Aktualisiert: Januar 2026
Are you planning to leave Germany and wondering what tax consequences this could have for you? Exit taxation is a key issue that affects many emigrants. It applies if you move your place of residence abroad and hold significant shares in domestic corporations.
"If you have a sole proprietorship, you are not subject to exit tax - but here, too, the tax consequences (unbundling of individual assets or transfer of functions if the sole proprietorship is taken along completely) must be considered. Therefore in principle always exit taxes if you transfer assets abroad and Germany loses the right to tax the assets (the so-called hidden reserves)."
Comment – Patric Böhle from BaBo Tax Steuerberatungsges mbH
This regulation can have a significant financial impact and requires careful planning. In this article, you will find out exactly what exit taxation is, who it affects and how you can best prepare for it. This way, you can ensure that your move abroad does not lead to unexpected tax burdens.
The most important facts in a nutshell:
💲Exit taxation explained: The exit tax applies if you leave Germany and hold significant shares in corporations. The situation is similar in the case of a transfer of functions or unbundling of sole proprietorships. It serves to prevent tax evasion.
🧑⚖️ Legislative changes: Since 2022, there have been significant legislative changes that affect exit taxation. The deadline for submitting tax returns has been extended and measures against tax avoidance have been tightened.
🧮 Calculation and examples: Taxation is based on a notional sale of the shares at the time of departure. The sales proceeds are calculated by multiplying the average profit of the last three years by a fixed factor, of which a certain percentage is taxable.
💡 Strategies for tax avoidance: Statutory exemptions, the sale of shares prior to departure, instalment payments and deferral are some of the most important strategies for reducing or avoiding the tax burden.
🇩🇪 Double taxation agreement: Moving to a country with a double taxation agreement can help to avoid tax disadvantages. These agreements regulate which country has the right of taxation.
What is exit taxation?
The exit tax in Germany applies when you leave the country and fulfil certain conditions. Its aim is to prevent tax evasion by preventing assets from simply being moved abroad.
Who is subject to exit taxation?
- If you have lived in Germany for more than 7 years. You must have been resident here for this minimum period.
- If you own more than 1 % of the shares in a corporation. If you have significant holdings in domestic companies, you are affected.
- If you have no reasonable expectation of returning to Germany. If you do not plan to return in the near future, the tax will apply.
Influence of legislative changes on exit taxation
New regulations since 2022
The Act Implementing the Anti-Tax Avoidance Directive (ATAD) introduced significant changes from 2022:
- The indefinite deferral option for EU/EEA relocations has been abolished.
- Payment by instalments over seven years is now the rule.
- The return regulation was extended to seven years (in certain cases up to 12 years).
These new regulations can have a major impact on your tax obligations if you have significant holdings in domestic corporations and leave Germany.
Calculation of exit tax
The exit tax applies as soon as you move deregister in Germany and fulfil certain conditions. A fictitious sale of your shares in corporations or your sole proprietorship is assumed in order to calculate the tax.
How is the tax calculated?
The exit tax is calculated in three steps:
- Determination of the fair market value (market value) of the company shares or your company) at the time of departure.
- Deduction of the acquisition costs of the capital shares.
- Taxation of the resulting notional capital gain
Sample calculations for clarification
Assume a GmbH shareholder or sole trader is planning to move abroad. The average profit of the company in the last three years before the move is 186,500 euros. To calculate the exit tax, this average value is multiplied by a factor of 13.75:
- 186,500 euros × 13.75 = 2,564,375 euros
Of this value, 60 per cent is taxable at the shareholder's personal tax rate.
- 2,564,375 euros × 0.60 = 1,538,625 euros
Assuming a personal tax rate of 40 per cent, this results in the following tax burden:
- 1,538,625 euros × 0.40 = 615,450 euros
In this example, the exit tax amounts to 615,450 euros.
"In the case of sole proprietorships, the value is to be calculated as in the above example - with the special feature that a notional (appropriate) managing director's salary is to be deducted from the income. The Karlsruhe table (Appropriate management remuneration) should be used as a basis. The multiplier is to be multiplied by this corrected value and the profit taxed at the personal tax rate."
Comment - Patric Böhle, BaBo Tax Steuerberatungsges mbH
Effects of exit taxation
The exit tax in Germany has specific regulations that you should be aware of if you are planning to move your place of residence abroad.
Tightening of exit taxation from 2022
There have been important changes to exit tax since 2022. Tax deferral is no longer possible indefinitely and without interest. Instead, you can apply to pay the tax in seven annual instalments, but only with a security deposit.
Shortening the deadline for tax liability
The tax liability period has been shortened from 10 to 7 years. This means that you must have been resident in Germany for at least 7 years in order to be subject to exit taxation.
Discrimination against emigration to other EU countries
The exit tax for EU/EFTA states and Switzerland is often regarded as contrary to European law. This is because it favours relocations within Germany. So if you move to an EU/EFTA state or Switzerland, this could be disadvantageous for you.
Double taxation agreement
Double taxation agreements (DTAs) can help you to avoid tax disadvantages. These agreements regulate which country has the right of taxation in order to prevent a double tax burden. Find out about existing DTAs between Germany and your new country of residence. Germany has not had a double taxation agreement with the United Arab Emirates since 31 December 2021.
