For Germans

How tax residency works

Germany taxes you as a resident, with unlimited tax liability (unbeschränkte Steuerpflicht), if you have a residence (Wohnsitz) or your habitual abode (gewöhnlicher Aufenthalt) there. A residence is any home you keep available and can use. It does not have to be your main home, and it does not matter whether you are still registered there.

Habitual abode means a stay in Germany of more than six months, with short interruptions ignored. It is often summarised as 183 days, the figure tax treaties use, but the German test looks at continuous presence rather than a simple count of days.

Once both are gone, you have limited tax liability (beschränkte Steuerpflicht): Germany taxes only German source income, such as rent from German property, German pensions and pay for work done in Germany. A tax treaty can shift some of these rights. Germany has no tax treaty with Paraguay or Panama, and its treaty with the United Arab Emirates (UAE) expired at the end of 2021 and has not been replaced.

German citizens face one more rule. Under the Foreign Tax Act (Aussensteuergesetz), a German who was resident for at least five of the last ten years and moves to a low tax country while keeping substantial economic interests in Germany has extended limited tax liability (erweiterte beschränkte Steuerpflicht) for the year of departure and the following ten years. It widens the German income that is taxed and sets the rate by reference to your worldwide income, in any year that income exceeds €16,500.

• Low tax country: one that would tax an unmarried person on €77,000 of income at less than two thirds of the German tax, or that offers a preferential regime. The UAE and territorial systems such as Paraguay’s will usually count.
• Substantial economic interests: for example, owning a German business or 1% or more of a German company, German income above 30% of your total income or €62,000, or German assets above 30% of your wealth or €154,000.

Leaving properly

Leaving Germany is mostly about removing the facts that make you resident, and keeping the paper trail that proves you did. These are the core steps; your accountant confirms the order for your situation.

1. 01

   Give up your German home

   Sell it, let it on a long lease or end the tenancy. A home kept available for your own use, even one you use only occasionally, can keep you fully taxable.

2. 02

   Deregister (Abmeldung)

   Deregister with the residents’ registration office within two weeks of moving out, and no earlier than one week before. The confirmation (Abmeldebestätigung) is the document insurers, pension providers and the tax office will ask for.

3. 03

   Check exit tax before you go

   If you hold 1% or more of any company, or large fund holdings, exit tax is assessed on the day you leave. Arrange the valuation, and any instalments and security, in advance.

4. 04

   Sort out health insurance

   Statutory health insurance generally ends or is suspended when you move outside the European Union (EU). Put international cover in place first, and ask your insurer about a standby policy (Anwartschaftsversicherung) if you may return.

5. 05

   File the final return

   File a return for the year you leave, covering your resident months and any German income afterwards. Give your tax office (Finanzamt) a foreign address so later notices reach you.

6. 06

   Keep proof of your new life

   Keep your foreign residence permit, lease and travel records. They support your position if the tax office later asks whether you really left.

Exit tax, property and investments

The exit tax (Wegzugsbesteuerung) treats you as having sold your shares on the day you stop being resident. It applies if you held at least 1% of any company, German or foreign, at any time in the last five years, and you were resident in Germany for at least seven of the last twelve years. The deemed gain is taxed under the partial income method (Teileinkünfteverfahren), so 60% of it is taxed at your normal rate.

Since the 2022 reform, the tax is due on departure wherever you move. Moves within the EU used to qualify for indefinite deferral without interest; that is gone. Instead you can apply to pay in seven annual instalments, interest free but usually against security. If you return within seven years, which the tax office can extend by up to five more, the tax lapses, provided you have not sold the shares in the meantime.

Since 2025 the exit tax also covers investment funds where you hold at least 1% of a fund or paid at least €500,000 for your units, and every privately held unit in a special investment fund (Spezialfonds). Ordinary share and fund portfolios below these thresholds are not caught.

German property stays taxable in Germany after you leave. Rent is taxed there, and a sale within ten years of purchase is taxable unless you lived in the home yourself in the year of sale and the two years before.

Inheritance and gift tax follows Germans for longer. A German citizen remains fully liable for five years after leaving, and where the extended limited tax liability applies, German linked assets stay within the tax for up to ten years. Heirs who live in Germany are taxed on everything they receive, wherever you live.

Pensions and social security

The statutory pension from the German Pension Insurance (Deutsche Rentenversicherung) is paid abroad. Since October 2013 it is paid in full even in countries with no social security agreement with Germany, although some periods, such as those credited under the Foreign Pensions Act (Fremdrentengesetz), can be restricted outside the EU. Germans living abroad can keep building their pension with voluntary contributions.

Germany usually keeps the right to tax the statutory pension when you live abroad, and with no treaty it taxes it in full. Pensioners abroad deal with a central tax office in Neubrandenburg. Company and private pensions depend on their type and on any treaty.

Riester plans keep their subsidies if you move during the savings years, but the subsidies become repayable if you live outside the EU and the European Economic Area (EEA) when payouts begin. Statutory health insurance (gesetzliche Krankenversicherung) generally ends or is suspended once you move outside the EU, so private international cover needs to be arranged before you leave.

Dual citizenship

Since the citizenship law reform took effect on 27 June 2024, Germans can apply for another citizenship and keep their German one. The old rule, under which you automatically lost German citizenship when you acquired another one on application, is gone, and so is the retention permit (Beibehaltungsgenehmigung) once needed to avoid it.

The reform is not retroactive. If you took another citizenship before 27 June 2024 without a retention permit, you may already have lost German citizenship, and the route back is renaturalisation. Later changes in 2025 removed the three year fast track to naturalisation for newcomers but left dual citizenship in place.

That makes a second passport, including through citizenship by investment, a realistic option for Germans. The other country’s own rules still apply, so we check them for you.