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About Straightpoop

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  • Nationality USA
  • Gender Not Telling
  • Year of birth 1949

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  1. Does a GmbH need to be reported on a US tax return?

        Oh, the horror!   The answer is yes.   Read 'em and weep:   Form 5471:   Instructions to same:   Now google "controlled foreign corporation" (CFC).   There is a possibility of abatement of the penalty that will be automatically assessed against you and, failing that:   If your German tax advisor was dumb enough to give you the advice you say he gave you in writing, you may want to urge him/her to contact his/her malpractice insurance carrier.
  2. Steuerberater for US Inheritance

    @adjustment   Please carefully reread my post - especially the language you quoted - and consider whether in light of the information I provided your response makes any sense. 
  3. Steuerberater for US Inheritance

      You do not need a lawyer but you may need a German Steuerberater.   Assuming you were a German resident at the time of your mother's death, the value of what you receive from your mother's estate will be subject to German inheritance tax.  If the value of your inheritance that you eventually receive plus the value of other gifts you may have received from her in the 10 years preceding her death does not exceed the Freibetrag of €400,000, then you also have no German inheritance tax concerns.   You have no responsibility for US estate taxes.  That will be the responsibility of the "personal representative" or executor of your mother's estate.  If your mother's estate was less than $11.5 million (and there are no state death taxes) that too will be zero.   If your stated desire to "get a stock transfer" is fulfilled, however, you may cause yourself future German INCOME tax issues that can be avoided by prompt and effective communication between yourself and your mother's executor/personal representative.   Under US tax law (IRC §1014) securities and other assets that are part of a decedent's estate enjoy a "step up" in basis to their fair market value as of the date of death.  As a result, a direct distribution of securities to an heir via, e.g. "a stock transfer", will transfer securities whose tax basis is stepped up to FMV.  The resulting gain from the sale of such securities in your hands would produce (presumably) lower taxable gain on their future sale.   But this step up in basis DOES NOT apply for German income tax laws.   Instead, if you receive a "stock transfer" of appreciated securities directly from your mother's estate, those securities will have the following characteristics in your hands:   1.  your date of acquisition will be deemed to be the date your MOTHER acquired them (or, if your mother inherited them, the date the person she inherited them from acquired them.)  If you can demonstrate that the acquisition date was prior to 1.1.2009 then if these are common stocks or bonds you will be able to sell them GERMAN tax-free any time.  If they are mutual funds acquired prior to 1.1.2009 then any gains from their sales will be tax-free up to the extent you have not exhausted your lifetime €100,000 exemption for such "Altfonds".   2.  your cost of acquisition or tax basis will be your MOTHER's cost basis.  As a consequence, you could be taxed twice on the acquisition of shares acquired in a "stock transfer":  first by inheritance tax to the extent the entire gift including the market value of the securities on the date of death exceeds the €400K Freibetrag and second by income tax on the gain realized when you sell the appreciated securities.   This German domestic "double taxation" has been unsuccessfully challenged in the German courts.   So what should you do?   COMMUNICATE with your mother's executor/personal representative.  If he is allowed to do so by his governing instrument (will, trust, etc.) ask him to sell securities that may cause you future income tax problems wer you receive them directly, i.e. in kind from him through a "Stock transfer".  These would include any appreciated shares, bonds and possibly mutual funds acquired after 31.12.2008 and possibly appreciated mutual funds acquired at any time. Since under US succession law, the personal representative holds legal title to these securities, the sale will arguably not be attributable to you.   As far as the real estate is concerned that may be something the personal representative is powerless to act on since in many states real estate does not become part of a solvent probate estate but rather, descends directly to the heir.  In other words, you may already own the real estate and consequently will not be able to avoid whatever adverse German income tax consequences (if any) that may flow to you as a result of a future sale.   Again, you need to COMMUNICATE.  
  4. @Straightpoop since you seem knowledgeable about taxation, I was wondering if you could help with this question. Different people have given me different answers including tax advisors.

    Do people have to pay capital gains taxes on unrealized gains on Stocks, funds in germany? 

    For eg. if I invested 5000EUR in an ETF and in a year due to a good market gain it appreciated to 10000EUR but I got no dividends and I didn't sell and take out the money, AM I required to pay 25% tax on the 5000EUR gain?


    I know about the 800 EUR exemption, but again are unrelaized gains also included? 


    I was told that there was a new law that came into effect in 2018 which means that the growth is taxed even if not realized. 


    Can you confirm? As if this is the case then I am planning to get a private pension fund instead of putting my money in ETFs despite the fees. If this is not the case, then I am going to just invest in ETFs on my own

    Thank you!

    1. escalera

      Thank you snowingagain. I did come across this before but I guess my question is if the growth itself is considered capital gain and subject to the tax or not. Most people said No but some said yes. 

    2. escalera

      And will this work the same if I am buying stocks through a brokerage and not funds?

