Escaping the system – My pathway to freedom of tax and bureaucracy
Many people are curious to know how I accomplished having a nomad life. Here is my tutorial for you to imitate:
First, two points: On the one hand, I invoke any person to obey applicable law. On the other hand, I invoke any person to take over responsibility for his life. Yes, you must and should pay taxes, but you don’t have to resign on having 70% tax load. Yes, you must and should conform to applicable law, but you are free to leave an obstructive and immoral system. Of course, the world will never be perfect. So, I also still pay much more tax because of all the hidden and indirect duties. And even if I would find paradise on earth it wouldn’t be paradise anymore as early as I enter it. I am not a dreamer, but I hope to be as realistic as possible. But exactly because of that I have taken the chance which I have discovered. The world is nowhere perfect, but one can surely escape the German “system” and everyday rat race. The German state makes your life very hard. Especially for entrepreneurial people the German apparatus of state is rather obstructive. Therefore, my first entrepreneurial and self-responsible step was to free myself from the clutches of the German socialism and bureaucracy.
Basics about the German tax law
Everybody who has an official residency in Germany is unlimitedly taxable (§1 EStG). Because I have ended my residency in Germany already in the last legal year this doesn’t apply for me since beginning of 2017. Whoever has no residency in Germany but still earns domestic income for example through real estate, a company or a job in Germany can become limitedly taxable (§49 EStG). Products which are exported to Germany are only taxable regarding the sales tax/VAT and possible customs. Extendedly limitedly taxable can be all persons who live in a low tax country but are still economically involved in Germany (§2 AStG). Here I suggest you as a German to found a company somewhere in the world and only do business in Germany through this company. Because of the arbitrariness in the German legal system and because you want to provide appropriate invoices for your German customers it is easier to act as a company than as a private person in Germany. This is the reason why I will soon finally found my own company for my future online business. Generally following standard applies for me as a private person since January 2017 regarding the German tax law:
Persons shall have their habitual abode at the place at which they are present under circumstances indicating that their stay at that place or in that area is not merely temporary. An unbroken stay of not less than six months’ duration shall be invariably and from the beginning of such stay regarded as an habitual abode in the territory of application of this Code; brief interruptions shall be excepted. The second sentence shall not apply where the stay is undertaken exclusively for visiting, recuperation, curative or similar private purposes and does not last more than one year.
~ §9 AO
My safety measures
To escape completely from the clutches of the system one has to at least give up his residency in Germany. With this the duty to pay tax and social tributes will end. But since the German judiciary – especially if the can get something like in tax law – is often very arbitrary and punishments are often very extreme (some murderers have it better than tax defrauders) you have to be very cautious as perpetual traveler. Because there are some things left you have to notice. I am very fastidious when it comes to this topic. I am very careful that I stay in the borders of the law. In the case of doubt, I might be responsible to prove that I have no habitual abode in Germany anymore. So, I keep for example all my passport stamps, hotel and flight bookings as well as other invoices from foreign countries to be able to always demonstrate that I in fact don’t live in Germany anymore. I absolutely avoid it to say 183 days per year in Germany. Even if it is allowed according to the law to stay longer and still remain non-taxable for reasons of health care and visitations most judges would probably only accept family celebrations. Because the general rule is to not have the center of your life in Germany. Even an accessible apartment (an apartment you possess the keys) is a grey area. Surely, you are not allowed to still have your own apartment in Germany but on the other hand you always get a key for your room in any hotel. And the famous German tennis player Boris Becker got busted because of a tooth brush at his mom’s house. This moves me to interpret the laws even more pessimistically.
Of course, I have cancelled contracts and memberships before I left Germany: Health insurance, vehicle registration and so on should be cancelled. Banks and correspondence addresses (like Privatebox) are still okay. Also, you can still store remaining things in Germany as long as you don’t keep your fully equipped child’s room at your parents’ house. Generally, because of the law quoted above and other laws I am very careful that I don’t stay longer than 3 months in a row in Germany. For not having a possible so-called center of life in Germany I am at least several weeks somewhere else bevor I visit Germany again. I also try to not always go to Germany at the same time of the year even though I surely prefer the summer. I also always communicate it clearly that I have nothing to do with Germany any longer. I have for example had a farewell party in Germany and all my friends and peers know that I have expatriated. I live my life mainly outside of Germany. Even a part of my family doesn’t live in Germany anymore. Of course, I still have friends left in Germany, but my social life is international. Maybe I will soon even start a home base in a country which has not so much bureaucracy and taxes.
My first steps towards freedom
In order that you might also have an easy take-off I have created my extended check list with all important points for the exit. Many of these steps I have made myself. I had the advantage that I have already started living very minimalistic before I left Germany. But except tidying out your apartment and possible cancelation periods for your apartment and job the process shouldn’t take you longer than a month:
- Cancelling job (mind the cancelation period)
- Cancelling apartment (mind a possible period as well)
- Start early with tidying out and living minimalistic (this I recommend even for people which want to stay in their country). Besides eBay I highly recommend the selling groups in Facebook that exist for nearly every town. There I got rid of my stuff very conveniently.
- Make an appointment to deregister the residency in Germany before the end of the year (notice that you will be taxable for one more year when the new legal year starts)
- Unfortunately, you cannot make this appointment early according to the law or you might get a fine. In my hometown, I could deregister only as early as 7 days before my departure.
- If you have a company, then deregister it as well (Caution: you might become applicable for exit taxation). Inform all possible unions and so on.
- Medical check-ups and maybe vaccinations (but be careful: private international health insurances might not like so many previous visits at your doctor and it could become more expensive for you; best you do only the necessary thing and the rest once you have left)
- Search for your international health insurance and start the application process. This was the most stressful part of all. Because the new insurance company required a record of my medical history of the last 3-5 years. Here it was a huge convenience that I was still customer of my German health insurance company. They were very complying to that effect and sent me all relevant protocols. Also, all necessary visits of local medical offices were, of course, accomplished quickly. So, I could relatively quickly and honestly inform my preferred insurer in a detailed manner. I highly recommend you to start the insurance search very early – especially if you don’t want to start your journey without health protection.
- Maybe renew passports (many countries require a passport that is at least 6 more months valid)
- Find international insurances (liability insurance, health and maybe legal protection)
- Deregister your vehicle and sell it (or register it through a friend)
- Get an international driver license
- Cancel your insurances
- Cancel contracts and subscriptions (maybe you can get rid of some only after you gave up your residency)
- Don’t forget telecommunication and other providers!
- Maybe get a worldwide SIM card provider.
- Get your Privatebox correspondence address (maybe redirect your mails)
- Get emergency credit cards for abroad and maybe a second bank account
- If not done yet: Create your own crypto currency wallet and order a Bitcoin debit card
- Charge your Skype or other VoIP provider to have a phone number for emergencies
- Get rid of unnecessary papers and scan important ones
- Create you IT infrastructure: Online backups, Calendar, Address books and so on
- Organize a farewell party: This brings some benefits for you: On the one hand, you can say to all your friends “Goodbye” and you inwardly and outwardly commit yourself to really do that thing now. On the other hand, you make your farewell official and known what might be useful later if the factuality and sincerity of your emigration gets questioned by anyone.
- Communicate your new or not anymore existing address to everyone:
- Website and social media accounts: e.g. Facebook, Couchsurfing, AirBnB and so on
- Server- and domain provider
- Phone provider
- Organizations and clubs
- Television and radio license fee agency
- Peers, friends and family (maybe you can even start a travel blog or newsletter)
- Cancel your automatic bill payments for your rent and so on
I hope that I could help you with this article. If you still have questions or other points that I forgot, then please write a comment below! You might also share your concerns. Maybe I can assist you with your individual problems.