Will Germany tax my money when I move to another EU country?

21 posts in this topic

I have heard Germany might apply an exit tax to someone who moves out of Germany after having stayed at least 10 years there. I read there was a draft on this in 2019 but was not able to read more detail about that.

 

I am a freelancer, and I have money both in my bank accounts earned from freelancing and I also own stocks. How much will Germany take from this money?

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1 hour ago, treerender said:

How much will Germany take from this money?

 

0.00

 

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8 hours ago, Straightpoop said:

 

0.00

 

Wrong. It's 0,00.

Okay ,the proposed draft of 2019 couldn't get approved, or why is it 0?

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I trust your short answer and your answers on other threads seem authoritative, but can you please give some more explanation?

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Curious and lurking here! I have never heard of an exit tax ( maybe I don't read enough ) but what is this exit tax?

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37 minutes ago, john g. said:

Curious and lurking here! I have never heard of an exit tax ( maybe I don't read enough ) but what is this exit tax?

Here is an article: https://www.moore.be/en/news/german-exit-tax-on-capital-gains-on-shares-tightened

 

Quoting the first paragraph here:

"What are the current conditions?

The German exit tax is only applicable if it relates to:

A natural person who is domiciled or habitually resident in Germany for a period of at least 10 years.

A natural person who is at least a 1% shareholder in a domestic or foreign company.

If both conditions aremet, a move abroad will result in the application of the exit tax. Although the shares have not been sold, it is assumed that capital gains have been realised. These capital gains on the shares are calculated on the basis of a calculation method stipulated by German law. In most cases, this results in a tax of approximately 30%."

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Ah ok. Business- related/ shares etc. You had me worried for a moment!😂

I thought you meant some wierdo bugger-off tax for normalos! 

( Had once to pay 1,000 dollars to have had the cheek to try to book a short holiday in Australia whilst resident in Indonesia. Cancelled the trip. I was a poor English teacher back then!).

Thanks for the link!

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12 minutes ago, john g. said:

Ah ok. Business- related/ shares etc. You had me worried for a moment!😂

I thought you meant some wierdo bugger-off tax for normalos! 

( Had once to pay 1,000 dollars to have had the cheek to try to book a short holiday in Australia whilst resident in Indonesia. Cancelled the trip. I was a poor English teacher back then!).

Thanks for the link!

I am a professional independent insurance broker and authorised advertiser. Contact me.

Wait, you mean it doesn't apply to stocks individuals have? But the article says:

 

"Natural persons who are residents of Germany for a certain period of time and who are at least 1% shareholders in a domestic or foreign company, are deemed to realise capital gains on this shareholding when they move abroad." 

 

From that sounds like it's talking about individuals (i.e., natural persons) who have invested in stocks. Or is "shareholder" and a stock owner not the same thing? Sorry, I am even more normalo than you :) 

 

Edit: Wait, it says 1%. When you buy stocks you are a shareholder but you of course own less than 1%. Did I get it this time?

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Seems to me to be related to tax on equities/ shares one holds but tax is payable anyway even if staying in Germany.

Question indeed for tax consultants. So Straightpoop and PandaMunich on here.

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As I read it, the tax already exists.  The 2019 draft is looking to tighten the law, reducing 10 years to 7 and various other things.  So, if you own the requisite shareholdings and otherwise come within the legislative requirements, you are already caught by it... 

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I wonder how this can be monitored? How will the Finanzamt know if the 1% threshold is passed? I doubt they keep record of the amount of shares issued by all companies. Plus, how can they prevent that a major shareholder / holder of equity sells their shares to a foreign company controlled by them for cheap to avoid capital gain tax?

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2 hours ago, jeba said:

How will the Finanzamt know

 

Indeed. The sources of information available to the tax authorities of any country needed to perform the task set them by legislatures (or potentates) are frequently slim to non-existent.

 

Beginning with the computer age in the 1960's the US embarked on - or rather stumbled into - developing a system of total 3d party reporting of all tax-relevant financial information of its taxpayers. That system has been constantly expanding - with fits and starts - at the US national level ever since.

 

With the introduction of FATCA in 2010 the US has attempted to expand that system of "total tax knowledge" to every country on the planet.

 

The US system, both nationally and internationally, still has vast, gaping holes but with the advent of huge computing and data storage capacities, those holes are now starting to close; slowly but steadily.

