Here’s an interesting take on Germany’s exit tax, which I have written about before:
Leave Germany before your business gets big.
What do I mean by that?
I mean that once you’re a business owner in Germany and your business has reached a certain size, you are essentially barred from ever moving out of the country again.
Crazy, right? I think it’s also pretty crazy that no one really talks about this. This is, quite literally, erecting a “Berlin Wall” around German entrepreneurs, forcing them to stay in the country.
Germany’s Exit Tax
But first things first. What is Germany’s exit tax?
In simple terms, you’re hit by Germany’s exit tax once you hold more than 1% in any limited liability company (foreign companies included!). So if you own 100% of a German GmbH, you’re hit by exit tax. But also if you e.g. own 2% of a US company.
And then your exit tax is calculated by taking the average of the past 3 years of earnings of that company, multiplied by 13.75 (which is crazy), and then taking 60% of that which is taxed at your personal income tax rate (likely 42%; Teileinkünfteverfahren). So:
(Average earnings of past 3 years) * 13.75 * 0.6 * 0.42
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