Exit tax is usually not paid. But there are situations in which it can even make sense to pay the exit tax voluntarily. Of course, this is related to a tax design that we would like to present to you now.

1st Exit tax voluntarily pay – Introduction

Shareholders of a GmbH are increasingly faced with a delicate question: how can you emigrate abroad without having to pay the exit tax? This is because the number of German entrepreneurs who want to emigrate abroad tends to increase. Thus, the cases in which, for example, our tax consultancy firm is tasked with developing arrangements for avoiding the exit tax have become more and more numerous over the last few years. And sometimes the answer is that it's actually quite good to pay them. Granted, the exceptions are rare. But we now want to put one in the focus of our considerations.

Why You Have to Pay Exit Tax

The reason why you have to pay an exit tax in Germany is far back in the 1970s. His name is Helmut Horten. He was then the so-called department store king, because he owned numerous flourishing department stores in German inner cities (yes, yes, how times change). In any case, he wanted to sell them, but would have had to tax the profits in Germany. Since he wanted to save himself this, he moved to Switzerland before selling and sold his companies from there at a much lower tax rate. Hardly imaginable from today’s point of view: the German Treasury actually went completely empty.

Therefore, the legislature has decided to close this loophole. From now on, all shareholders of limited liability companies should pay a tax on the current value of the company in Germany at the time of giving up their unlimited tax liability. Thus the exit tax was born. In the meantime, however, other countries have also created comparable regulations. In Germany, § 6 AStG regulates the exit tax, whereby the law is also known as “Lex Horten”.

Paying Exit Tax: Our Design

So we assume that our fictional client Fridolin Fort wants to emigrate abroad as a GmbH shareholder. This should be done without his GmbH leaving Germany or being dissolved. He now founds a new GmbH and sells his previous operating GmbH to this new unit. For the profit from this sale, Fridolin Fort must of course pay taxes on a private level. This can be optimized, for example, by agreeing on a warrant or a sales-related purchase price. But let’s assume that Fridolin Fort has to pay an income tax of about 27%.

Nevertheless, we manage to save a large part of these taxes in the end. Because if the holding company now gradually serves the purchase price claim against Fort, there is no tax on it. If, on the other hand, it paid dividends regularly, taxes would also be incurred. In fact, the capital gains tax plus solidarity surcharge and possible church tax is about the same as the income tax incurred on the sales profit. So what you had to pay in taxes first, you can now save.

Now you are certainly wondering where the advantage should be here. After all, Holding GmbH is also a capital company. When Fridolin Forts leaves, he has to pay exit tax. Yes, and in this case he is especially happy to pay them. Because at the beginning his purchase price demand corresponds almost exactly to the equivalent of the holding company including subsidiary GmbH, the value and the liability towards Fridolin Fort are approximately compensated. And on a balance sheet value of only a small amount Fridolin Fort can then gladly pay exit tax.

4. Paying the exit tax made easy – Conclusion

There are many ways to escape the German exit tax. But they all have one thing in common, namely that they are by no means easily visible. Some may even seem quite easy to implement, but you should always seek the advice of an experienced tax consultancy. For once a detail runs counter to the legal provisions, this can under certain circumstances have serious tax consequences. Surely you want to avoid that, right? So contact us for designs around the topic of moving abroad in order to avoid having to pay removal tax. Because we advise clients on such issues every day, who then consider themselves lucky to have emigrated abroad tax-free or tax-optimized with our support.