offer software freelancing services.

- Not setting up a separate bank account for your business, GmbH or otherwise, is strongly advised against. Not only by literally 100% of tax advisors, but also by the tax office themselves.

Yup. Most of the time, you simply don't need a GmbH.

I wonder why German people often think they need to found one - maybe because people in the US have a low threshold of founding an LLC, but that's because it's easy and cheap; or maybe due to the German Angst of "I will immediately get sued, so I need limited liability".

Sure, there are lots of middlemen who are more than happy to take your money to navigate this broken process, and tax advisors are probably #1 on the list :)

That being said, even throwing money at a tax advisor won't reduce the 16 steps to 1. More like 5-10.

You'll still have to to go the notary yourself, you'll still be opening the bank account yourself, you'll still be subject to Handelsregister spam and fake invoices, etc., etc.