Tim David Brachwitz | 🇪🇺 eu/acc

building stuff from 🇩🇪 and 🇨🇳

[Tim David Brachwitz | 🇪🇺 eu/acc @luxdav]

If you are into

- web development, bootstrapping businesses
- AI / ML, statistics, math or probability

Feel free leave a follow, I regularly tweet about those topics!

[Tim David Brachwitz | 🇪🇺 eu/acc @luxdav]

@noahduck283
我就是德国人！其实我们刷手机也很猛，之所以你刷不到，主要有几个原因：

全员隐形： 德国年轻人基本上都直接混“国际英语圈”。哪怕在全都是德国人的线上社区里，大部分也习惯用英语交流，所以你根本看不出谁是德国人。这点和瑞典、芬兰等北欧国家很像。

习惯看英文内容： 比如我个人消费的大部分网络内容（视频、帖子等）也全都是英文的。

虽然网上也有德语内容，但大部分德国人都直接“融进”英语社群里了，所以表面上看起来像是“失踪”了一样。

[Tim David Brachwitz | 🇪🇺 eu/acc @luxdav]

Thank you for writing this out. It's not as easy as it seems.

[moneyfetishist @moneyfetishist]

If you fall for this "Germany wanted 55 percent so I moved to Paraguay and now I pay zero" shit you deserve the Betriebsprüfung that is coming for you

No one who has actually structured real wealth talks about it this way

No one running a real Familienstiftung is posting about it

No one with a serious Steuerberater is announcing the structure on Twitter

The entire post is slop

I am not a tax advisor (so take my words with cautions and maybe @bowtiedbrazil can call out when I say something wrong)

I have one and I pay him well

What I am is someone who has actually insights of real German structures and hear a lot stuff of people get destroyed for exactly the kind of advice this post is selling

So let me walk through why everything in it is wrong
Start with the math

1.2 million euro revenue is not 1.2 million euro of personal tax exposure

The founder pays Körperschaftsteuer plus Gewerbesteuer plus Solidaritätszuschlag at the company level which lands around 30 percent on profit not revenue

He then pays personal income tax only on what he actually distributes to himself

If he was paying 660 thousand euro of personal tax on this business he was either drawing the entire revenue as salary which no German founder does because the structure is moronic, or you do not understand the difference between revenue and taxable income

Either way the 55 percent number is the kind of figure that sounds correct to people who have never seen a German tax return

Anyone who has actually run a GmbH knows the effective combined rate on retained earnings is closer to 30 percent and on distributed dividends is closer to 47 percent after Teileinkünfteverfahren

The 55 percent on 1.2 million headline is the first tell that the author is selling a fantasy to people who do not know the numbers

Now to the structure

US LLC for operations

The German Finanzamt does not care that the LLC is in Delaware

If the founder is tax resident in Germany the LLC profits are attributed back to him under the Außensteuergesetz Hinzurechnungsbesteuerung if the LLC is passive

If the LLC is active and he is managing it from Germany he has just created a German tax-resident permanent establishment for the LLC because management substance follows the founder

He has not avoided German tax

He has created an additional German tax filing obligation in a foreign legal wrapper

Panama company for IP holding

Panama is on every relevant grey list and several black lists depending on the year

Royalty payments from a German operating entity to a Panamanian IP holding company trigger automatic disallowance of the deduction under the Lizenzschranke since 2018

The German tax code specifically targets exactly this structure

The author either does not know the Lizenzschranke exists or is hoping the reader does not

Panama foundation for asset protection

Panamanian foundations are reportable under CRS

Germany has full information exchange with Panama since 2018

The Finanzamt sees the foundation the same year it is created

Asset protection through a Panamanian foundation while remaining tax resident in Germany is reportable as a controlled foreign structure under paragraph 138 AO

Failure to report is a separate criminal offense beyond the underlying tax fraud

Paraguay tax residency

This is where the fantasy completely falls apart

You do not become a non-resident of Germany by filing paperwork in Paraguay

You become a non-resident of Germany by physically leaving Germany and severing your center of life

