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Everything posted by Straightpoop

  1. German citizenship from sofa status?

      Yes, you may apply.   No, you will not be eligible for citizenship.   Here are the requirements:    
  2. US capital gains tax on foreign property

  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 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:  
  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:   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:   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?
  16. Collecting the Economic Impact Payment - 2020 CARES Act USA

      I would be curious to know where you found that info since it is news to me.   After qualified persons who filed a tax return for the later of 2018 or 2019  received their checks, next in line were Soc.Sec. recipients. The IRS relied on information from the SSA to identify these persons and their addresses but at no time did the SSA assume any responsibility or control over the funds. The IRS as you may know may not automatically deposit refunds to any account other than a US account.   I suspect this limited involvement of the SSA may have led to your misunderstanding.   I'm not sure what you wrote in your letter to the IRS or to whom you addressed it but the likelyhood of getting an answer from a carbon-based unit at the IRS is about the same as Donald Trump engaging in reflection and self-criticism. Fraufruit's idea of a 3d party is a good one but requires a US bank that is willing to accept a 3d party endorsement.  Many will not do so as a matter of policy because of the risks to the bank.  But if Fraufruit's bank says no, find a friend or relative in the US and ask if their bank will allow it.   But here's the catch:  if you have no US dollar denominated bank account and the person to whom you endorse the check has no EURO account, he or she will have to wire you the funds back internationally so there will be transmission and conversion costs.  Those costs may be worse than the (surprisingly low) €40 you were quoted.  
  17. Money paid in advance to Finanzamt and Steuererklärung

    @WhyNot_DE   I don't file directly through Elster but rather indirectly with a commercial provider so I have never seen what you describe as an electronic bescheid.   I do have an Elster account though so that I can "sign" electronic returns.   Out of curiosity I looked into what you report because the last couple of years I have been getting an Email alert from Elster telling me" eine verschlüsselte Datei mit allen wesentlichen Daten zum Einkommensteuerbescheid 2019 zur Abholung bereitgestellt."   The weird thing is that on the very day this Email arrived in both 2020 and 2019, the actual paper Bescheid was in my mailbox.   Consequently until your post I never bothered to read the Elster notice real carefully.  Apparently, there is such a thing as an electronic bescheid but apparently you can only get one if you file directly with Elster.  Everyone else gets the "wesentliche Daten" which they can download through their 3d party software to compare those data with what the software predicts should be the results.   Just for yucks I opened up my program and sure enough I found I could download the "wesentliche Daten" from the FA.  According to the program, the FA's wesentliche Daten showed that I was going to get about €157 less refunded than the program said I should.    I then compared the actual paper bescheid with the program figures and found them to be identical down to the Eurocent, i.e. no difference between the program prediction and the actual Bescheid.   Based on this limited experience I think therefore that the "wesentliche Daten" that is made available by the FA should be taken with a grain of salt. In other words "wesentliche Daten" doesn't necessarily translate to "all tax relevant data" much less "complete and accurate data".  
  18. Money paid in advance to Finanzamt and Steuererklärung

      The official forms do not provide for the entry of this figure.  The Finanzamt will use the figure on its books to compute your remaining liability or refund.   If, however, you use commercial software and wish to compute your taxes on your own to compare your result with that of the FA, that software will usually allow you to make the entry.  
  19. Money paid in advance to Finanzamt and Steuererklärung

      Whoops!  There it is!
  20. UK rental income on German tax returns (post-Brexit)

    If the Germany-UK tax treaty is still in effect, then the following should be of interest:   Article 6 Income from immovable property (1) Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State. ... (3) The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property.   Article 23 Elimination of double taxation (1) Tax shall be determined in the case of a resident of Germany as follows: a) There shall be exempted from the assessment basis of the German tax any item of income arising in the United Kingdom and any item of capital situated within the United King-dom which, according to this Convention, is effectively taxed in the United Kingdom and . . . . .   So the question is:  does "effectively taxed" in the UK mean some amount of tax was actually assessed and paid or does it mean "woulda coulda shoulda been" taxed in the UK were it not for the exemption allowances provided under UK tax law?   If exempted from German tax, progressionsvorbehalt will apply:   Article 23 (1d) provides:   d) Germany, however, retains the right to take into account in the determination of its rate of tax the items of income and capital which are under the provisions of this Convention exempted from German tax.  
  21. International Tax Consultant in Germany for EU Countries

