I am considering moving to another country, so I had to look into the exit tax in Germany.

The tax kicks in when you own more than 1% of a company and you move out of Germany without the intention to move back (permanently) within 7 years. You can circumvent it when you remain tax-resident in Germany (so you still have a residence in Germany) IF you move to certain countries.

The exit tax applies mainly for shares in companies. The tax applies to something called “Stille Reserven” (silent reserves).

Imagine:

• I started a company in Germany (or bough one for € 100k)
• The shares are now worth €500k
• The “Stille Reserven” (silent reserves) are the difference between the current value of the shares and the original purchase price, so €400k or €500k in the case of the startup

It’s like a “forced sale” for tax purposes, even though:

• I haven’t actually sold anything
• The company continues to operate and pay taxes in Germany
• I haven’t realized any actual gains

This is particularly challenging for startup founders because:

• The valuation is theoretical (no real market price)
• The tax bill comes at a time when I haven’t actually received any money from selling shares
• The company’s value might be largely based on future potential rather than current profits

It’s like a double taxation.

• I am already paying taxes on my company’s revenue in Germany
• Now they want to tax the unrealized gains in my shares just because I move

It sets the wrong incentives.

Sure, they want to keep the money in Germany and get people to stay. But this is not the way to do it.

You don’t incentivize people to stay here by taxing them when they leave. You need to make it easier for them to stay here.

On me, it has the opposite effect. I just won’t open my next company in Germany but somewhere else. It’s creating disincentives for people to start companies in Germany.

Not legal advice, just my thoughts.