Comment by Matthias247 | Hacker News Reader

Comment by Matthias247 | Hacker News Reader

Having moved from germany to canada (Vancouver BC) in 2017, I can tell you that "quality of life" is highly subjective, and a lot of things in germany work far better than it seems - but you will only notice it if you have anything to compare against.

E.g. [online] shopping and stock availability is so much better in germany, and you only notice what a privilege it is to get everything you need in 1 day once it's taken away from you. Groceries are super cheap in germany compared to canada. Cellphone and ISP service and pricing is often looked down upon in germany, but still also better than lots of other places. [Free] eduction is also good.

Housing in Berlin in 200k should be as comfortable as in Vancouver on 400k and new building construction quality is good. But sure - there will be tons of other places on this planet where housing is cheaper.

Then there's considerations about healthcare (where germany is probably neither at the top end nor the bottom end of the spectrum).

And of course also about long term job perspectives. While you might be able to find a remote job now, it could be much harder to maintain it or look for future opportunities in some locations than in others. Being in a country with a big tech industry or at least in the same timezone will help retaining opportunities.

You touch a number of very important points here. Thanks for that. We're aware of the fact, that the overall situation in many countries in the world is much, much worse. So it's kind of a luxury problem. What is actually a challenge, is that I work as a freelancer for 20 years now and still have to go a long way to secure my private pension. I once calculated my personal "real" tax rate in Germany, and ended up at around 71%. Especially due to the fact, that we both are in the highest income tax band but also due to the fact that there are taxes on close to everything. But since we're not really consume oriented, we're fine with lower income, IF we find a place, where life is just more relaxed. Thank you for your thoughts.

How do you come to the 72%, I'm just interested.

VAT + Income Tax + Socials?

Income tax + business tax pile up to 50% already. I don't pay social taxes by choice, hence I do not benefit from the social net. If I add up all other taxes then, I end up pretty close at 70%. Meaning mostly VAT, taxes on gas and oil, alcohol, tobacco, final withholding tax on stock and crypto investments and speculation, vehicle tax, electricity tax. All in all there are close to 40 different types of tax, but we don't have to pay all of them. But being in the highest income tax band as a tech freelancer with virtually no deductible costs you pay taxes first, and then have to take care about health care, insurances and pension afterwards. Even if you make some good money, that does not leave you with a lot to live. At least that's our scenario for many years now.

>Income tax + business tax pile up to 50% already

Is that for all your income or "just" over a certain threshold?

>Even if you make some good money, that does not leave you with a lot to live.

You said you travelled to different countries in Europe, Africa and Asia. Do you consider that not leaving you with a lot to live?

>with virtually no deductible costs you pay taxes first, and then have to take care about health care, insurances and pension afterwards

Those are all, up to a certain degree, deductible from your taxes, right?

>Is that for all your income or "just" over a certain threshold?

Regarding income tax, there is a tax free allowance of 9.984.

>You said you travelled to different countries in Europe, Africa and Asia. Do you consider that not leaving you with a lot to live?

We travel for more than 15 years and we mostly leverage so called PEP offers, which reduce your travel cost to a fraction of the real cost. Otherwise we'd not be able to afford that.

>Those are all, up to a certain degree, deductible from your taxes, right?

That's the point. They are NOT! The only deductible position would be an official pension insurance. If you invest on your own (which we do) you can not deduct a dime. Everything else we have to pay AFTER taxation.

Sound's like it's quite a lot to live on if you have enough cash on hand to travel only "mostly" on PEP.

>That's the point. They are NOT!

Your private pension might not be - but with Health Care, business expenses and certain type of insurances there's more than "virtually no deductible costs" though.

There's a lot of stuff that seems unfair, I agree. I'm not here to debate that you pay more into the system as others and don't get more benefits from it - but the picture you're painting of a 70 % overall tax rate and "not a lot to live on" strikes me as a bit too grim.

You can compare taxes here: https://files.taxfoundation.org/20191022154112/TEMTR-41Count...

To compare cost of living: https://www.numbeo.com/cost-of-living/comparison.jsp

Safety comparison: https://www.numbeo.com/crime/rankings_by_country.jsp?title=2...

How does that work? I mean the tax rate is progressive and as a freelancer you only pay the normal income tax. If the tax authority insists you're a Gewerbe you'll have to pay Gewerbesteuer as well, but most of that can be deduced from your income tax already. Just wondering how you get at this number, calculating with 240 T€ and tax class 1 I only arrive around 40 % income tax.

