Moving abroad requires careful tax planning. Entrepreneurs, shareholders and high-net-worth individuals, in particular, should clarify before moving which tax obligations will cease, which will continue, and whether the move itself will trigger any tax liabilities.
The key factors are living arrangements, asset structure and the destination country.
Place of residence and centre of life when moving away
Anyone who gives up all their German residences and spends fewer than 183 days in Germany generally ceases to be subject to unlimited income tax liability. Germany will then no longer tax their total worldwide income. However, certain types of German income, such as income from letting property, may still be subject to tax.
Important: A flat that remains available and is intended for personal use may continue to constitute a German residence. Anyone who retains the flat but moves their centre of life abroad remains, in principle, subject to unlimited tax liability under German law on their worldwide income. However, a double taxation agreement may limit Germany’s right to tax.
Shareholdings and funds may trigger exit tax
One of the consequences of emigration that needs to be addressed at an early stage is what is known as exit taxation. This means that, for shares in a company, a sale is deemed to have taken place for tax purposes – capital gains are taxed even though no proceeds from the sale are received. This generally applies to individuals who, within the last five years, have held, either directly or indirectly, at least one per cent of a company’s shares and who have been subject to unlimited tax liability for a total of at least seven years within the last twelve years. Special rules apply, for example, to shares that have been gifted or inherited.
Funds and ETFs held as part of private assets may also be affected: in particular, where the acquisition cost is at least 500,000 euros per investment fund or where the holding has been at least one per cent over the last five years. Further conditions must also be met, including, as a general rule, at least seven years of unlimited tax liability within the last twelve years. The €500,000 threshold refers neither to the current value of the investment portfolio nor to the total value of various funds.
A change in tax residency under a treaty, whilst retaining a German residence, may also trigger exit tax if this restricts Germany’s right to tax. The valuation and liquidity requirements should therefore be clarified at an early stage.
Preparing your tax return, investment account and business properly
As a general rule, there is no separate ‘declaration of departure’ for private individuals. The departure must be declared in the income tax return for the relevant year. In the event of departure during the year, foreign income from the remainder of the calendar year is generally subject to the progression clause: it is not taxed in its own right, but affects the tax rate applicable to income taxable in Germany. Private investment income that would otherwise be subject to the separate flat-rate withholding tax is generally excluded from this. In the case of exit taxation, there are additional reporting obligations; German income may also require tax returns to be filed at a later date.
If the investment account remains with a German bank, you should notify them of the change in tax status and provide evidence of this, for example by means of a certificate of foreign residence. For income where you do not have limited tax liability in Germany, the withholding tax on capital gains will generally not apply. German dividends, on the other hand, are usually subject to this withholding tax; relief under the double taxation agreement must be assessed separately.
Sole shareholders and managing directors should also take their GmbH into account. If the company is actually managed from the new place of residence, the place of management may shift abroad. This may give rise to additional tax obligations there; German tax liability does not automatically cease simply because the company’s registered office remains in Germany. The corporate structure and tax implications must therefore be assessed together.
For German nationals with significant economic interests in Germany, extended limited tax liability may apply when they move to a low-tax jurisdiction, subject to certain further conditions. This may extend German tax jurisdiction for up to ten years after the end of the year in which they left the country and may trigger additional reporting and documentation requirements.
Start planning as soon as your destination country and timeframe have been finalised. In the case of shareholdings, it may be advisable to allow for several years’ lead time. Our international tax advisory team will help you coordinate your housing arrangements, assets and business management with the advice provided by the authorities in your new country of residence.
Moving abroad: Plan your tax arrangements well in advance
Moving abroad is a far-reaching personal or business decision. By having the tax implications assessed at an early stage, you can identify potential options for tax planning and better assess the financial risks.
You can also find out why tax planning shouldn’t be left until just before an important decision is made in our expert article ‘Tax planning 2026: Why many people miss opportunities’.
How can I prepare properly for moving abroad from a tax perspective?
Are you planning to move abroad and would like to know what the tax implications are for your assets, shareholdings or business?
I would be happy to help you identify tax risks at an early stage and explore potential options for tax planning.
Simply book an appointment using the booking options below.
Yours sincerely,
Dr Felix Siegel
Your ACCONSIS contact
Dr. Felix Siegel
Tax Consultant
Service phone
+49 89 547143
or via email
f.siegel@acconsis.de
FAQ – Frequently asked questions about moving abroad
1. Is deregistration in Germany sufficient?
No. The decisive factor is whether the person actually still has a German domicile or habitual residence. A flat available for personal use may be sufficient; staying for fewer than 183 days does not preclude a domicile.
2. Does an ETF portfolio worth 500,000 euros or more trigger exit tax?
Not automatically. The threshold relates to the acquisition cost of units in an individual fund, not the total value of the investment portfolio. Further personal and factual criteria must be met. Alternatively, a holding of at least one per cent in the fund may be relevant.
3. Is the tax return for the year of departure the last one?
Not necessarily. If you continue to receive income from Germany, further tax returns may be required. In the case of exit taxation, there are additional reporting obligations. The extended limited tax liability may also need to be considered.
4. Does a certificate of residence mean that no tax is deducted?
No. The bank requires reliable proof of the change in tax status. Capital gains tax may still be payable on German dividends.
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