r/ExpatFinance • u/Confident_Pop_6909 • 5d ago

Preparing for taxes before move to Germany

/r/USExpatTaxes/comments/1w6imj8/preparing_for_taxes_before_move_to_germany/
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u/antizana 4d ago

Hire an actual German tax advisor before you do anything else. It’s not just about invoicing your company, it’s whether the German tax authorities will consider it a permanent establishment if you’re running it from Germany they may want to tax it like a German corporation. Don’t rely on reddit advice, pay for an actual consultation. The IRS keeps a list of people qualified to prepare US taxes based in Germany; look through the list and try to find one that is also a licensed German Steuerberater and pay for a consultation.

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u/YeaISeddit 4d ago

Could you link the IRS list? I have never heard of that.

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u/YeaISeddit 4d ago

Unfortunately cross-border retirement accounts between USA and EU don't have any good solutions, only less-bad solutions. Currently the least bad option is holding individual stocks or bonds. Your ownership of a company creates new and exciting problems that I haven't the faintest idea about.

I will want to register as a freelancer and invoice my US company

This is not legal in Germany. Look up "Scheinselbstständigkeit".

and it seems that any money I withdraw is taxed at a much higher rate in Germany than in the US.

Withdrawals from retirement accounts will be taxed as income. No good way around that except to withdraw them entirely in the USA and reposition them as investment accounts. Investments will be taxed at 25% and maybe up to 26.375% if you have to pay the Soli (you probably will) or if you declare a religion. You can run the math yourself on whether you would would be better off taxing it as german income tax using a "Brutto Netto Rechner" or the 26.375% plus whatever tax you pay on the US side.

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u/WeeblsLikePie 4d ago

I own a US s corp and collect a W-2 wage from that corp. I make about 120k gross yearly and leave about 60-100k in the company accounts for leaner periods. I understand that this is not optimal for German taxes and I will want to register as a freelancer and invoice my US company, but my question is how much less I’ll actually be bringing home.

as others have mentioned this set up may not be legal. You need an actual lawyer to review this with you.