You're right on progression and Gewerbesteuer deduction. Nevertheless I pay tax rate "Höchststeuersatz" at 45%. Add "Solidarzuschlag" and you end up very close to 50%.

But the 45 % is only paid for income above 277 T€ (or twice that much if you're married)? I mean, it's a lot but if you alone are in that tax bracket you should be able to afford housing in Germany and Berlin, that puts you somewhere in the top 0.5 % of all families, not even accounting for your partners income.

Yeah this is not really how you do the math (and your salary should count as expense for the Gewerbesteuer no?)

You should calculate the end % of tax. The 45% is the marginal rate. Also the solidarity tax has a ceiling

(And not everything is charged the full VAT rate)

And in the end, that number doesn't mean much? Switzerland for example had much lower tax, but your cost of life shot up. Some other places your income tax might be lower but sales taxes are higher.

It's all relative

Edit, as an example for 200kEUR in Berlin your tax will be ~ 43% (Cat I) - for 1MEUR/yr you're paying 46%

(this is not so much about Berlin or Germany - the math is the same everywhere - it's about people thinking that the rate means they pay that % of their salary)

sounds like you need a proper tax consultant

Can you share your working out for the “real” tax rate? We could see how various US states, first world countries vary. Does knowing that the lowest state is say 50% make it easier to pick Portugal at say 60%?

One thing that's really hard to compare when looking at taxes is the quality of public services you get.

UK has not low taxes by any measure, but certainly lower than eg Germany, at 200k you're looking at effective tax rate of about 35-40% all in. But state schools are a lottery and shut down for 13 weeks a year. Healthcare is good if you can get seen but otherwise it's the private health insurance. Public transport is expensive. Social security in this segment of earnings is non-existent, you would be ineligible for many things (because "earn too much"), unemployment benefits only available if you have 0 savings left and so on.

I'm not sure I'd recommend the UK though it's less bad an option than it seems, it's just a demo.

In UK, can you please tell me how at 200K pounds, the taxes can come down only to 35-40% especially at 125K or above, the 60% tax trap kicks in. [1] If you can specify any tax saving tips or refer to some consultant, I will be grateful.

Really the only way in UK is to put in a large part of your earnings into pension contributions which effectively makes it out of bounds till 55 or 57 from 2028 onwards, which means even if you have FU money you can't use it. Again if you have large RSU payouts due to working at a FAANG, it can be difficult as you start hitting lifetime allowance of your pension contributions.

[1] https://www.nutmeg.com/nuggets/escape-the-60-tax-trap

edit: specifying that the above comment is for UK

What 60% trap is that? The linked page looks very suspicious and doesn't offer much information.

Between 100k and 125k you lose £1 of your tax allowance for each £2 you earn. Which greatly increases your tax in that window.

It does, but not greatly: for a £110k salary the effective taxes (including NIC) are around 35%.

It is not a good idea to get your tax information from an investment corporation advertisement.

If you work for yourself you usually create a Ltd. and pay yourself in dividends, not income.

I based my guesstimate off a rate of 200k EUR (OP says he's in Germany), or 170k GBP. Income tax and NI come up to 65k according to govt website (assuming you're not paying extras like student loan repayment etc). That's an effective rate of 38%.

The article you link is about marginal rates, and these are indeed all over the place, buy that's a different story.

Tax calculator: https://www.tax.service.gov.uk/estimate-paye-take-home-pay/y...

I would pick Barbados for tax reasons

More relaxed than Germany? I always thought it's one of the most relaxed country in the world. Rich, well-run, with excellent safety nets, great worker rights etc.

> to canada (Vancouver BC)

I mean Vancouver is not exactly a paragon of affordable housing either.

Toronto, Edmonton, Vancouver...probably couldn't be more different. Would not want to lump all of Canada into one of those cities.

Berlin to Edmonton? Maybe it could work if nightlife doesn't matter at all to you.

OP is specifically requesting no cold winters and you guys are talking about Edmonton ;)

Montreal is the most affordable city in canada that doesn't suck. It's a bit hard to believe how cheap it still is (relatively!), yet imo it's a much better place to live in than Toronto/Ottawa/Edmonton.

Too cold and French speaking.

sure, this wasn't meant as a suggestion to take Vancouver into consideration - it certainly won't win anything on affordability.

It was just meant to offer my perspective and lessons learned around moving from germany to another location. I am sure for other locations there are again other pro's and con's.

Apologies if that came off a bit dismissive - I think I am influenced by some acquaintances who had terrible experience in that area, due to insane real estate market. It was said that external investors driving it up is a big contributor but I don't have any data and am suspicious of those claims.

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