[tomschwiha]

I think the numbers in the article are mixed up. Earnings 200k. Wage 120k. So the profit is 80k for the calculation. 80×13,75=1.100k. 60% of it = 660k. Personal tax at 120k income = 45%. More likely less as for health insurance, etc. 660k×45% = 297k exit tax. Which can be paid in 7 yearly rates. So 42k per year. You still have a company that has earnings of 200k.

[BillyTheKing]

This means the person has to move to a country with 0% income tax for this to make any economic sense, so that's either Monaco or the UAE then. Very difficult for me to understand why someone is supposed to pay this tax in the first place, the business paid a whole bunch of other taxes in its lifetime.

I would understand if they'd tax the sale of the business.

[tomschwiha]

That is actually the intention: to tax as if you sold the business. But with a payment in 7 yearly rates. The tax intends to tax the value of the company that is not yet taxed (on a personal tax level). It does account for already paid businesses level taxes.

[realityking]

Its purpose is to avoid business owners to move to a low-tax place 12 months before selling their business and then move back to Germany another 12 months later, thus avoiding any tax on the increase in value of the business.

[bluecalm]

Just because it made 200k last few years doesn't mean it will continue to make that much. That is especially true in case of small companies.

[tomschwiha]

Keep in mind there are two methods for taxation: the simplified earnings value method (13.75 factor) or the actual unrealized profit of the business. If you believe your company will not be profitable in the future because you’re moving away, you could wind it down — but you’d still end up paying the same taxes on the unrealized gain.

[tomschwiha]

It also depends on how the company is valued: If based on balance sheet (retained profits + share capital) e.g. 5×100k retained = 500k value, the exit tax is 18k/year for 7 years. If simplified earnings method with factor 13.75 is used it much higher valuation, the exit tax is at the 42k/year.