Exit taxation

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An exit tax is the tax treatment of assets due to the relocation of the domicile or habitual residence abroad. The aim of exit taxation can be to make it more difficult for capital to flee or to ensure that hidden reserves held in Germany are also taxed in Germany.

Germany

history

Tax Evasion Act of 1918

Shortly before the end of the First World War, a law against tax evasion was passed. It stipulated that, when moving abroad, the income tax liability vis-à-vis the Reich and the federal states was retained for Reich citizens, regardless of the fact that they were neither domiciled nor permanently resident in Germany. The same applied to former German citizens who acquired foreign citizenship after August 1, 1914, and stateless persons who had been resident in Germany since August 1, 1914. The law received heavily penalizing elements. Thus, the state income tax owed two and a half times that amount. There is a legal presumption that the tax base corresponds at least to that of the year preceding the year of departure. One month before moving, the taxpayer had to report to the tax office and submit a list of assets . The tax office could demand security in the amount of 20 percent, from 1919 even in the amount of 50 percent of the property. In connection with the obligation, which has been in force for German nationals since 1916, to apply to the local police for an exit visa from the local police, which was only issued in conjunction with a clearance certificate from the tax office, the free movement of persons was in fact severely restricted. The law against tax evasion and the obligation to apply for an exit visa were repealed in 1925.

Reich flight tax from 1931

The Reich Flight Tax was introduced in 1931. Unlike the law against tax evasion, this law did not maintain personal tax liability after moving, but took the move as an opportunity to impose a tax liability of 25 percent on the taxpayer's existing assets. In connection with the foreign exchange restrictions in force since 1931 and the 100 Mark tax for foreign travel, these regulations led to a severe restriction on the free movement of people. Originally, the Reich Flight Tax was supposed to make tax evasion more difficult for the wealthy. The drastic lowering of the tax exemption limits after 1934 and the wave of flight from Germany that began in 1933 as a result of the persecution of Jews and politically dissenters made the Reich flight tax an instrument of looting for politically and racially persecuted people.

Current legal situation according to the Foreign Tax Act

The background to the reorganization of German foreign tax law in 1972 was a debate about tax evasion initiated by the German department store entrepreneur Helmut Horten . Horten moved to Switzerland with his wife Heidi in 1968 and in the same year converted his department store group Horten from a GmbH to an AG. In the following years he gradually sold all of his shares for 1.13 billion Deutschmarks . According to Swiss law, no tax was due on this and hoarding was no longer taxable in Germany. A double taxation agreement with Switzerland did not exist at the time, but would not have changed the legal consequences, since Art. 13 Para. 5 DBA DE-CH (corresponds to the OECD model convention) assigns the right to tax to the country of residence. Therefore, the AStG (or in particular the exit taxation of § 6 AStG) is still called " lex hoarding".

The German exit tax has since been regulated in Section 6 of the Foreign Tax Act. If a natural person who has been subject to unlimited tax liability in Germany for at least ten years moves their domicile abroad, the hidden reserves in all shares (up to and including the assessment period 2006 domestic shares) in corporations in which the taxpayer has in the past was or is taxed at least 1% for five years (see § 17 EStG), provided that he still holds shares at the time of moving. As there was no sale, the selling price is the fair value of the shares at the time of the change of residence. The tax can be paid in five annual installments on application under certain conditions. The tax liability does not apply if the move was only temporary and the taxpayer moves back to Germany within five or ten years without selling the shares. The prerequisite is that the taxpayer has reported the temporary absence to his last competent tax office before moving. If the taxpayer moves to an EU or EEA country, the tax will be deferred ex officio in accordance with Section 6 (5) AStG . In these cases, the taxpayer has to report regularly to his last competent tax office (§ 6 Abs. 7 AStG).

For this purpose, when you move to another country, the hidden reserves are recorded and taxed (personal tax evasion ). A fictitious sale is assumed. Most double taxation treaties assign the right to tax capital gains to the country of residence. Without special regulations, there is therefore the risk that a taxpayer will relocate to another country before selling an asset that has increased in value.

Example :
In 1990, a taxpayer resident in Germany acquires a 50% stake ( significant stake within the meaning of Section 17 EStG) in a German GmbH for 1 million euros. On January 1, 2005, this share was worth EUR 11 million. If he were to sell this stake now, he would have to pay tax on the capital gain of 10 million euros. This is subject to 60% of the personal income tax rate within the framework of the so-called partial income method ( Section 3 No. 40 lit. c) EStG)
However, if he moves his place of residence to another country before the sale , this increase in value would no longer be taxed in Germany - unless there are special regulations. Although the sales process would result in a limited tax liability (see Section 49 (1) No. 2 lit. e) EStG), Germany's right to tax is regularly excluded by a double taxation agreement.

