Financially Independent and New In Germany
Zitat von firenow am 21. Oktober 2020, 18:47 UhrHallo everyone,
First of all, my apologies for not speaking german. I came to germany 6 months ago so I'm pretty new here. Wife got a job offer from a state government and I thought I should try a new country. Can be an interesting experience.
I ran a technology company and sold it when I was 29. I got on the fire wagon when I was very young and did not even know what fire was. Saving rate has always been >80%. I stopped working in 2019. Currently figuring out what I want to do next.
Our wealth is around $$2.2M. Our total household budget is around $2200 and we feel we live like kings 🙂 I still have to buy a car here. I think that will add another 300-400 to our monthly budget.
I have to file taxes for the first time in germany next year for my investments in stock funds. I'm wondering how do I get a tax number. Should I tell FinanzAmt that I'm self employed? I no longer work?
Currently I'm covered under my wife's public insurance.
My second question is how are stock gains taxed? If my stock portfolio gained $50K in 2020, do I have to pay income tax on all 50K? Or I only pay tax on the part I sold?
Thanks so much for your help and if anyone needs help please let me know.
Thanks
Hallo everyone,
First of all, my apologies for not speaking german. I came to germany 6 months ago so I'm pretty new here. Wife got a job offer from a state government and I thought I should try a new country. Can be an interesting experience.
I ran a technology company and sold it when I was 29. I got on the fire wagon when I was very young and did not even know what fire was. Saving rate has always been >80%. I stopped working in 2019. Currently figuring out what I want to do next.
Our wealth is around $$2.2M. Our total household budget is around $2200 and we feel we live like kings 🙂 I still have to buy a car here. I think that will add another 300-400 to our monthly budget.
I have to file taxes for the first time in germany next year for my investments in stock funds. I'm wondering how do I get a tax number. Should I tell FinanzAmt that I'm self employed? I no longer work?
Currently I'm covered under my wife's public insurance.
My second question is how are stock gains taxed? If my stock portfolio gained $50K in 2020, do I have to pay income tax on all 50K? Or I only pay tax on the part I sold?
Thanks so much for your help and if anyone needs help please let me know.
Thanks
Zitat von Privatier am 21. Oktober 2020, 19:07 UhrZitat von firenow am 21. Oktober 2020, 18:47 Uhr
My second question is how are stock gains taxed? If my stock portfolio gained $50K in 2020, do I have to pay income tax on all 50K? Or I only pay tax on the part I sold?
Hello firenow,
you have to pay tax only on the part you sold. If you don't sell, you don't habe to pay any taxes.
In Germany you have to pay so called Abgeltungssteuer, which is about 25%. There are more details to know, so you should get familar with them.
This site gives a short overview (in German):
https://www.finanztip.de/abgeltungsteuer/
Zitat von firenow am 21. Oktober 2020, 18:47 Uhr
My second question is how are stock gains taxed? If my stock portfolio gained $50K in 2020, do I have to pay income tax on all 50K? Or I only pay tax on the part I sold?
Hello firenow,
you have to pay tax only on the part you sold. If you don't sell, you don't habe to pay any taxes.
In Germany you have to pay so called Abgeltungssteuer, which is about 25%. There are more details to know, so you should get familar with them.
This site gives a short overview (in German):
https://www.finanztip.de/abgeltungsteuer/
Zitat von firenow am 21. Oktober 2020, 19:14 UhrThank you for your reply @privatier
When financially independent people stop working in Germany and are self sustaining themselves (no social benefits), are they self employed in eyes of finanzamt? As per my understanding official retirement age in germany is 67 years?
Thank you for your reply @privatier
When financially independent people stop working in Germany and are self sustaining themselves (no social benefits), are they self employed in eyes of finanzamt? As per my understanding official retirement age in germany is 67 years?
Zitat von exitus2022 am 21. Oktober 2020, 19:25 UhrZitat von firenow am 21. Oktober 2020, 19:14 Uhr...
When financially independent people stop working in Germany and are self sustaining themselves (no social benefits), are they self employed in eyes of finanzamt?
...in eyes of Finanzamt, anyone is just a tax payer
and probably your wife (who has a job) is the main taxpayer 😉
one question:
do you have your stock funds at a German bank?
so they hand over "Abgeltungssteuer" to Finanzamt directly?or do you have your stocks/accounts abroad?
so you have to tell Finanzamt about your dividends?
(and when selling anything: the stock gains you have realizied)
Zitat von firenow am 21. Oktober 2020, 19:14 Uhr...
When financially independent people stop working in Germany and are self sustaining themselves (no social benefits), are they self employed in eyes of finanzamt?