    The Deutsche Rentenversicherung Bund is the organization that audits/investigates questions of employee vs. independent contractor.  The procedure for obtaining a Statusfeststellung is described by several of the IHK websites.  Here is an example:   Anfrageverfahren zur Statusklärung Die Clearingstelle der Deutschen Rentenversicherung Bund (ehemals BfA) ist zuständig für das Anfrageverfahren, durch das die Beteiligten eine Klärung der Statusfrage erreichen können. Der Antrag kann sowohl vom Auftragnehmer als auch vom Auftraggeber gestellt werden. Das Anfrageverfahren durch die Beteiligten ist jedoch nur möglich, wenn die Deutsche Rentenversicherung im Zeitpunkt der Antragstellung selbst noch kein Verfahren eingeleitet hat. Innerhalb des Statusverfahrens wird auf die Gesamtsituation abgestellt. Die Deutsche Rentenversicherung ist gesetzlich dazu verpflichtet, vor ihrer endgültigen Entscheidung, diese vorab bekannt zu machen, um den Beteiligten die Möglichkeit zu geben, weitere für die Entscheidung erhebliche Tatsachen und rechtliche Gesichtspunkte hervorzubringen. Widerspruch und Klage gegen diese Entscheidung haben aufschiebende Wirkung.   Kontaktdaten der Clearingstelle: Deutsche Rentenversicherung Bund Clearingstelle für sozialversicherungsrechtliche Statusfragen 10704 Berlin Service-Telefon: 0800 10004800 Das benötigte Antragsformular (V027) sowie Erläuterungen zum Antrag (V028) können auf der Internetseite der Deutschen Rentenversicherung abgerufen werden. Download: Antragsformular (V027) sowie Erläuterungen zum Antrag (V028)   Weitere Informationen zum Verfahren: Merkblatt der DRV Bund     As a (US) tax practitioner my only dealings with the DR has been to assist self-employed US citizen clients in obtaining a certificate of coverage under the Germany-USA Social Security Treaty.  For what it's worth (not much, in my view) the DR has never refused to issue a properly requested certificate or questioned the claimed self-employment status of the applicant.   If I were in your shoes, the first thing I would do is satisfy myself of my independent contractor status with respect to ALL my present and prospective clients. (A mere paper "contract in hand" is unlikely to be sufficient to convince anyone at the DR.  Actions will speak louder than printed words and they will likely inquire into all the relevant facts and circumstances. In particular, I assume they will examine how the day-to-day execution of your contract actually takes place and will inquire further into your professional credentials, past and present business organization, accounting, billing practices, tax reporting, marketing, etc.) Remember that it will be your client that runs the greatest financial risk should there be an official audit and contrary determination by the DR (or the Dutch, Swiss, etc. equivalent).  Your risk is minimal.   That being the case once you are satisfied in good faith that you are an independent contractor and are prepared to defend that position then simply go about your business as such.   If your client-to-be has any doubts they probably won't contract with you in the first place.  But if they do and doubts subsequently arise on their end, then let THEM petition for a ruling.
  22. International Tax Consultant in Germany for EU Countries

    The confusion was mutual.  I responded to your initial post under the assumption that you were clearly an independent contractor and concerned about taxation in countries in which you were providing services but not tax resident, i.e. whether you had a "permanent establishment" there.   I see now that the real issue is whether you are an independent contractor or not in the eyes of the various agencies (labor, social security, tax) in the various countries that might have an interest in you or your business counterparty.   As I noted earlier, the issue of whether to characterize a relationship as employer-employee or principal-independent contractor is a thorny one in just about every country.   The articles you link provide an excellent overview of the issues and approaches taken by the various agencies in Germany and NL and I thank you for them.   My area of expertise, however, is taxation.   In my experience the best way for you to deal with this problem is to first decide in your own mind what position to take and then - in cooperation with your business counterparty - take all the steps suggested in the articles you cited to establish, bolster and defend the position you intend to take and then act consistently with that position, i.e. be prepared to accept the disadvantages as well as the advantages that come with it.   Good luck.    
  23. International Tax Consultant in Germany for EU Countries

    I see now the source of your confusion.   The article you quote is concerned with an EMPLOYEE whose EMPLOYER in the country of their common tax residence assigns the EMPLOYEE to temporarily got to a different country and perform services for an entity in that country that is related to the EMPLOYER in the home country.  The issue is which of the two countries involved, the "home" company or the "host" country (e.g. of a corporate group or a home office and a branch, etc.) has the right to tax the employee.   The entire discussion you quoted has no application to a self-employed sole proprietor who leaves his tax residence to termporarily work for a client on site in a country in which the self-employed sole proprietor has no fixed base or permanent establishment.  
  24. International Tax Consultant in Germany for EU Countries

      Like sending a chicken to ask a fox what he'd like for dinner.   This and other posts raise the question in my mind whether your relationship to your prospective "employer" as you call your Dutch client is truly that of an independent contractor to a client or in fact a time-limited employment relationship.  Independent contractors are not "assigned" by their client. Independent contractors agree to perform a service and then decide themselves when, where and how they will perform that service. A contract that subordinates you to the orders/directions/instructions/assignments of your client is called an employment contract and makes you an employee.   If that is the case then the entire discussion concerning "permanent establishment" is moot. Instead, it will be the provisions of Article 14 of the DBA-NL applicable to "Einkünfte aus unselbständiger Arbeit" that will govern.   But whether to characterize a relationship as employer-employeee or independent contractor-client is a persistent and often intractable problem in the tax (and social security) law of just about every country.   So, by all means: ask the Dutch tax authorities what they think.  But don't be surprised if they invite you to dinner.
  25. when are capital gains taxed?

    @jeba   Indeed.   But even fund taxation using the "mark to market" method uses a fictitious "sale" date (usually the 31st of December) for purposes of computing and recognizing unrealized gain/loss.