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Comment by pu_pe | Hacker News Reader

> The German exit tax is very.. expensive. In simplified terms, I'd have to simulate a sale of all my companies at a high valuation (13.75 * earnings), and pay 30% tax on that.

This is an outrageous valuation and taxation scheme.

I think German politicians either don't understand the magnitude of the issue, or they have been coopted by lobbying somehow. It's such a tough environment for innovation.

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How is an exit tax a tough environment for innovation? You can continue to innovate while registered for taxes within the country.

Because innovation requires taking risks. In the off chance those risks pay off, you are now massively penalized for your success. In that scenario you're much better off just selling the company or never starting one in the first place. This situation strongly favor incumbents by inhibiting competitors from emerging.

It's not that you can't have an exit tax, it's that it shouldn't be so out of tune with other OECD countries, so bureaucratic and so expensive to even process.

Not at all, you’re better off using a holding, which is a perfectly reasonable solution if you want to live in a different country than where your companies are registered, want to keep your shares, and don’t want to pay an exit tax.

That whole article is really whiny, there is no massive penalization

Incredible that you describe a 1.5 year process that cost almost 20 thousand euros (plus running costs to keep a physical presence, management and tax advisors in Germany) a perfectly reasonable solution.

The author seems to own multiple companies. They seem to have an extremely complicated tax situation. Their own personal costs and issues do not reflect the system as a whole. I’m very critical towards Germany’s tax system, but that specific article doesn’t do a good job if their goal is show how absurd things are.

Because, if you want to attract founders, it's not a great proposition to state "as soon as you found a company here, leaving the country will subject you to massive bureaucratic pain with significant costs".

Many founders I've talked to opted to leave Germany before founding their companies; and many would-be founders opted to not found their company while remaining in Germany (for now).

It’s only if you want to avoid exit tax and do not want to sell your shares, while moving officially to a different country. It’s not really a Germany problem, you will have similar situations in other countries with an exit tax.

Germany tax system has a lot of problems, especially for founders, that specific one doesn’t sound like one honestly

Have you looked at German politics lately? These aren't serious people.

What do you think is a reasonable price/earnings ratio?

It depends on the industry, but regular companies are usually valued at 3x to 6x EBITDA for private acquisitions. A small one-person company would probably be valued at much less than that. Most countries with an exit tax would calculate both the valuation and the tax rate much more favorably than Germany here.

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