...
in eyes of Finanzamt, anyone is just a tax payer
and probably your wife (who has a job) is the main taxpayer 😉
one question:
do you have your stock funds at a German bank?
so they hand over "Abgeltungssteuer" to Finanzamt directly?
or do you have your stocks/accounts abroad?
so you have to tell Finanzamt about your dividends?
(and when selling anything: the stock gains you have realizied)
Zitat von firenow am 21. Oktober 2020, 19:37 Uhrdo you have your stock funds at a German bank?
so they hand over "Abgeltungssteuer" to Finanzamt directly?or do you have your stocks/accounts abroad?
so you have to tell Finanzamt about your dividends?
(and when selling anything: the stock gains you have realizied)Hi @exit-tbd so If I understand you correctly, govt doesn't care as long as I'm not asking for social benefits since I'm not working? I thought it would be a big problem since theoretically I could be a burden on govt when I was 67 years old? My understanding of german social system is pretty bad so I guess I'm totally wrong here.
As for your other question, stock funds are held at Interactive Brokers which is a foreign broker. So I have to report it myself.
According to my understanding after 2018, Germany will tax all dividends even if they are being reinvested instead of being distributed. I thought I would have to pay for capital gains even if I didn't sell them yet.
Example: I invested 100K in a MSCI world index. At end of 2020, It becomes 120K. 10K of this is dividends (which is reinvested into fund) and 10K is increase in share price. I am not selling anything. So at end of year I get my broker report which shows 10K in dividends and that is taxable?
do you have your stock funds at a German bank?
so they hand over "Abgeltungssteuer" to Finanzamt directly?or do you have your stocks/accounts abroad?
so you have to tell Finanzamt about your dividends?
(and when selling anything: the stock gains you have realizied)
Hi @exit-tbd so If I understand you correctly, govt doesn't care as long as I'm not asking for social benefits since I'm not working? I thought it would be a big problem since theoretically I could be a burden on govt when I was 67 years old? My understanding of german social system is pretty bad so I guess I'm totally wrong here.
As for your other question, stock funds are held at Interactive Brokers which is a foreign broker. So I have to report it myself.
According to my understanding after 2018, Germany will tax all dividends even if they are being reinvested instead of being distributed. I thought I would have to pay for capital gains even if I didn't sell them yet.
Example: I invested 100K in a MSCI world index. At end of 2020, It becomes 120K. 10K of this is dividends (which is reinvested into fund) and 10K is increase in share price. I am not selling anything. So at end of year I get my broker report which shows 10K in dividends and that is taxable?
Zitat von TheWanderer am 22. Oktober 2020, 0:02 UhrZitat von firenow am 21. Oktober 2020, 19:37 UhrHi @exit-tbd so If I understand you correctly, govt doesn't care as long as I'm not asking for social benefits since I'm not working? I thought it would be a big problem since theoretically I could be a burden on govt when I was 67 years old? My understanding of german social system is pretty bad so I guess I'm totally wrong here.
Hi @firenow and gratulation to what you have already archieved! Guessing you are non-EU citizen, as you calculate with $$: Germany does not care about your retirement savings for now, as you are probably living here with some temporary residence permit (like EU blue card, family reunion etc...) that only require living expenses and health insurance for your limited length of stay. To retire in Germany you would have to acquire permanent residence permit as Niederlassungserlaubnis, Daueraufenthalt EU or naturalization at some point of time, and those permits require proof of suficient retirement savings. Would be interesting to know how they'd deal with fire guys. 🙂
Zitat von firenow am 21. Oktober 2020, 19:37 UhrHi @exit-tbd so If I understand you correctly, govt doesn't care as long as I'm not asking for social benefits since I'm not working? I thought it would be a big problem since theoretically I could be a burden on govt when I was 67 years old? My understanding of german social system is pretty bad so I guess I'm totally wrong here.
Hi @firenow and gratulation to what you have already archieved! Guessing you are non-EU citizen, as you calculate with $$: Germany does not care about your retirement savings for now, as you are probably living here with some temporary residence permit (like EU blue card, family reunion etc...) that only require living expenses and health insurance for your limited length of stay. To retire in Germany you would have to acquire permanent residence permit as Niederlassungserlaubnis, Daueraufenthalt EU or naturalization at some point of time, and those permits require proof of suficient retirement savings. Would be interesting to know how they'd deal with fire guys. 🙂
Zitat von Gelöschter Benutzer am 22. Oktober 2020, 0:13 UhrZitat von firenow am 21. Oktober 2020, 19:37 UhrHi @exit-tbd so If I understand you correctly, govt doesn't care as long as I'm not asking for social benefits since I'm not working? I thought it would be a big problem since theoretically I could be a burden on govt when I was 67 years old? My understanding of german social system is pretty bad so I guess I'm totally wrong here.
https://www.youtube.com/watch?v=R6AzD6F9oHY
Zitat von firenow am 21. Oktober 2020, 19:37 UhrHi @exit-tbd so If I understand you correctly, govt doesn't care as long as I'm not asking for social benefits since I'm not working? I thought it would be a big problem since theoretically I could be a burden on govt when I was 67 years old? My understanding of german social system is pretty bad so I guess I'm totally wrong here.
