Straightpoop

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About Straightpoop

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  • Nationality USA
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  • Year of birth 1949

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  1. German citizenship from sofa status?

      Yes, you may apply.   No, you will not be eligible for citizenship.   Here are the requirements: https://www.bamf.de/DE/Themen/Integration/ZugewanderteTeilnehmende/Einbuergerung/einbuergerung-node.html    
  2. US capital gains tax on foreign property

      Yep.
  3.   That's the question, isn't it?   The answer depends upon how German tax law classifies your SMLLC and your relationship to it:  corporation/shareholder/employee/independent contractor or partnership/partner/employee/independent contractor.   German taxes will also depend upon where and how the SMLCC conducted its business operations to earn that money and whether, when and to whom it disbursed those profits in the form of cash.   It might be helpful if you were to describe your purpose in creating these things. That might help you to reconsider whether the administrative and financial burden of owning them makes it worth your while.  
  4.   Indeed but few arrive with an LLC hanging around their necks and those that do typically have not a clue as to what that might portend.   You should give yourself a pat on the back for at least asking.
  5.   Nope.  Just an educated guess.
  6.   Whose profit?   Taxes to which country or countries?    
  7.   No reason to question much less dispute that.   The question is how you and they will be taxed in Germany.   To answer that question, you would have to provide copies of the LLCs' articles of association by-laws, state of incorporation, a description of their business activities, location of operations, personnel, etc.   You would then have to analyze that and other relevant information and apply the factors set forth in BMF v. 19.03.2004 - IV B 4 - S 1301 USA - 22/04 https://datenbank.nwb.de/Dokument/Anzeigen/129083/ plus the various tax court cases that have addressed the issue generally and have applied the BMF's factors.   In America, you just "check the box" on the ol' entity classification form and you're done.   In  Germany you spend a whopping sum on translation into German followed by legal analysis to obtain an "educated guess" followed by a roll of the legal dice.   If your US Tax lawyer did all that and came up with the answer you reported in your OP, then my hat is off to him or her.   If they didn't do all that and just guessed, then I hope for your sake (s)he guessed right.  
  8.   You did not provide any facts needed to question this advice.
  9. Lawyer expert in Tax and Banking Law

    1st a correction:  It is § 43a of the EStG that governs the obligation to transfer cost basis data - but only between German banks.  So far as I know there is no requirement for the Italian bank to do so.   Until 2011 when US banks were required to report cost basis to the IRS, cost basis info almost never transferred from one US bank to another. Instead, the books of the transferee bank would show the transfer date as the acquisition date and the market price on that data as the cost basis.   This same procedure used to apply in Germany until the introduction of the Abgeltungssteuer effective 1.1.2009.   The conduct of the banks as you describe it seems to me to be unobjectionable.  By obtaining the Italian basis information for substantiation you will be able recoup the excess amount withheld by the German bank on your 2020 tax return. You lose the time value of that money but in a negative interest rate environment not a big deal.    
  10. Lawyer expert in Tax and Banking Law

    If your German bank does not have a reliable record of the cost basis of your shares transferred in from the Italian bank where you acquired them, then upon the sale of those shares your gain will be computed - and tax withheld - using the Pauschalmethode auf Basis einer Ersatzbemessungsgrundlage.   This entails multiplying your net proceeds from the sale by 30% and withholding tax on that amount.   However, you are not bound by that determination and can override it by filing a tax return with evidence of the actual basis and thus the actual gain/loss on the transaction.   My understanding is that German banks are supposed to transfer cost basis information for transfers within Germany and for that reason you would be forced to get the basis information corrected in order to obtain relief from the Pauschalmethode.   My understanding is that a transfer in from a bank in the EU should also be accompanied with cost basis information but where that interbank communication fails you apparently can obtain relief by obtaining basis certification information from the Italian bank on your own and submitting that as substantiation for the figures you use on your tax return.   The matter is governed by § 43 of the EStG.  
  11. US expat tax filing and German pension funds

