Most taxes need a transaction: you sell, you earn, you inherit. The German exit tax (Wegzugsbesteuerung) needs only a moving van. If you own a meaningful stake in a company and give up German tax residency, Germany treats you as if you’d sold your shares the day before you left – and sends the bill.
The logic behind it: Germany wants to tax the value that grew while you lived there, before a treaty hands the right to tax a future sale to your new country. Fair enough in theory. Painful in practice, because there’s no sale and therefore no cash.
This guide covers the rules as of September 2026, after the big 2022 reform. General information, not tax advice.
Who is affected
Section 6 AStG applies if all of these are true at the time of the move:
| Condition | What it means |
|---|---|
| You hold shares within the meaning of §17 EStG | At least 1% of the capital of a corporation, directly or indirectly, at any time in the last five years. GmbH, UG, AG, but also foreign corporations like a Cyprus Ltd, an Estonian OÜ or a Dubai FZ-LLC |
| Long German residency | At least seven years of unlimited German tax liability within the last twelve years (since the 2022 reform; before that it was ten years in total) |
| A trigger event | Usually: your unlimited tax liability ends because you give up your German home and habitual abode |
Not affected: portfolio shares below 1% (think ETFs and a few Apple shares – there’s no exit tax on those, and a later sale is generally a matter for your new country). Partnerships (GmbH & Co. KG, GbR) have their own exit rules under the business-assets regime, not §6 AStG.
The 1% threshold is lower than most people expect. A founder who owns 3% of a start-up after three funding rounds is inside. So is anyone holding 100% of a one-person GmbH.
What triggers it
The classic trigger is leaving: you give up your German home and habitual abode and your unlimited tax liability ends. See leaving Germany for how that works.
Other triggers exist too:
- Gifting or inheriting the shares to someone who isn’t unlimited taxable in Germany.
- Treaty residence moves abroad. If you keep a German home but a double tax treaty now treats you as resident in the other country, Germany may lose its right to tax a future sale. That can trigger exit tax even though you’re still technically unlimited taxable.
- Other ways Germany loses the right to tax a sale of the shares, for example certain transfers into foreign structures.
How the tax is calculated
The law pretends you sold your shares at their fair market value (gemeiner Wert) at the moment you left. From there, it’s a normal §17 EStG calculation:
- Fair market value of your shares on the day of the move.
- Minus your acquisition costs (what you paid for the shares, plus capital contributions).
- = Fictitious capital gain.
- Partial-income method (Teileinkünfteverfahren): only 60% of that gain is taxable (§3 No. 40 EStG).
- Taxed at your personal income tax rate, up to 45% plus 5.5% solidarity surcharge on the tax, plus church tax if you pay it.
At the top rate that works out to roughly 28% of the gain (60% × about 47.5%).
The valuation question
For listed shares, value is easy: the stock price. For a private GmbH, value is the big lever and the big fight. Tax offices often use the simplified earnings value method under the German Valuation Act (vereinfachtes Ertragswertverfahren, §§199 ff. BewG): average annual profit of the last three years, adjusted, multiplied by a fixed factor of 13.75.
That factor can produce high values for profitable owner-run companies that no buyer would ever pay that much for. You’re allowed to prove a lower value with a proper valuation (for example a recent sale to a third party or an expert appraisal). For a small company with high profits and a founder who is the whole business, that argument is often worth a lot of money.
Worked example with numbers
Clara founded a GmbH in 2014 with €25,000 of share capital. She owns 100%, has lived in Germany all her life, and moves to Cyprus in 2026. The GmbH is valued at €1,025,000.
| Step | Amount |
|---|---|
| Fair market value | €1,025,000 |
| Acquisition cost | –€25,000 |
| Fictitious gain | €1,000,000 |
| Taxable portion (60%) | €600,000 |
| Income tax at 2026 rates (single, no other income) | about €250,500 |
| Solidarity surcharge (5.5% of the tax) | about €13,800 |
| Total exit tax | about €264,000 |
With seven annual instalments, that’s roughly €37,700 a year. The rough figures use the 2026 income tax tariff for a single person with no other income and no church tax; your numbers will differ.