That means giving up your German apartment, deregistering at the Einwohnermeldeamt, moving your family if you have one, moving your bank accounts, moving your phone number, moving the operational substance of the business, and spending fewer than 183 days per year in Germany

A founder running a 1.2 million euro German ecommerce business is generating revenue from German customers, fulfilling from German warehouses or German fulfillment partners, advertising on German platforms, and dealing with German suppliers

His center of life and the business's center of management are both in Germany regardless of what stamp Paraguay put in his passport

The German Finanzamt does not recognize a paper residency in Paraguay when the actual life and business operations remain in Germany

This is called Scheinwohnsitz and it is the most common attack vector the Finanzamt uses on people who try exactly this structure

The penalty is back taxes plus interest plus a fine plus potential criminal liability under paragraph 370 AO for Steuerhinterziehung

The author claims the tax bill went from 660 thousand to zero

What actually happens when this structure gets reviewed and it will get reviewed because the German Finanzamt has been specifically targeting this exact pattern for the last six years

The founder gets a Betriebsprüfung

The Betriebsprüfung discovers that the German operating substance never left Germany

The Finanzamt reassesses six years of back taxes at full German rates

They add Hinterziehungszinsen at 6 percent per year on the unpaid amount

They add a fine that scales with the severity of the evasion

They refer the case to the Staatsanwaltschaft for criminal proceedings

The founder is now paying 660 thousand euro of original tax plus six years of interest plus penalties plus criminal defense costs and potentially serving a sentence

The accountant the author claims called him to ask how the structure works did not call him

The accountant in the story is a fictional device

Real German Steuerberater do not call random Twitter accounts to ask how someone evaded 660 thousand euro of tax

Real German Steuerberater would refuse to sign the books for a structure like this because they would lose their license under paragraph 70 StBerG for participating in obvious tax evasion

The author then claims he sent the accountant an invoice

This is the giveaway

The entire post is a lead gen funnel for the author's own services

He is selling the dream of zero tax to founders who do not know enough to recognize that the structure he is describing is textbook Steuerhinterziehung wrapped in legitimate sounding entity names

The people who buy his service get the structure

The structure gets discovered within 3-5 years through CRS reporting or a Betriebsprüfung

The customer becomes the defendant

The author moves to the next country and posts the same thread with different entity names

This is the exact pattern that played out with hundreds of German YouTubers and dropshippers who set up Dubai entities in 2019-2021 and are now in active proceedings with the Finanzamt for back taxes plus criminal charges

The Cum Ex prosecutions taught the Finanzamt that aggressive structures can yield criminal convictions

They are no longer settling these cases quietly

They are prosecuting them as Steuerhinterziehung in besonders schwerem Fall which carries up to 10 years imprisonment

The author of this post is offering a fast track to that prosecution and charging the founder for the privilege

You can only legally pay less tax than your peers if you understand the German tax code at a depth most accountants do not reach

A real understanding of Außensteuergesetz, Lizenzschranke, paragraph 138 AO disclosure requirements, the Erbersatzsteuer cycle on Familienstiftungen, the 95 percent exemption inside a Holding GmbH

That is the definition of structural intelligence in this domain

Achieved only by going deep on the actual legal code and grasping it from first principles so you can build structures that survive a 6 year Betriebsprüfung and three generations of family succession

There is nothing admirable about a guy claiming he reduced 660 thousand euro of tax to zero by stamping his passport in Paraguay

People posting this nonsense are either dishonest and making the structure sound effortless so you will like them and buy whatever consultation package they are selling because the product cannot move without manipulating your perception of them

Or they are genuinely operating this structure and will be in active proceedings with the Finanzamt within five years which means they have not actually achieved anything that should warrant your attention

Either way you lose if you take the bait

[Tim David Brachwitz | 🇪🇺 eu/acc @luxdav]

@PierreDeWulf Wow! Congrats! Excited to see what’s next!

[Tim David Brachwitz | 🇪🇺 eu/acc @luxdav]

@DinBisevac Cheering from the sidelines!

[Tim David Brachwitz | 🇪🇺 eu/acc @luxdav]

@TweetsOfSumit @TweetsOfSumit Ich vorratsdatenspeichere seit 2021 im 5min Takt leider nur alle Baustellen-Infos aller Autobahnen... Hab aber noch keine Webseite draus gemacht.

