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New German Capital Gains Tax (ABGELTUNGSSTEUER)

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New German Capital Gains Tax (ABGELTUNGSSTEUER) New German capital gains tax 25% tax on (ABGELTUNGSSTEUER) investment! - what you need to know and what you need to do about it! Overview of changes This free information is provided to you courtesy of Chambervelt, Rooselain & Cie. Ltd.—your truly independent financial advisor for Expats in Germany About the author: Starting Jan. 1st 2009, Germany introduces new capital gains tax With the start of the new year Even of the other 80% of Ger- tent and the details of the new 2009, Germany will see a major mans with some knowledge about capital gains tax. change as a number of invest- the new tax, only a minority so far Furthermore, you will find some ments—or rather the profits sees reason to change their cur- warnings about what to avoid— from these investments—will be rent investments or switch to since German banks and insur- taxed henceforth differently with other forms of saving and invest- ances have already introduced a flat rate of 25%. Many forms of ment plans (only 8.2% according numerous "Tax-saving" products, investment which in the past to the JP Morgan survey), while most of which will not be worth have been exempt from taxation nearly 33% of Germans have no your money and some of which will now suddenly be taxed se- intentions of changing anything at may even make things worse for verely—time to learn more all in their portfolios. Since Ger- you. And of course you will find about this new tax and to check, mans have on the one hand some general tips and ideas about The author, Patrick Oliver Ott is a what steps have to be under- among the highest savings rate per senior financial advisor at CR & Cie. what to do in order to optimize taken in order to optimize your capita within the OECD nations, Qualifications: While being a certified your current and future invest- banker (IHK) by profession, he also holds pension plans and investments, but on the other hand the poor- degrees in "International Taxation" from ments. Harvard Law School and a Master- both current and future ones. est average yield on those savings, Degree from Harvard John F. Kennedy your German friends and We hope you'll find the informa- School (MPA, Class of 2000). In a survey by JP Morgan Asset Experience: Before starting with CR & neighbors might not be the ideal tion provided here helpful and Cie. he used to work for Bayerische Management in September 2009, Vereinsbank, Bankhaus August Lenz and examples to follow or even to get appreciate any feedback and com- American Express International Banking. still close to 20% of the German For several years he has specialized in good, unbiased information from. ments from you to make it even advising English speaking Expats in population has no knowledge Germany in all financial areas, whether it Nor can you trust the average better in the future. be insurance, investment and pension about the up-coming ABGEL- planning or finding a good mortgage for German banker or insurance real estate investments. TUNGSSTEUER even though Cheerio Patrick Oliver Ott agent to give you unbiased and Dedication: At Toytown Germany he German banks and insurances are regularly gives free advice in the finance really helpful advice—they are For more information please call bombarding them with invitations chat under his a.k.a. "Starshollow". usually selling to you, rather than us at 0700-226525688 or send an to receive their advice or simply Personal facts: He is 41 years old, ad-vising you. With this little email to [email protected] married, father of a daughter (3 months) buy their products in order to and lives near Munich, enjoys reading, brochure we are trying to provide teaching at a number of colleges and avoid this tax as much as possi- universities (Strategic Negotiation and the Expat community with de- Decision Making) and the odd golf game if ble. he finds the time. tailed information about the ex- For direct contact: [email protected] Talk to your financial advisor AND your tax advisor about it now! Read in this edition: According to German law, indivi- process of financial advice. Since it Zitzelsberger from Expattax.de, How the new tax works 2 dual tax advice is limited to reg- may be time not only to check with whom we are happy to co- Do's and don'ts 2 isterd and licensed tax advisors. out your current pension , savings operate whenever our clients Therefore we at Chambervelt, and investment plans but also need more tax advice than we are Tax overview/table 3 Rooselain & Cie. are only al- your overall tax situation in gene- able or allowed to give. Therefore, Tips & tricks for Expats 4 lowed to give you general infor- ral with regards to the new tax, if you don't know whom to turn mation about tax effects and please do contact your tax advi- to, contact Thomas Zitzelsberger Contact us 4 results with regards to invest- sor. A large number of our clients directly at [email protected] or call ments or insurances within our are already working with Thomas him on 089/78018197 This free information is provided to you courtesy of Chambervelt, Rooselain New German capital gains tax & Cie. Ltd.—your truly independent Page2 How the new flat tax works and what becomes different in 2009 Until the end of this year, many from investments. This also ships or real estate or private forms of investment—for in- means: any investment you make equity to name just a few. But stance in stocks or funds—are before the end of the year will be even among those exemptions exempt from tax on their profits taxed according to the old rules the tax results vary a lot and it is if one has kept those investments (or be exempt from taxation) well worth your time to check for longer than one year. For even if it matures or you sell in out the table on the right hand other forms of profits, such as 10 years from now or beyond. side to see how your own invest- dividends, the so-called Therefore it is time to check ment portfolio will be touched by "Halbeinkünfte-Verfahren" was your assets and act now. the new capital gains tax. Since applied by taxing only half of the Germany taxes you on your There will still be a few remaining profits with one‘s normal income worldwide income/assets, as an exemptions as you can see in our tax rate instead.. Expat who may have assets table on the next page, mostly © Chambervelt,Rooselain & Cie. Ltddo not form reproduce specific - withoutin any permission abroad please consider the ef- All these special rules are going for real estate investment (direct fects from the new tax on your to end come January 1st 2009 or through a fund), certain forms investment funds, offshore pen- An investment and they will be replaced by a flat of pension plans and combined sion plans or real estate tax of 25% (plus SOLI and church life-insurance/savings products as abroad—especially if you plan to made before the tax, where applicable), resulting well as for so-called "Geschlossene sell and re-invest any of your in a max. tax burden of actually Fonds" where you usually become end of the year assets abroad while still being a more like 28% for future profits shareholder of a corporation/ tax resident in Germany. will be taxed blind-pool to invest in either Things to do and things to avoid now……………. according to the On the next page you'll find a and get your investment‘s profits in any way of how they are going "old" rules even if table with a large selection of tax free to perform in the future–while investment forms and how their on the other hand a multitude of 3. Check if your current pension it matures or will taxation will be changed through such funds with solid track re- plans /saving plans are worth the new capital gains tax. If you cords are available already. You be sold 10, 20 or continuing and if it does not have more questions with re- can’t even know if these new make sense to switch to, for gards to a particular investment, funds are sustainable at all. New 50 years hence! instance, a RIESTER plan—find please do not hesitate to contact funds are sometimes forced to more about this on page 4 This is why it is us for advice. In general, here is close soon after their introduc- what you should do now in 4. Talk to your tax advisor if by tion for cost reasons, which important to act order to prepare yourself for the selling some assets now with a would then create exactly the tax upcoming new capital gains tax: loss you can carry over losses to problems you tried to avoid in now! write off against future profits the first place. Read more about 1. Separate "old" investments this on page 4. from future investments in your And here are things to accounts! In order to avoid avoid: Banks and insurances are II) FONDSPOLICEN: insurance problems with the tax authorities currently trying to sell special companies are offering savings if an investment you sell in the newly developed products. Be plans combining fund-investment future falls under the old or new very cautious about those solu- with a life-insurance. These insur- taxation rules, put all new invest- tions to "avoid" the new tax: ance products are usually too ments after 2008 in a separate 1) DACHFONDS: banks have cre- expensive to have a positive ef- account, in Germany as well as ated a large number of special fect, and many of them are not abroad umbrella funds (fund in funds) as even certain to be accepted by the tax authorities regarding the 2.
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