The exit tax can be avoided in several ways, including through an atypically silent society. In doing so, the atypically silent company GmbH shareholders help to create a co-entrepreneurship from a tax point of view. Unlike participation in the limited company, however, this co-entrepreneurship is not a criterion that triggers the exit tax. In this way, the atypically silent society makes it possible to avoid the exit tax. At the same time, the GmbH remains formally, and thus in the external relationship, nevertheless.

Oh yes, the exit tax. In our contributions we have often dealt with it. More specifically, with the possibilities of how to avoid the exit tax. And for good reason. Because on the one hand, many entrepreneurs who run a GmbH are sooner or later permanently abroad. Potential tax savings are one of the reasons why you want to move abroad, even if the increase in quality of life is usually the main reason. On the other hand, the exit tax is often the focus of our attention because it is a tax that is sometimes very burdensome. Finally, there is an exit tax, although there is no real increase in value. But those who have to avoid the sometimes very high exit tax in order to be able to emigrate abroad at all understandably find it unfair.

Nevertheless, from Germany’s point of view, it is very fair in one respect. Because by the departure of a taxable person who is involved in a German capital company, Germany loses the chance to claim the tax on the capital gain otherwise incurred in a sale. In other words, if there were no exit tax, emigrant GmbH shareholders would receive a tax advantage over those who remain in Germany if they sold their company abroad at a lower tax. And that would be at least as unfair.

Nevertheless, we are now considering an option with which you can avoid the exit tax. We use an atypically silent society.

Before that, another excursion into the world of tax laws. The framework for the exit tax is § 6 AStG. Here, in accordance with income tax law (specifically § 17 EStG), what is to be observed in cross-border tax behavior is regulated. This also includes the imminent loss of tax sovereignty, which occurs when taxpayers withdraw tax substrate from Germany by moving abroad. This is why there is taxation within the framework of the exit taxation.

The second important aspect in our plan to avoid the exit tax is the atypically silent society. This is a financial participation in a company in which the silent partners remain invisible in the business transactions of the company with other business contacts. The capital provided by the silent partnership partners enables them to share profits.

A silent society is specifically described in the Commercial Code. The definition can be found in § 230 HGB. Further regulations on the silent society are part of §§ 231 to 236 HGB. However, there is no essential reference there. For one can distinguish between a typically silent and an atypically silent society. The HGB only deals with the typically silent society. But the atypically silent society is different only in a few, albeit important, points. Thus, unlike the typically silent partner, an atypical silent partner receives certain co-entrepreneur characteristics. For example, atypical silent partners can claim a share in the sales profit in a sale of the GmbH; in the case of a typical silent partner, this is excluded.

In order to avoid the exit tax, the GmbH shareholder establishes an atypically silent company with his own GmbH. This means concluding a social contract and making the money deposit agreed therein. This requires neither a notary appointment nor any application to the financial administration. Thus, such a step is also quite easy to implement in the short term.

From now on, as a GmbH shareholder, you will receive dividends from your own GmbH as well as a profit share, which is usually proportional to the cash contribution. However, we also have to answer the question why it must be an atypically silent society, whereas the typically silent society is unsuitable for our goal of avoiding the exit tax.

The answer to this question is that the typically silent society does not require a change in the structure of society. A GmbH shareholder who enters into a silent partnership with his own GmbH will continue to be a shareholder of a corporation both internally and externally.

In order to understand this question in more depth, it must first be emphasized that the exit tax within the meaning of § 6 AStG is aimed solely at corporations. If we manage to ensure that the GmbH, which is clearly a corporation, is to be regarded as a partnership for the purpose of the exit taxation, we will have achieved our goal.

And that is exactly what happens when we establish an atypically silent company with the GmbH. Because then the original participation in a limited company a co-entrepreneurship within the meaning of § 16 EStG arises. The pivotal point here is that this change of participation in a corporation to a co-entrepreneurship only takes place internally. On the other hand, the whole process remains hidden from outsiders, because the GmbH continues unchanged for them, while the silent society is purely oriented towards the internal relationship.

From a tax point of view, however, this change from participation in a corporation to co-entrepreneurship is quite essential. The assessment of whether the departure of a GmbH shareholder triggers the legally fictitious sale of shares in a limited company within the meaning of § 17 EStG is now negative. Indeed, § 6 AStG refers to the examination of the conditions laid down by § 17 EStG for the existence of holdings in limited liability companies. And with our atypically silent society, we have clearly changed that. In this way we can avoid the exit tax by the atypically silent society.

Finally, let us once again note all important points. First, the atypical silent partnership with its own GmbH leads to a co-entrepreneurship arising from the original participation in a limited company. Secondly, co-entrepreneurship is not a criterion where the exit tax is incurred. Thirdly, the atypical silent society makes it relatively easy to avoid the exit tax.

This can even be achieved in a very elegant way, because the atypically silent society is purely internal and outsiders are not aware of it. For example, no publication in the commercial register is required. On the other hand, the tax office perceives the change to co-entrepreneurship as a tax-relevant change, because now the condition for exit taxation remains unfulfilled.