Working from home is also common practice among entrepreneurs. Depending on their lifestyle, some people are drawn to the Baltic or North Sea, others prefer southern climes, living at least temporarily in Florida, southern France, Tuscany or Mallorca. This can be highly explosive from a tax perspective if the entrepreneur is involved in a corporation based in Germany. From a German perspective, working from home abroad can lead to exit taxation even if the entrepreneur is still resident in Germany for tax purposes.
Example: Mr. M lives in Germany and holds more than 50% of a GmbH based in Germany. He bought a home in Mallorca and often works in his home office there. He owns the house 100%. From a German perspective, recently confirmed by the BFH (BFH dated November 17.11.2020, 72 - IR 16/2021, BStBl. II 484, XNUMX), there is a business split. The office is treated as an entrepreneurial holding company, the shares in the German GmbH become tax business assets of the Spanish holding company.
As a result, Germany could no longer tax the sale of the shares that are now resident in Spain for tax purposes and therefore taxes the tax on the increase in value of the shares at the time the home office begins to be used (Section 6 Paragraph 1 Sentence 1 No. 3 AStG). It doesn't help, like when you actually move away, if you change your mind later and return or give up your home office and only go on vacation in the house. Anyone who falls into this trap can immediately hand over their finca again if the values are appropriate and see where they get the rest of the money from to pay the tax. The BFH had to decide the opposite case, i.e. domestic ownership and foreign operating company. When the BFH declares that the effects of the business split apply across borders, then this applies in all directions. This was obviously not taken into account.
This is a matter of case law and, as is well known, this must also be applied retroactively. It gets exciting when you've had your home office for many years. After checking the statute of limitations, you can inform the tax office that a home office has existed in Spain for many years. At that time, no one, not even the tax offices and tax courts, thought about the fact that a business split would have to be taken into account from now on. According to the BFH's latest ruling, the shares would have had to be taxed at the time. However, there was no fault in not disclosing this in the tax return. “Unfortunately” the tax has now expired. Spain does not have any division of operations and neither do the other countries. Ergo, you can now use the shares if the existing or
sell tax-free if you newly establish residency in Germany, for example if you relocate the shares back to Germany for tax purposes by ending the material connection. Because the so-called tax disentanglement does not require any active action or reporting to the tax office in the case of the compulsory assignment to a foreign owned company that arises purely through judicial law. To determine the capital gain, the original acquisition costs of the shares would not be taken into account, but rather the fictitious gain on the shares from the ownership company. The taxation of the withdrawal profit is the responsibility of the state in which the owned company is located, although taxation is not regularly carried out there because the artificially conceived invention of business splitting is not known and has never really been confirmed by the German legislature. With that you can Millions in winnings tax-free place. That is the good thing about the ax, which should be examined in view of the MoPeG and recent case law and, if necessary, applied to the existing structure.
