Podcast #53 EXIT TAXATION – "Goodbye Germany" – What you have to consider from a tax point of view if you want to leave Germany permanently!

Exit taxation: What entrepreneurs need to know before they leave Germany

More and more entrepreneurs are considering leaving Germany permanently. Whether for a better climate, a lower tax burden or more flexibility – the reasons are manifold. But the tax aspect of moving away is often underestimated. In the current podcast episode of DAWICON CFO Insights, Daniel Winkler talks to tax consultant Melina Maridou, an expert in international tax law, about the most important points.

What is exit taxation?

Exit taxation applies if natural persons who: at least 1% in a corporation to leave Germany. For tax purposes, this is referred to as fictitious sale of shares – even if there are no real sales revenues. This often results in a significant tax burden without any cash inflow. Dry-Income Problem ).

Planning is the be-all and end-all

To avoid unpleasant surprises, Mleina recommends early preparation of 9-12 months. These include:

• One Valuation of company shares (e.g. with the simplified income value method).
• Examination of alternative design measures such as conversions into partnerships or the use of instalment payments.

Pitfalls and special cases

Even those who have real estate or other income in Germany remain liable to tax. A complete move therefore requires more than just a change of registration. The actual centre of life must be moved abroad. Without clear documentation, e.g. through rental contracts or plane tickets, the tax office can doubt the move.

Result:

Exit taxation is complex and has numerous pitfalls. Entrepreneurs should seek advice at an early stage in order to explore their options and avoid unnecessary costs.

If you are planning to move abroad, you should not only check the tax framework in Germany, but also in the destination country.