Zitat von firenow am 22. Oktober 2020, 1:20 Uhr@thewanderer
Yep you are right. I'm on family union visa but since my wife is a civil servant, I'm exempted from requirement of making contributions to pension. Also since I have considerable investment income, that should make them happy 🙂
I still don't know how do I get a tax ID. Since I don't work, self employed will be a false categorization no?
Yep you are right. I'm on family union visa but since my wife is a civil servant, I'm exempted from requirement of making contributions to pension. Also since I have considerable investment income, that should make them happy 🙂
I still don't know how do I get a tax ID. Since I don't work, self employed will be a false categorization no?
Zitat von Sparschwein am 22. Oktober 2020, 8:10 UhrZitat von firenow am 22. Oktober 2020, 1:20 Uhr@thewanderer
Yep you are right. I'm on family union visa but since my wife is a civil servant, I'm exempted from requirement of making contributions to pension. Also since I have considerable investment income, that should make them happy 🙂
I still don't know how do I get a tax ID. Since I don't work, self employed will be a false categorization no?
How about you just call your local Finanzamt and ask about those topics?
Generally speaking, the state employees in Germany are very friendly and always happy to help.
As fas as I know, you are the only one who migrated TO Germany in this forum, after firing elsewhere.Is you partner working for the German, or for the US in Germany?
Regards,
Sparschwein.
Zitat von firenow am 22. Oktober 2020, 1:20 UhrYep you are right. I'm on family union visa but since my wife is a civil servant, I'm exempted from requirement of making contributions to pension. Also since I have considerable investment income, that should make them happy 🙂
I still don't know how do I get a tax ID. Since I don't work, self employed will be a false categorization no?
How about you just call your local Finanzamt and ask about those topics?
Generally speaking, the state employees in Germany are very friendly and always happy to help.
As fas as I know, you are the only one who migrated TO Germany in this forum, after firing elsewhere.
Is you partner working for the German, or for the US in Germany?
Regards,
Sparschwein.
Zitat von TheWanderer am 22. Oktober 2020, 14:53 UhrZitat von firenow am 22. Oktober 2020, 1:20 UhrI still don't know how do I get a tax ID. Since I don't work, self employed will be a false categorization no?
A tax ID will automatically created and sent to you by post a few days after your Anmeldung (e.g. your first visit to Ausländerbehörder or Bürgeramt shortly after arrival). If you can't find it, you can recover it here: https://www.bzst.de/SiteGlobals/Kontaktformulare/DE/Steuerliche_IDNr/Mitteilung_IdNr/mitteilung_IdNr_node.html
As far as I know tax IDs are not categorized in any way. As @exit-tbd said, we are all just tax payers. 😉
Zitat von firenow am 22. Oktober 2020, 1:20 UhrI still don't know how do I get a tax ID. Since I don't work, self employed will be a false categorization no?
A tax ID will automatically created and sent to you by post a few days after your Anmeldung (e.g. your first visit to Ausländerbehörder or Bürgeramt shortly after arrival). If you can't find it, you can recover it here: https://www.bzst.de/SiteGlobals/Kontaktformulare/DE/Steuerliche_IDNr/Mitteilung_IdNr/mitteilung_IdNr_node.html
As far as I know tax IDs are not categorized in any way. As @exit-tbd said, we are all just tax payers. 😉
Zitat von exitus2022 am 22. Oktober 2020, 15:27 UhrZitat von firenow am 21. Oktober 2020, 19:37 Uhr
..., govt doesn't care as long as I'm not asking for social benefits since I'm not working? I thought it would be a big problem since theoretically I could be a burden on govt when I was 67 years old? ...
there is no difference if you are below or above 67:
you only get "Rente" if you have paid into "Rentenversicherung" for (the more the better) years!
so if you stay:
probably only your wife (who has a job) will get regular Rente - only in case she predeceases you, you might get "Witwerrente"
(Witwenrente beträgt 55 % der gezahlten ... Rente ... des verstorbenen Versicherten)PS:
if ONLY your wife is working, also be aware of Ehegattensplitting
due to "Abgeltungssteuer", your capital gains/dividens/... do not count in the progression - so your wife will safe some 1.000 EUR per year (compared with the taxes she had to pay having the same income as a single person)
Zitat von firenow am 21. Oktober 2020, 19:37 Uhr
..., govt doesn't care as long as I'm not asking for social benefits since I'm not working? I thought it would be a big problem since theoretically I could be a burden on govt when I was 67 years old? ...