 

The US information reporting system and FATCA was an inspiration to the rest of the world's tax authorities. The OECD's Common Reporting Standard and Germany's newly introduced TIN and ELSTER are examples at the international and national level, respectively, of the worldwide trend. 

 

In the private sphere, Amazon, Google, Facebook & Co. have demonstrated the modern technological capabilities of "big data" collection and analysis.

 

The only real barrier now is the legislative will at the national level to apply that modern technological capacity to tax collection worldwide.

 

The real barrier to implementing such a "perfect" system will ultimately be a philosphical/political one caused by a salient fact of modern income tax systems:  tax liability is impossible to determine based on financial information alone; personal relationships and personal data are key determinants without which tax liability cannot be accurately determined. Thus, to know all "tax relevant" data is to know very nearly everything about the individual. With the power to know everything comes the power to control everything; the very definition of totalitarianism.

 

Only democracies will continue to tolerate the possibility of tax evasion.

 

 

 

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Just the fear of being prosecuted for income tax evasion is enough to keep most of us in line. 😂

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Regarding owning 'stocks' I assume you mean stocks on an international exchange? NASDAQ, FTSE etc.

Did Germany not bring in a rule where they assumed some capital increase in value of the stocks each year?

German stock brokers or brocker accounts automatically calculated this, yet no one else in the world did.

As least the way I read it, this in effect made it impossible to open a non German brokerage account.

Anyway, if so, the amount declared each year would (presumably) be offset when you left.

 

But I think the law related not really to FTSE shares, but more private shares in a company, typically a family business for example?

If I ever managed to own more than 1% of a FTSE/NASDAQ company, well, lucky me. More like 0.000000000001% in reality.

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38 minutes ago, scook17 said:

As least the way I read it, this in effect made it impossible to open a non German brokerage account.

Not at all. E.g. via "Lynxbroker"  (located in Berlin) you can have a US broker acting for you. And your German tax won´t be withheld.

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2 hours ago, scook17 said:

Did Germany not bring in a rule where they assumed some capital increase in value of the stocks each year?

 

It did not.

 

You are probably referring to Germany's new method of taxing unrealized gains in different types of mutual fund and similar entities that do not pay tax at the entity level in effect since 31.12.2018.

 

Even here, however, there is no "assumed" gain.  The gain, if any, is based on end of year market value and the taxable portion - if any - is computed differently each year depending on an established "base rate" and the individual character of the fund/entity itself, e.g. predominantly equity, predominantly bonds, predominantly real estate. The paid tax - if any - resulting from these annual mark-to-market computations function as a credit against any remaining tax owed - if any - upon ultimate disposal at a gain.  Essentially, the idea is to put all funds - regardless of nationality - that reinvest internally on more or less the same tax footing as those that distribute in cash by reducing the advantages of tax deferral.

 

Funds/entities held in German brokerages "enjoy" the benefit of having the bank do all the computations whereas if held in a foreign brokerage the computations are the same but it's DIY.

 

 

 

 

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I think I read something about them taxing your German earnings for 2 years if you leave Germany and live abroad and still earn money from a German company. Not sure how it is now. If you are in receipt of some pensions I think there is also taxation unless you tell them you are not earning. 

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53 minutes ago, Straightpoop said:

 

It did not.

 

You are probably referring to Germany's new method of taxing unrealized gains in different types of mutual fund and similar entities that do not pay tax at the entity level in effect since 31.12.2018.

 

Even here, however, there is no "assumed" gain.  The gain, if any, is based on end of year market value and the taxable portion - if any - is computed differently each year depending on an established "base rate" and the individual character of the fund/entity itself, e.g. predominantly equity, predominantly bonds, predominantly real estate. The paid tax - if any - resulting from these annual mark-to-market computations function as a credit against any remaining tax owed - if any - upon ultimate disposal at a gain.  Essentially, the idea is to put all funds - regardless of nationality - that reinvest internally on more or less the same tax footing as those that distribute in cash by reducing the advantages of tax deferral.

 

Funds/entities held in German brokerages "enjoy" the benefit of having the bank do all the computations whereas if held in a foreign brokerage the computations are the same but it's DIY.

 

 

 

 

Yes, it was this actually, this unrealized gain rules I remember reading about. Do you know it apply to shares held in such an account to? Say I buy Google and hold it for 10 years and then sell it, all the time being in Germany. Is the gain payable 10 years from now, or at the end of every year I continue to hold the stock?

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15 hours ago, scook17 said:

Do you know it apply to shares held in such an account to?

 

It does not.

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