France

The French regulations on exit taxation (Art. 167 to CGI) have been classified by the ECJ as unlawful to the EC (see below). If a French taxpayer (resident of at least six of the last ten years in France) relocates abroad, Art. 167 bis CGI provided for the taxation of certain hidden reserves for investments in corporations. In contrast to the German regulation, the French exit tax only applied to participation rates of at least 25%; the shares of closely related persons (spouses and close relatives) are added together. However, under certain conditions, the French regulation provided for a deferral of the tax until the hidden reserves were actually realized (i.e. until the share was actually sold). If no sale has taken place five years after moving, the tax was waived.

Austria

In Austria, exit taxation was introduced in 1992 (Section 27 (6) Z 1 lit b EStG). The increase in value of significant holdings (at least 1%) in corporations was taxed if the shareholder moved abroad. Austria adjusted its regulation in response to the ECJ ruling on French exit taxation in 2004. If you move to another EU or EEA country, the tax can be deferred upon request until the hidden reserves are finally realized. At the time of the move, only the hidden reserves made up until then are recorded, but tax is only due when the investment is actually sold.

Switzerland

Switzerland does not levy any exit tax.

The ECJ judgment "Lasteyrie du Saillant"

With a judgment of March 11, 2004 (Lasteyrie du Saillant) , the ECJ ruled that the French rules on exit taxation are contrary to Community law. Since the German rules are very similar to the French, it was assumed that the German rules were also incompatible with EU law. The EU Commission had therefore initiated infringement proceedings against Germany and formally requested Germany to lift its exit taxation or to make it conform to Community law.

For this reason, the German Bundestag, with the consent of the Bundesrat, changed Section 6 AStG through the "Law on Tax Accompanying Measures for the Introduction of the European Company and for Changes to Other Tax Regulations (SEStEG)" passed on December 7, 2006 . of the EEA introduced an interest-free deferral of the tax due until the participation is actually sold or the place of residence is relocated to a country outside the EU or the EEA.

See also

literature

  • Jochen Ettinger, Tobias Eberl: The German exit taxation according to the ECJ rulings and essential design considerations in connection with an exit abroad . In: GmbHR , 2005, pp. 152–159.
  • Siegfried Grotherr : Innovations in exit taxation (§ 6 AStG) by the SEStEG . In: IWB , 2007, Fach 3, Gruppe 1, pp. 2153–2174.
  • Jens Kalbitzer: Exit taxation according to § 6 AStG , Frankfurt a. M. 2012.
  • Annekathrin Keller: The further development of exit taxation according to § 6 AStG . Wiesbaden 2006.
  • Matthias Koller: Exit taxation and unraveling hidden reserves in German tax law. The development regulations according to the old and new legal situation as well as evaluation and design options under European law . Hamburg 2007.
  • Gerhard Kraft: Commentary on § 6 AStG . In: Gerhard Kraft (ed.): External tax law. AStG . Commentary, Munich 2009.
  • Martin Lausterer: The exit tax according to the government draft of the SEStEG . In: BB-Special , 8, 2006, pp. 80-87.
  • Dietrich Ostertun, Ekkehart Reimer (Hrsg.): Exit taxation. Relocation advice. Civil right. Tax law. Social security . Munich 2007.
  • Günther Strunk, Bert Kaminski : Commentary on § 6 AStG . In: Günther Strunk, Bert Kaminski, Stefan Köhler (eds.): External tax law. Double taxation agreement . Comment, loose-leaf. Bonn / Berlin, status: 19th supplementary delivery, October 2009.
  • Franz Wassermeyer: Commentary on § 6 AStG . In: Franz Wassermeyer, Hubertus Baumhoff, Jens Schönfeld (eds.): Flick / Wassermeyer / Baumhoff, external tax law . Commentary, loose leaf, Cologne, status: 60th delivery, June 2007.

Web links

Individual evidence

  1. ↑ Law against tax evasion (RGBl. 1918, 951–958)
  2. ↑ § 1 STZ! of the law against tax evasion
  3. ↑ § 1 sentence 2 of the law against tax evasion
  4. ↑ § 4 of the law against tax evasion
  5. ↑ § 5 of the law against tax evasion
  6. ^ Reichsfluchtsteuer and other measures against capital and tax flight, RGbl. 1931, p. 731
  7. ↑ https://www.iww.de/pistb/archiv/aussensteuergesetz-die-wegzugsbesteuer-von-horten-bis-de-lasteyrie-du-saillant-f42713
  8. ↑ Martin Walser: Always up to date: On the occasion