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Tax Scenario

Particular Advice

Specialized tax advice for M&A and finance transactions, driving value and strategic advantage for your business. Below we provide some guidance on how to approach certain tax scenarios.

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Table of Contents

I live in Germany and inherited assets, cash, etc. from a passed away relative in a foreign country. Do I need to report the inheritance in Germany?

  • If you inherit assets from abroad while being a resident in Germany, you're required to report this to the German tax authorities within a three month notice period.
  • The (inheritance) tax rate and applicable tax-exempt thresholds depend on your relationship to the deceased and the (tax) value of the inheritance.
  • Germany has entered into (inheritance tax) double taxation agreements with some countries (i.e. Denmark, France, Greece, Sweden, Switzerland, United States) that may affect the amount of inheritance tax due - for all other countries double taxation may apply.

I want to continue my self-employed business in the legal form of a GmbH. What do I need to consider tax-wise?

  • When transitioning from a sole proprietorship to a GmbH (a type of German corporation), you'll encounter a different set of tax obligations.
  • GmbHs are subject to corporate income tax, trade tax and VAT. Profits distributed to shareholders are subject to the individual tax rates applying to the respective shareholders.
  • You should in any case avoid to simply end your sole-proprietorship and continue the same business from the established GmbH as this will very likely result in adverse tax effects and the triggering of exit taxes (dry income risk = tax but no cash flow).
  • A formal merger/conversion can be carried tax neutral, but must be structured accordingly beforehand.

I am holding shares in a corporation and want to abandon my German tax residency (i.e. relocate to a foreign country). What are my German tax obligations?

  • Exiting German tax residency can trigger exit taxes ("Wegzugsteuer"), especially on unrealized capital gains in certain assets, like shares in corporations.
  • The specifics depend on the duration of your residency and the nature of your assets. Specific structures may avoid the application of exit taxes.

I gained income from crypto trading, staking, lending, etc. Is this income subject to German tax and how do I determine the taxable portions?

  • Private crypto trading profits are subject to tax if the assets are held for less than one year, with specific exemptions for longer holdings. This must carefully be assessed for each individual case.
  • The volatile nature of cryptocurrencies adds complexity to determining taxable gains and losses.
  • Usually we require additional tools to reconcile your wallets within the determination process of taxable profits.
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Whatever special tax scenario you might be facing: we are gladly having a look into it.

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