  5. Unlike tax penalties which can be automatically calculated, imposed, assessed and collected by the IRS's computer, FBAR penalties require the involvement of the IRS's carbon-based units, i.e. humans. These are in very short supply.  And, in the extremely unlikely event they write you and ask for penalty money, if you simply say "no", their collection options are those set forth in the Federal Debt Collection Act.  These are slow, cumbersome, inefficient and require lots of man hours and institutional attention; all in short supply.   The IRS has no budget for such penny ante nonsense.   When filling out Form 114 you will be prompted to explain your tardiness.   The Form conveniently has a drop-down menu of excuses.   Pick the one that applies.   File it.   Then go and sin no more.   @willowhands   Your experience differs from that of the OP in that you apparently had delinquent tax returns to file as well and used whatever benefits the so-called "streamlined procedure" offers to get right with all tax and info filings.
  6.   This is accurate with respect to filing jointly but not accurate with respect to filing separately or as head of household.   There are only 3 instances when a US citizen needs to obtain a US TIN for a nonresident spouse:   1. if the NRA spouse intends to join the US citizen on a joint US tax return whereby the NRA spouse agrees to be taxed on his/her worldwide income as if they were a US citizen.   2. (No longer relevant for tax years after 31.12.2017 when personal exemptions were abolished)  if the US citizen files with married filing separately or head of household and claims a spousal exemption for the NRA spouse who has no US source gross income.     3. if the US citizen has purchased cheapo software from Turbotax or H&R Block which will not allow him to electronically file MFS or HoH without first obtaining an ITIN for the spouse and filing electronically is so important to him/her that he is willing to go through the rigmarole of getting an ITIN just so he can save paper and postage.   @jvonboston   If you provide more than 50% of the support needs of your children file as head of household on paper and forget the ITIN:   If you provide less than 50%, you cannot claim HoH so file "married filing separately" on paper and forget the ITIN   Only if your NRA husband wants to join you on a US return and is prepared to be taxed on his worldwide income and endure all the other indignities to which US citizens are subject should you apply for an ITIN.                    
  7. Question on tax percentage on consultancy

    @rosinim   Your German taxes and various Sozialabgaben will depend upon whether your "consultancy" is regarded as an employment relationship or whether you are treated as self-employed.  If the latter, then you potentially will have deductible expenses that will make it impossible to predict your ultimate tax liability. Similarly unknown is your potential church tax liability, gewerbesteuer, etc.   There is also the unanswered question of how much of the 33K postulated will fall within any given calendar tax year.   Last but not least there is the issue of whether your UN salary is subject to Progressionsvorbehalt in computing your tax rate.  In this case, however, it would appear there is a clear answer:    
  8. German tax for property sold overseas

      You seem not to understand a fundamental aspect of income taxation:   It is the TRANSACTION (sale, transfer, exchange, gift, etc.) that produces the income that is the taxable event.  What you subsequently do with the proceeds from that transaction:  whether you stuff them in a mattress, transfer them to Germany, buy a Mercedes or a Big Mac, add it to your savings, donate it to your niece or a charity, etc. is of absolutely no relevance to whether and how much the preceding TRANSACTION is taxed.   Generally speaking, moving money - regardless of its source - from one place to another (without converting the currency and without changing its ownership) is not a taxable event.     How you move it, however, can be expensive:  bank fees, etc. and, if you move it in a suspicious manner, you may find yourself having to pay for a lawyer to represent you vis-à-vis regulatory authorities whose interest you have piqued.            
  9. German tax for property sold overseas

      @TheSame   With the exception of the sentence quoted above, I heartily endorse Smaug's reply.   Most double taxation treaties grant the treaty partner the exclusive right to tax gain from the sale of immovables (real estate) located in their country.   However, even in the absence of a treaty German domestic tax law (EStG § 34c) provides a credit procedure to claim a credit against your German taxes for taxes paid to the foreign country   So check first to see if there's a treaty and, if not, find yourself a Steuerberater to help determine whether and how you might be qualified to claim a foreign tax credit..
  10. Another question regarding Tax residence and 183 day-rule