Special features when moving to EU/EEA states and third countries
Special regulations apply to departures to EU/EEA states and third countries.
- EU/EEA countries: Here you may have easier conditions for a deferral or exemption from exit tax.
- Third countries: Stricter rules often apply when moving to third countries. The possibility of deferral is limited and requires additional collateral.
You should take these special tax features into account when planning your emigration in order to avoid unnecessary financial burdens.
Exit tax vs. unbundling tax
Removal tax
The exit tax applies to natural persons who own shares in domestic and foreign corporations and leave Germany. If you move your place of residence abroad and own more than 1 % of shares in a corporation, the exit tax applies. The tax is calculated on the notional sales proceeds of your shares. This type of tax is a special form of income tax and is regulated in the Foreign Tax Act (AStG) and the Income Tax Act (EStG).
Important points of the exit tax:
- At least 7 years of residence in Germany
- Ownership of more than 1 % of the shares in a corporation
- No reasonable expectation of returning to Germany
There have been important changes since 2022. The deadline for tax returns has been extended, measures against tax avoidance have been tightened and tax deferral is limited to seven years.
Entstrickungssteuer
The de-incorporation tax applies to companies that are relocated abroad. In this case, your company is liable for tax here. It applies to sole proprietorships, partnerships and corporations. If a company relocates its registered office or permanent establishment abroad, it will be subject to the unbundling tax. The tax is levied on hidden reserves that are realised as a result of the relocation.
Important points of the unbundling tax:
- Applies to sole proprietorships, partnerships and corporations
- Tax liability if the company's registered office is relocated abroad
- Taxation of hidden reserves on departure
„Is usually taxed (like the GmbH) with the goodwill. Basically, profit of the last few years less appropriate management salary x multiplier (simplified capitalised earnings value method: x multiplier), see explanations above.„
Comment - Patric Böhle, BaBo Tax Steuerberatungsges mbH
Both the exit tax and the unbundling tax have specific rules and requirements. It is therefore advisable to obtain comprehensive information in advance and take account of special tax features in order to avoid financial burdens. You can contact us and our tax advisors for a free initial consultation to evaluate your individual situation.
Options for avoiding exit taxation when changing residence
Legal exceptions and loopholes
You should be aware of the legal exceptions and possible loopholes. Section 6 AStG and Section 17 EStG offer certain exemptions. For example, exit taxation does not apply if you move to an EU/EEA country and do not sell the shares in the corporation within seven years. This extension is granted if you can prove or announce in advance that you wish to return.
- Sale of shares before the moveSelling the shares before the move can significantly reduce the tax burden. If you are planning to sell anyway, this is a good option.
- Tax payment in instalmentsYou can apply to the tax office to pay your tax in instalments. This helps to spread the financial burden.
- Moving to a country with a double taxation agreement: You can avoid tax disadvantages by moving to a country with an existing double taxation agreement. Germany has not had a DTA with the United Arab Emirates since 31 December 2021.
- Deferral of taxApply for a deferral of the exit tax. Under certain circumstances, you can defer payment of the tax for a period of up to seven years. However, a security deposit is required.
- Low tax value calculationA precise valuation of the hidden reserves can also help. The lower the tax value, the lower the tax burden. An expert's report is helpful here.
Each of these strategies requires careful planning and consultation with a tax advisor. This will ensure a smooth process and avoid unexpected financial burdens.
Conclusion
Exit taxation in Germany is complex and can have significant financial implications. If you are planning to emigrate and hold significant shareholdings in domestic corporations, careful planning is essential. You don't want to make any mistakes here.
Special regulations also apply within the EU/EEA, depending on the destination country. Double taxation agreements can help to avoid tax disadvantages. Our tax advisor can help you develop the best strategies and avoid unexpected financial burdens.
Don't forget to bear in mind the differences between exit tax and exit tax. Both have specific rules that you should be aware of.
You would like to leave Germany and Set up a company in Dubai? With the right planning and advice, you can organise your exit smoothly and avoid financial surprises. Book your free initial consultation with our experts now.
Frequently asked questions on the topic
Who has to pay exit tax?
The exit tax applies if an individual who holds shares in a corporation moves abroad. The prerequisites are that the taxpayer has been subject to unlimited tax liability in Germany for at least seven years in the last twelve years and has held at least 1 % of the shares in a company in the last five years. This regulation applies to both German and foreign corporations.
When is exit tax due?
The exit tax is due if the above conditions are met and the taxpayer permanently gives up their residence in Germany. If the departure is only temporary, the exit tax may be waived. Since 2022, there is no longer an indefinite, interest-free deferral option, but the tax can be paid in seven annual instalments upon request.
Am I liable for tax in Germany if I live abroad?
If you live abroad, you are generally liable to pay tax there. However, you may still have unlimited tax liability in Germany if you are either resident or ordinarily resident in Germany. The so-called 183-day rule means that you are liable to pay tax in Germany if you spend more than six months a year there. Double taxation agreements between Germany and other countries can also affect your tax liability.
Is emigration taxed?
Yes, that Emigrate to Dubai, for example can be taxed through exit taxation if the above-mentioned conditions are met. This tax can represent a considerable financial burden, as it taxes the hidden reserves of the shares in the company as if they had been sold. It is therefore advisable to seek tax advice at an early stage in order to avoid potential tax traps and minimise the tax burden.
