‘Mini town’ planned for central Berlin

A millionaire has unveiled plans to build a “mini town” in an abandoned brewery in Berlin, complete with apartments, shops and a hotel.

'Mini town' planned for central Berlin
How the development in Prenzlauer Berg could look. Photo: Bötzow Berlin

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After three years of design work, entrepreneur Hans Georg Näder has unveiled the designs for the old Bötzow Brewery in the central eastern district of Prenzlauer Berg.

Näder, from the prosthetic company Ottobock, is investing €250 million to create what he has termed a "mini town" on Prenzlauer Allee.

Star British architect David Chipperfield has re-designed the 24,000m2 area, which is within walking distance of Alexanderplatz. It is set to be finished in 2019.

Chipperfield's plans will see the former brewery renovated into a boutique hotel, loft apartments, a “Future Lab” research centre for Ottobock as well as underground parking spaces for approximately 200 cars.

Three new buildings are also planned – a 50 metre swimming pool with a view over Alexanderplatz, an art gallery and a micro brewery with a beer garden.

Bötzow Brewery's original buildings, the majority of which were never rebuilt after they were destroyed during World War II, are to be carefully renovated, said Näder.

Around 6,000m2 of historic vaults, which form the foundations of the site, will in future be used by artisan food manufacturers to make their goods in.

Berlin's mayor Klaus Wowereit is enthusiastic about the project. “An entrepreneur is building his life's work”, he told the Bild newspaper.

The site of the former Bötzow Brewery will be open to the public this weekend, with activities for children such as a circus and music workshops.

SEE ALSO: Germany's tallest flats planned for Alexanderplatz

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Is it worthwhile for expats in Germany to have an offshore pension plan?

If you've ever wondered whether it's a wise or cost-saving idea to invest in an offshore pension plan, there's a good chance you aren't alone. A tax expert for internationals based in Germany has given The Local some insight on the topic.

Is it worthwhile for expats in Germany to have an offshore pension plan?
Photo: DPA

This article is available to Members of The Local. Read more Membership Exclusives here.

Whether or not you plan on retiring soon, like many others across Deutschland you may already be saving for your pension. 

Offshore pension plans differ from usual pension plans in that they specifically allow people who live abroad or frequently move from country to country for work to contribute to a retirement plan outside of their usual place of residence.

But how beneficial (if at all) are they particularly for foreigners in the Bundesrepublik?

The costs for maintaining an offshore pension plan for foreigners here can be quite high, both on the commissions side and administrative costs side, financial advisor Patrick Ott told The Local.

As such, Ott usually advises expat clients in Germany to set up a new pension plan or use one which they have already set up in their own country, such as the 401(k) plan in the US, which is a retirement savings plan sponsored by an employer. Yet there are a few exceptions, Ott added. 

“It makes more sense to just open an account with a German or international platform for investing into investment funds directly rather than using an overly expensive offshore pension plan,” he said.

“There are only very few that do not work based on commissions and therefore the vast majority come with very high closing and running costs,” Ott added. One key criticism of offshore pension plans is that they're an expensive way to invest in the world stock market.

German pension plans are moreover usually tax subsidized, which isn't the case for many offshore retirement plans, according to Ott. Some of the big names in Germany include RIESTER (a pension plan specifically designed for families), RÜRUP (a pension for the self-employed) and betriebliche Altersvorsorge, or a company pension scheme.

While even simple private retirement plans in Germany – if set up correctly with high enough coverage for biological risks like sudden death – can be used for tax deferral, the vast majority of offshore pension plans fail to comply with the relevant German tax rules, Ott said.

When an offshore plan makes sense (and when it doesn't)

Nevertheless, for globetrotters who know they’ll stay mobile in their work, such a plan could be wise. “An offshore pension plan would most likely be a huge advantage for someone who works globally and will move on to many countries for many years to come,” the tax expert said.

Ott recommends seeking out commission-free plans in which the advisor charges fees directly and only to the client. He finds them a “much more transparent and cost-reduced solution.” He also recommends passive investment funds, which are lower in costs than pension plans which are actively managed. 

But even if you decide to go with an offshore plan, Ott warns that “you won't have special tax advantages if you reside in Germany.” This is because German tax legislation – much like many other countries around the world – does not recognize offshore plans in their own tax legislation.

Photo: DPA

Starting this year, Germany has introduced a so-called ongoing taxation, meaning that a person “has to report profits even if they are only on paper every year.” This basically means that on your tax declaration, you would need to list the price of the fund at the beginning of the year and the price of the fund at the end of the year, with the difference being taxable profit in Germany.

In this regard, an offshore plan can have a slight advantage if it can work to defer those ongoing tax payments. But most of the offshore pension plans lack certain criteria under German law. Furthermore, since they undergo “transparent taxation” in Germany, their profits also need to be declared and taxed yearly.

Even if an offshore pension plan is not taxed at a high rate, the costs of setting one up can be prohibitively expensive, Ott emphasizes. Some plans could also cause serious problems among tax authorities, depending on the country of origin of the foreigner.

For example, there’s a German-US double tax recognition agreement, meaning that pension plans set up in Germany would not cause any issues for Americans, whereas an offshore plan could be problematic.

FOR MEMBERS: How to file taxes as an American in Germany

Looking at a foreigner's country of origin

If an expat snags a job in Germany, but is unsure whether they want to plant roots in Deutschland, they can simply continue to invest in their home country's plan, advises Ott. They wouldn’t have any tax advantages but wouldn’t have any disadvantages either, with the ability to pay into the already established plan of their native country.

Yet even some employees who aren't here for the long haul can take advantage of a German pension scheme, according to the advisor. For example, if someone moves to Germany as an employee with a very high income, “it would make sense to use tax-subsidized company pension schemes in order to minimize tax exposure for three or four years.”

It’s also possible to turn to a tax advisor to set up these often low cost, commission-free plans.

In general, if a person comes from America or elsewhere and does not know if they’re going to stay for longer, Ott recommends paying into the old pension plan if it’s legally possible. If not, a person is usually better off setting up an investment plan where they funnel savings directly into investment funds.

Once they choose the country they want to stay in for the long run, they can move that capital into either the pension plan in their home country or the one in Germany.

But for expats, the tax expert says he wouldn't recommend setting up a new pension plan “if you only have a short term perspective” with regards to your country of residence.

FOR MEMBERS: How to maximize your German pension – even if you plan to retire elsewhere