The "Reducing exit tax via a cooperative" model is offered by a few people on the internet. I have researched the model extensively and have summarized my findings here. The short summary is that I am quite skeptical about whether it works. I personally probably wouldn't do it.

In principle, the cooperative model for the exit tax sounds similar to the "Foundation in Liechtenstein" model which I wrote about here: You set up a "structure," here a foundation or cooperative, put your company shares in it, and then move away from Germany. Since you no longer own the company shares yourself at that moment, but the foundation / cooperative does, no exit tax applies.

So far, so "good." However, the problems here lie in the details, and I found no real solutions to these problems in my research. Furthermore, the providers offering this cooperative "solution" unfortunately did not make a particularly serious impression. Then again, this whole industry of exit tax consultants isn't exactly known for its professionalism, haha..

Before I describe the problems I found, here are the advantages of the cooperative model briefly:

Those were the advantages. Now to the disadvantages, which I will write about in a bit more detail.

So here are the disadvantages!

Disadvantage #1: No real company shares, you need two other founders

The first disadvantage is that a cooperative must be founded by at least three people. So you need two friends or family members to found the cooperative with you. That sounds feasible at first, but then again, you must know that a cooperative does not have normal "company shares" like a GmbH—each of the three people participates in the cooperative in equal parts and everyone has a voting right.

Highly simplified as always, but you can imagine it a bit like founding a Holding-GmbH with three people, which belongs to everyone at 33.33% and everyone has a voting right. And now you put your company shares in there. I find that pretty intense, because ultimately you are giving up control of your company and virtually "gifting" the others large parts of your company, since now everyone indirectly "owns" 33.33% of your company via the cooperative.

(I am sure the terms above are all wrong, but I hope it helps for understanding)

Now, the relevant consultants in this industry offer all sorts of "workaround structures" for this. The usual one I heard here was that you, for example, design the cooperative so that different people have different voting rights. So it looks like the two other people in your cooperative e.g. only have 1% of the voting rights each and you have the remaining 98%. Thereby you control the cooperative in the end.

But ultimately, that is a stark contrast to the general model of a cooperative, in which (more or less) every member should be equal. No idea if that passes in the long run—especially since your cooperative must be regularly audited by a cooperative auditing association, and even there it is not clear to me if such an obvious "structure optimized for exit tax" will be accepted.

Additionally, some consultants recommend holding less than 1% of the shares in the cooperative—see next point.

Disadvantage #2: Exotic structure, everyone (incl. the tax offices) interprets it differently

An interesting disadvantage I heard was that tax offices partly do not understand cooperatives. Specifically, it seems it happened that someone founded a cooperative with two other people and contributed his company shares there. But since everyone "owned" 33.33% of the cooperative, the tax office essentially said that this was now the same as a corporation and that exit tax would still apply to these 33.33% "shares" in the cooperative.

In the end, this probably wouldn't hold up in court proceedings, since a cooperative is not a corporation. Nevertheless, the question arises whether one has much desire to struggle for years with random court proceedings regarding one's exit tax (for me the answer would be "no").

The "solution" for this, which a consultant suggested to me, was that one reduces one's shares in the cooperative to less than 1% at the time of moving (and logically increases those of the other two persons to more than 99% combined). Thereby one would have double certainty not to fall under the exit tax, since on one hand one owns no corporation shares (but shares in a cooperative) and, even if the tax office doesn't understand that, one would be under the threshold of 1%, above which exit tax would apply.

But all in all, the structure is slowly becoming very complex—you need the two people for founding the cooperative, then reduce your own shares in it considerably, but still reserve considerable voting rights for yourself (??). I have great doubts whether all of this works out like that. Maybe it does, but if it is ever audited.. no idea.

Disadvantage #3: Unclear how to contribute company shares tax-neutrally

The third and biggest disadvantage for me is that it is unclear how to bring your company shares into the cooperative. Various consultants have (as always) various solutions here, but I doubt that these solutions really work.

The first and obvious solution would be to sell your company to the cooperative. But now the cooperative usually has no money, so you give the cooperative a loan, which it can pay back over the next few years. But in this process, the tax on the proceeds would then still apply, which you would have to pay personally—after all, you have sold your company at a (usually) profitable price. Since the tax rate is the same as with the exit tax (barely 30% partial income method etc.), you ultimately pay virtually the same tax at this moment that you would have to pay upon moving away. So I see no advantage here.

The second and less obvious solution allegedly consists of a qualified share exchange: This is actually a procedure with which you can bring a corporation, in which you hold >50%, into another corporation. This is usually used to bring an operating GmbH, in which you (let's say) hold 100%, into a Holding-GmbH, in which you also hold 100%—so setting up the normal "Holding model" for yourself in retrospect (independent of the exit tax).

Now it is the case that the consultants say that this qualified share exchange would in principle also work for contributing your company into a cooperative—so you would bring in your company and receive further cooperative shares in "exchange" (which you then, as described further above, again extremely awkwardly transfer to the other members, because you want to have less than 1%).

I could not find good information on whether such a qualified share exchange really applies to cooperatives. My gut feeling is "no," since further cooperative shares are not particularly valuable for you. At the end of the day, however, I am not a tax advisor and do not know.

Maybe nobody knows. One of the consultants also mentioned that many notaries do not understand this and that one should go to a specific notary. That would be at least one data point suggesting that nobody understands the structure (or also that it factually does not work).

At first glance, the cooperative model sounds like a cheaper variant of the Liechtenstein Foundation: You establish a structure, transfer your shares, which you then no longer own, and thereby no exit tax applies.

However, it remains unclear to me conclusively whether all the details really work. I tend towards "no," as I see the same problem as with the Liechtenstein Foundation, namely that it is not trivially possible to put one's company shares into the foundation.

And even if one were to manage that, the question is whether one generally wants to expose oneself to the risks of the cooperative structure: You no longer own your shares and now "share" them with two other people; and then you first have to find these two other people. And then you have to convey to them that you want to set up an exotic structure for exit tax here and are basically dragging them into it!

I don't know. I personally wouldn't do it. But maybe I have also overlooked something..