[Tim David Brachwitz | 🇪🇺 eu/acc @luxdav]

Die digitale Konsolidierung ist meiner Meinung nach super wichtig. Ich bin aktuell in China, natürlich gibt es hier auch viel Föderalismus aber die wichtigsten Systeme, die jeden Bürger betreffen sind nationalweit. Wo mir das als erstes aufgefallen ist, ist der ÖPNV. In Deutschland hat jede Stadt eigene Designs von Zügen, Bussen, Trams. Jeder Verbund hat sein eigenes Social-Media-Team, Ticketing-App, andere Preistarife, ... Ich glaub wir haben über 60 Verkehrsverbünde... Wäre sogar Fan einer EU-weiten Lösung.

[Tim David Brachwitz | 🇪🇺 eu/acc @luxdav]

@laozhang2579 我是唯一一个没怎么感觉到有问题的人吗？我的 VPN 一直挺好用的 过去两周我去了上海青岛和成都

[Tim David Brachwitz | 🇪🇺 eu/acc @luxdav]

Was ist das?

[Andreas K. Maier @maier_ak]

Open Source Bavarian AI Foundation Model is coming soon!

[Tim David Brachwitz | 🇪🇺 eu/acc @luxdav]

@zwiebelhelm Sounds awesome! Let’s friggin go!

[Tim David Brachwitz | 🇪🇺 eu/acc @luxdav]

Imagine building your 100th startup after failing 99 times knowing this one will 100% succeed. 😝

[Leila Hormozi @LeilaHormozi]

Becoming successful is not luck. It’s math.
If your probability of success is 1/100 and you try 100 times, you have a 100% chance of success.

[Tim David Brachwitz | 🇪🇺 eu/acc @luxdav]

valid crashout

[colinhacks @colinhacks]

woke up happy, crashed out immediately because I remembered there's still no database that supports discriminated unions

[Tim David Brachwitz | 🇪🇺 eu/acc @luxdav]

@GuanniQu OMG thank you! I’m using ClashX in China and I was already trying to fix that somehow, even looking in some methods to tunnel all traffic of an app via some 3rd party. Terminals usually do that as well btw. I thought it’s just signal being lazy not adding this setting…

[Tim David Brachwitz | 🇪🇺 eu/acc @luxdav]

Bro stole my vibe coding spot 😝

[Dan Kulkov @DanKulkov]

i forgot how to vibe-code

[Tim David Brachwitz | 🇪🇺 eu/acc @luxdav]

So chill to go watch an English movie in a suburb of a tier 2 city in china, literally only 10 people in the cinema, about 5€

[ada @leadaal]

the chinese translation for Project Hail Mary seems to have gotten some attention, there're actually 3 different names and they all have different meanings

🇭🇰 Hong Kong - 末日聖母號 (Doomsday Holy Mother Ship)
🇹🇼 Taiwan - 極限返航 (Extreme Return Voyage)
🇨🇳 China - 挽救計劃 (Rescue Plan)

[Tim David Brachwitz | 🇪🇺 eu/acc @luxdav]

@TGTM_Official My somewhat usually stable provider had a downtime last Friday, other than that all good so far

[Tim David Brachwitz | 🇪🇺 eu/acc @luxdav]

@FlorinPop17 🇨🇳

[Malte Ubl @cramforce]

To quote from my keynote at Vercel's internal offsite:

Software is free as in puppies. It will pee in your bedroom and eat your furniture.

The weight of every line of code is real. We will need to maintain it. We will need to port it. It goes into the context window. And somebody in this room will get paged at 2am because it did something unexpected

[Tim David Brachwitz | 🇪🇺 eu/acc @luxdav]

@petergyang @qiangthesuper @petergyang Check DMs, I can send you a QR code you can just scan with shadowrocket and ur done.

[Tim David Brachwitz | 🇪🇺 eu/acc @luxdav]

I don’t want to be a conspiracy theorist but if you don’t know why all this stuff is happening in the world, I recommend you to watch the movie „Wag the Dog“ (1997)