there is no difference if you are below or above 67:
you only get "Rente" if you have paid into "Rentenversicherung" for (the more the better) years!
so if you stay:
probably only your wife (who has a job) will get regular Rente - only in case she predeceases you, you might get "Witwerrente"
(Witwenrente beträgt 55 % der gezahlten ... Rente ... des verstorbenen Versicherten)
PS:
if ONLY your wife is working, also be aware of Ehegattensplitting
due to "Abgeltungssteuer", your capital gains/dividens/... do not count in the progression - so your wife will safe some 1.000 EUR per year (compared with the taxes she had to pay having the same income as a single person)
Zitat von firenow am 22. Oktober 2020, 17:27 Uhr@sparschwein She works for the german govt.
@thewanderer makes sense. It's strange that my wife got it since she had signed the contract but I did not. I only received a city registration document.
@exit-tbd Thanks for this gold. Tax authorities will not increase the tax rate even if we file jointly? That would be perfect 🙂
Do you guys file your taxes yourself or have a tax advisor? I find german taxes quite complicated. Probably more so because the language is different.
@sparschwein She works for the german govt.
@thewanderer makes sense. It's strange that my wife got it since she had signed the contract but I did not. I only received a city registration document.
@exit-tbd Thanks for this gold. Tax authorities will not increase the tax rate even if we file jointly? That would be perfect 🙂
Do you guys file your taxes yourself or have a tax advisor? I find german taxes quite complicated. Probably more so because the language is different.
Zitat von firenow am 22. Oktober 2020, 17:42 UhrZitat von n am 22. Oktober 2020, 17:36 UhrJa, die gute Bürokratie hat Dich schon im Griff... herzlich willkommen!
Are you talking about bureaucrazy? 🙂 It is definitely bad in Germany even running a small business and registering for VAT. For someone who has outside perspective, it makes sense to me why Europe has issues with growth and why US is so far ahead.
Zitat von n am 22. Oktober 2020, 17:36 UhrJa, die gute Bürokratie hat Dich schon im Griff... herzlich willkommen!
Are you talking about bureaucrazy? 🙂 It is definitely bad in Germany even running a small business and registering for VAT. For someone who has outside perspective, it makes sense to me why Europe has issues with growth and why US is so far ahead.
Zitat von Safari am 22. Oktober 2020, 17:53 UhrHi firenow,
have you had a look at this website yet?
https://www.make-it-in-germany.com/en/jobs/social-security/german/
Hi firenow,
have you had a look at this website yet?
https://www.make-it-in-germany.com/en/jobs/social-security/german/
Zitat von TheWanderer am 22. Oktober 2020, 22:01 UhrZitat von firenow am 22. Oktober 2020, 17:42 UhrZitat von n am 22. Oktober 2020, 17:36 UhrJa, die gute Bürokratie hat Dich schon im Griff... herzlich willkommen!
Are you talking about bureaucrazy? 🙂 It is definitely bad in Germany even running a small business and registering for VAT. For someone who has outside perspective, it makes sense to me why Europe has issues with growth and why US is so far ahead.
Buereaucrazy can be terrible here, as in most countries. And US being ahead is a risky statement. 🙂
Zitat von firenow am 22. Oktober 2020, 17:42 UhrZitat von n am 22. Oktober 2020, 17:36 UhrJa, die gute Bürokratie hat Dich schon im Griff... herzlich willkommen!
Are you talking about bureaucrazy? 🙂 It is definitely bad in Germany even running a small business and registering for VAT. For someone who has outside perspective, it makes sense to me why Europe has issues with growth and why US is so far ahead.
Buereaucrazy can be terrible here, as in most countries. And US being ahead is a risky statement. 🙂
Zitat von firenow am 22. Oktober 2020, 22:03 Uhr@thewanderer Haha you are right. US is ahead in economy, not so much in personal happiness and social security 🙂 There is a reason I moved to Germany 🙂
@thewanderer Haha you are right. US is ahead in economy, not so much in personal happiness and social security 🙂 There is a reason I moved to Germany 🙂
Zitat von Sparschwein am 23. Oktober 2020, 15:32 UhrHow is social security for foreigners in Germany better than in the US for residents from your perspective?
How is social security for foreigners in Germany better than in the US for residents from your perspective?
Zitat von firenow am 23. Oktober 2020, 19:51 Uhr@sparschwein the health insurance alone is a huge benefit. And public health insurance can't charge you more just because you have some previous illness. That is a blessing which a lot of people in germany take for granted.
@sparschwein the health insurance alone is a huge benefit. And public health insurance can't charge you more just because you have some previous illness. That is a blessing which a lot of people in germany take for granted.