      Here's the approach:   If I didn't buy a PFIC or receive it as a gift I don't own one.   If I buy shares in a US Corporation that owns PFICs, I own an undivided equitable interest in the corporation but not it's assets - including its PFIC shares, etc. (This presumes, of course, that the corporation is not an LLC that has elected pass-trhough treatment.).   If I buy a life insurance policy from a company that invests my premiums - with or without my knowledge - in PFICs I have a contract with a life insurance company but that does not make me an owner of the insurance company much less the owner of any of the insurance company's assets.   If I buy a fondsgebundene Lebensversicherung with a sufficiently "opaque" insurance "wrapper" to qualify it as insurance entitled to tax deferral rather than a thin disguise to obtaining tax deferral on my investments and the insurance company with whom I contract invests in one or more PFICs as opposed to bonds, real estate, etc., I do not own the PFICs, any more than any other asset belonging to the Insurer.  All I have is the contractual right to direct the insurer to invest the non-insurance portion of my contributions in fonds. In most cases I won't even be allowed to pick the fond.  If the insurer internally sells a PFIC the gain or loss belong to the insurer it does not flow out to me in the year of sale.  If the PFIC pays a dividend the dividend belongs to the insurer. It does not flow out to me in the year of sale and I have no legal claim to it.  While the value of my fondsgebundene Lebensversicherung at maturity or at any time prior to maturity will depend upon the performance of whatever fonds (PFICs) the insurer has invested in for me and other insureds, when the policy is cashed in either for a lump sum distribution or as an annuity, the proceeds will be characterized as an annuity or a lump-sum life insurance distribution and taxed as such by whichever country or countries may be claiming a piece of me.   Ownership of PFICs might be imputed to the owner of a funds-linked life insurance policy if the insurance "wrapper" is so transparent (or diaphanous) that it fails under the applicable tax law to qualify as insurance and thus fails to qualify for the tax deferral benefits accorded insurance. In such a case, direct ownership of the underlying investments can be imputed to the "insured" policy holder and if those investments include PFICs then the PFICs will belong to the insured in the eyes of the IRS.   The purpose of the US PFIC rules is prevent US citizens from obtaining tax deferral by purchasing foreign funds that - unlike US funds - are required to distribute at least 90% of their income annually in order to avoid taxation at the fund level.   If, however, the tax law for reasons of public policy allows certain investments to accumulate value on a tax deferred basis, e.g. life insurance, employer pension plans, IRAs, etc. then there is or should be no policy objection to that plan's investing in a PFIC because all income within these deferral schemes are tax deferred anyway.  In short, ownership of a PFIC within an IRA (if you could find a custodian who would buy and hold one for you) or an insurance policy or a BAV does no violence to the principle of allowing tax deferral only where specially permitted.  It will be taxed when the conditions for deferral end and the resulting taxable income will not be characterized as gain, interest, dividends, rent, PFIC distribution, etc. rather, it will be characterized as "pension" if it was employment related or an "annuity" if not.   Are you aware of any statute or regulation that contradicts this approach?            
  12. @elrobot   Assuming you abmelden your German residence and effectively abandon any "Wohnsitz" you might have, you will cease to be a tax resident of Germany effective the day of your physical departure.  However, if your sojourn in Argentine is brief (i.e. less than 6 months) and you return to Germany, you might be regarded as having never effectively abandoned your German residence.  So, if you want to be sure that your German tax residence ends with your departure to the Land of the Pampas and a good Malbec, make sure you stay there for at least 6 months - preferably longer.   Once your German tax residence ends and your Argentine residence begins, you will be subject to income taxes on your wages earned in Argentina from that moment on.  Germany and Argentina have a DBA and it contains the standard rule for employees in Article 15:  only the country of residence can tax your wages earned in that country.  (If you fly back to Germany for a week or two for some reason then under Article 15 Germany will theoretically be able to tax that 2 weeks of income because the wages will be paid/borne by a German resident employer.)   All your German employer needs to do is stop withholding German Lohnsteuer effective on your date of departure.  For your part, you must do whatever is required of you by Argentina to report your wages.   As far as social security and health insurance contributions are concerned I note that there is no Social Security treaty between Germany and Argentina so the possibility exists that you could be required to pay into both systems especially if you wish to continue to pay into the German system during your assignment.  I have no expertise in this area but here is a good place to begin your inquiry:   https://www.tk.de/firmenkunden/service/fachthemen/ausland/laenderuebersicht-a-z/argentinien-2034150  
  13.   Contracts do not have citizenship or nationality.  People and corporations, however, do.   What do you mean by "non-German" contract?
  14. US capital gains tax on foreign property

      Probably not.   You would be the sole US person owner of a "controlled foreign corporation" (CFC) and unless you satisfy the active management exception you would be personally taxed on the current (Subpart F) income of the rental.  Here is a somewhat dated (2007) but otherwise excellent and relatively brief discussion of the problem:   https://www.thetaxadviser.com/issues/2007/nov/usindividualsinvestmentinoverseasrentalproperty.html   Moreover, because rental income is regarded as a passive business activity, the CFC would also likely be regarded as a Passive Foreign Investment Company (PFIC) with potentially horrendous tax consequences if not treated with extra special care (i.e. tax planning, reporting and compliance costs) over the life of the investment.   Here is a KPMG review of new (2019) proposed changes to the PFIC regs that provide some idea of the complex morass that you will be embarking on:   https://assets.kpmg/content/dam/kpmg/us/pdf/2019/07/tnf-kpmg-report-pfics-july12-2019.pdf   Rental property can potentially escape the "passive activity" characterization if there is active management but, again, the bookkeeping, accounting and other administrative costs - not to mention time expenditure - associated with the exception may eliminate what little, if any, benefit accrues to escaping characteriziation as a CFC or PFIC.     Remember:  if you own the property and your property actually earns a profit - which is theoretically the goal - the German taxes you pay on that profit will likely far exceed whatever the US is going to charge you thereby nullifying any current US income tax liability.  Gain on sale, of course, is another story but if you get lucky and buy something that actually appreciates in value (as measured in USD gain), then you should be thrilled to pay the US taxes.  They are likely to be far less than the aggregate extra administrative, compliance and aggravation costs of owning it through a CFC/PFIC.   Upshot:   Don't spend more to avoid taxes than the taxes themselves.    
  15. Can't help with the insurance issues but might be able to help with the taxes.   But first:   You say you will be "seconded" to Argentina by your German employer that has a "HQ only" in Germany.   For whom will you be working in Argentina?   If you are working for the same employer, is the Argentine office a separate legal entity from the HQ element in Germany?   If so, will the Argentine entity be supervising your work, carrying you on its books, paying you from its financial resources and otherwise treating you for social security, health and other employee benefits as a local Argentine employee/resident?