    The "183-day rule" found in subparagraph 2 of Article 14 of the Germany-Netherlands is an exception to the general rule set forth in Subparagraph 1 of Art. 14 that states that employment income is taxable only in the state where the employment is exercised.  Your facts do not qualify you for the 183-day exception because although your Dutch employment lasted less than the 183 day maximum your wages were borne by a Dutch employer.  Thus, even if you were a resident of Germany and employed there by a German employer through 31.12.2018, your subsequent 181-day Dutch employment would be fully taxable in the Netherlands and non-taxable in Germany.   Without knowing where you were resident and employed through the end of 2018, we cannot know when your German tax residence began but from your facts it began (probably) not later than 1 July 2019.  (You also don't say whether it continued into 2020 but your profile says "Munich" so we'll assume you are still here.)   If your German residence began in 2019, you pay taxes on your German wage income and world-wide income from any source as a tax resident in 2019 and report your Dutch and other non-German income for purposes of computing Progressionsvorbehalt.  Your German-source income for the first 181 days of 2019 would be subject to German non-resident taxation (beschränktsteuerpflichtig).   The instructions to Anlage WA Est indicate that if you did have German-source income during your period of German non-residency you apparently do not file a separate non-resident return (ESt 1 C) to report that income. Instead you apparently are supposed to simply include that income on your resident return and somehow (I don't know quite how) your non-resident tax on that income will be computed.   If your German residence began prior to 1.1.2019 (i.e. you were only temporarily in Holland for 181-days), then the only difference would be that your worldwide non-wage income in the first 181 days of 2019 would be fully taxable in Germany, i.e. you would be unbeschränktsteuerpflichtig the entire year - including, of course, your German source income - but not still not taxable on your Dutch income - except for Progressionsvorbehalt.   In either case you will report your Dutch wages on Anlage N-AUS and you will file Anlage WA ESt to report your comings and goings to Germany in 2019 and the income attributable to these periods.    
  11.   OK.  You have added facts that were not apparent from your first post.   Evidently, the proposal does not require your husband to actually buy a property with his siblings but rather to assume an ownership interest in an existing "family-owned" property that appears to already include multiple generations some of whom are seeking to exit even as it has been proposed that your husband "enter" into the co-ownership arrangement.   I'm afraid it is not at all clear what the status quo is much less what it is you (or someone else?) wants to do or the economic rationale for doing so. The notion that earning Euros in this fashion and location will somehow be useful for when your children eventually go to university here makes little or no economic or practical sense.  I suspect that the USD or any other currency earned from your US rentals or from any other source will be freely exchangeable for Euros when and if the need for them arises; assuming, of course, the Euro is still in existence. Nor is there anything convincing about the assertion that - something undisclosed - "worked for the older generations for 60 years".  A lot has happened in 60 years and will likely happen in the next 60 and as you note: the older generation is looking to get out of this arrangement.   There are far too many undisclosed facts, variables and circumstances that would need to be explored in depth before anyone could hope to offer you the useful advice you seek.   You will likely need a team of - competent & preferably bilingual - legal and tax experts on both sides of the Atlantic and a real estate professional in Germany working together.  That is going to be very expensive.   Good luck.        
  12. Double Taxation Agreement conundrum

    @pampuero   There may be some confusion as to which of two treaties you are concerned with.  You mention two:   1.  The "Double Taxation Agreement" (Ab­kom­men zwi­schen der Bun­des­re­pu­blik Deutsch­land und der Volks­re­pu­blik Chi­na zur Ver­mei­dung der Dop­pel­be­steue­rung auf dem Ge­biet der Steu­ern vom Ein­kom­men und vom Ver­mö­gen)   and   2.  The Deutsch-Chinesisches Abkommen über Sozialversicherung*%5B@attr_id=%27bgbl202s0082.pdf%27%5D#__bgbl__%2F%2F*%5B%40attr_id%3D%27bgbl202s0082.pdf%27%5D__1596200769470     Two different treaties.  Two different topics.  Two different results.   For income tax purposes your wages were German tax free because you were employed in China in excess of the 183 day limit provided by Article 15 (2) of the DTA. Consequently, those wages were taxable as provided by Art. 15 (1):  in China only.   Social security contributions are a different story and are governed by the social security treaty. That treaty provides as follows:   Article 4 Compulsory coverage in case of detachment   When an employee who is employed in one Contracting State is sent by his employer to the territory of the other Contracting State in the context of that employment to perform services there for that employer, only the legislation on compulsory coverage of the first Contracting State shall continue to apply with regard to that employment during the first forty-eight calendar months as though the employee were still employed in the territory of the first Contracting State.   So, German income tax free but you still have to fork over the Sozialabgabe to Germany on the tax-free income.    
  13.   The technical legal term we lawyers use for a family co-ownership/co-management arrangement of the type proposed by your H's (no doubt well-meaning) father is:  crazy.   What possible economic purpose would be served by such an arrangement?   In my view, assuming that the right property can be found at all, the only financial structure that makes any sense would be one in which each sibling buys their own property and manages it independently.  That will eliminate the need to obtain coordinated agreement on object, purchase price, financing, management, capital improvements, landlord-tenant relationships, taxation, accounting, exit strategy (i.e. buyout, sale, death), etc, etc. ad nauseum.   And why, for the love of all that's sainted and holy would your husband want to buy and participate in the management of property on the other side of the planet rather than where he actually lives?   Unless H's Dear Old Dad is threatening to disinherit him if he doesn't agree to participate in such a cockamamie scheme, my advice would be to find some way to gently let the Auld One down and find a more sensible way of investing your money.        
  14. Working in Germany for UK Ltd with >1 shareholder

    I am no expert on German-UK tax and social security relationships but I can say with confidence that Brexit is likely to have some serious disruptive effects on the current status quo.   Some things to be mindful of:   1.  After Brexit, the Germany-UK tax treaty will likely become highly relevant.  In particular, the character and scope of your activities in Germany on behalf of your UK Ltd may give rise to what is defined in most bilateral tax treaties as a "permanent establishment" of the UK Ltd in Germany the allocable share of whose profits may become taxable in Germany.   For the current history of this treaty see:   2.  The future of Social Security (retirement, health, unemployment, etc.) contribution liability and rights appears to be highly uncertain at this point.  Here is what I think is a brief useful summary of the possibilities: