Here’s the problem....having lived in Germany for twenty-odd years, I’ve come to view both sides of the mess.
Both the US and the Germans want to tax the US guy sitting in Germany. The Germans want the income earned in Germany, along with stock sales in the US, and all the various little items of US residency. The US wants all the German income, the sale of German property, etc, etc.
You end up with some high-priced US accountant and a high-priced German accountant, and nothing ever comes to a clean or happy ending. You feel ripped off by the American government for grabbing money that was entirely earned beyond their borders.
If you ran a successful bar in Frankfurt.....IRS wants part of that income. If you had part-ownership in some Heidelberg hotel....same deal.
The regulations? They get deeper each single year. Both the German and American tax guys are idiots at this whole thing...never grasping the pains involved or just how much paperwork is generated.
In the end, an American will evaluate the mess, and just admit he can’t do it anymore. He’s a success because his American background, ideas, and tendency to be aggressive. Sadly, the US government thinks they’ve got a line on all that success, and the German IRS thinks the same thing.
I’ll predict in ten years....that half the Americans living in Germany and running businesses....will give up. It’s a sad part about the mess....being successful....gets you no real leverage.
My son has lived in London for well over twenty years and he pays British income tax and United States income tax. He has an accountant to figure it out every year.
I’ve been on the foreign side as well. When “over there” I earned income that was taxed at a reduced rate so I have money to invest in foreign accounts. Uncle Sam wants full income taxes on any earned income and any income not previously reported. The IRS has browbeat most foreign nations and banks into providing reports on American income and holdings. However, not all foreign banks or governments participate. I know many people in my situation where bringing any money into the US system in any way results in heavy taxes so we leave the money overseas. I won’t bring it here even if I can escape taxes as any investing is then taxed heavily. Foreign governments appreciate our money and my taxes on anything taken out over there is about 5%. Anything taken out and brought over here is taxed and has additional transfer fees applied. My last transfer about 20 years ago was taxed at about 65% after all was said and done. Screw that. My money stays over there until I need to cash out.
About an hour ago a friend of mine from Germany told me he’s going back to Germany before the end of the month to get away from US tax complications. Your observations here are very similar to his...and he’s from Mannheim which is right near Heidelberg!
Give up in the sense of renouncing US citizenship, or stop running businesses?