For comparison: if Clara had sold the GmbH instead, the tax on the sale would be calculated the same way. The exit tax isn’t higher than a sale – it just arrives without a buyer’s money.
Paying: instalments and security since 2022
The 2022 reform (the ATAD implementation act, ATADUmsG, in force for moves after 2021) changed the payment rules completely.
Before 2022: moving to another EU/EEA country meant an interest-free, open-ended deferral. You only paid if you actually sold. Moving to a third country meant paying, with an option to stretch it over five years.
Since 2022: there’s one regime for everyone.
- On application, the tax can be paid in seven equal annual instalments, interest-free.
- The tax office will usually require security (a bank guarantee, a pledge of the shares, or similar), unless it’s satisfied the tax isn’t at risk.
- The remaining instalments become due immediately if you sell or transfer the shares, the company pays out large amounts (distributions or capital repayments above certain limits), you miss a payment, or you go insolvent.
The old EU privilege is gone. That’s why Cyprus, Malta or Portugal no longer give you an easier ride than Dubai on exit tax.
Coming back: the temporary-absence rule
If you leave only temporarily, the tax can disappear. Under §6(3) AStG:
- If you become unlimited taxable in Germany again within seven years of leaving, the exit tax lapses.
- This applies only if, in the meantime, the shares weren’t sold, transferred or otherwise “used up” – for example through large distributions.
- The seven years can be extended by up to five more years on application, if you can show your absence is for professional reasons and you still intend to return.
The tax office can ask for security in the meantime, and you have to report certain changes. Since 2022, this return rule is the same whether you went to Austria or to Australia.
This is useful for people on a fixed-term foreign assignment or a sabbatical-with-a-plan. It’s not a loophole for people who want to leave for good: “intending to return” is something you have to show, not just say.
EU/EEA vs third countries after the reform
| Before 2022 | Since 2022 | |
|---|---|---|
| Move to EU/EEA | Interest-free deferral, no security, tax only on sale | 7 instalments, usually with security |
| Move to a third country (e.g. UAE, Switzerland, US) | Tax due, optional 5 instalments with security | Same as EU: 7 instalments, usually with security |
| Return within the time limit | Lapse only for temporary absences (5 years, extendable) | Lapse for everyone: 7 years, extendable by up to 5 |
| Residency required | 10 years unlimited liability in total | 7 years within the last 12 |
Is the new regime compatible with EU law? That’s debated. In the Wächtler case (C-581/17, 2019), the Court of Justice of the EU found that the old German rule, which didn’t allow deferral for a move to Switzerland, breached the EU–Switzerland free movement agreement. Whether the post-2022 regime with instalments and security stands up to EU freedoms is still discussed among German tax lawyers. Don’t build a plan on winning that case.
Planning ideas (the legal kind)
Exit tax planning is timing plus structure. Everything here needs a German tax advisor to implement for your specific case – these are the ideas to put on the table, not a DIY list.
- Check the seven-of-twelve years. Someone who came to Germany six years ago isn’t caught. Timing a move before year seven ends can matter.
- Get the valuation right. Prepare documentation for a realistic value before you leave. A defensible appraisal is often the single biggest saving.
- Consider moving shares into a German business structure. Shares held as business assets of a German commercial partnership (a GmbH & Co. KG with real business activity) are, under specific conditions, not within §6 AStG. Whether that works – and whether §50i EStG or later law changes interfere – is highly technical.
- Sell before you move, if a sale is coming anyway. If you plan to sell within a year or two, selling in Germany at the same tax cost but with cash in hand can beat an exit tax without cash.
- Use the return rule deliberately if your stay abroad is genuinely temporary. Document the professional reasons from day one.
- Think about gifts. Gifting shares to children living in Germany doesn’t trigger exit tax in itself, and gift tax allowances (€400,000 per child per parent every ten years) may help. Combine with inheritance tax planning, not in isolation.
- Don’t leave the company behind unmanaged. After you move, a German GmbH still managed by you from abroad raises its own questions. And your new company abroad must not be run from Germany: see place of management.
What doesn’t work: quietly not reporting it. The move itself, your deregistration and the CRS reporting from your new bank make your departure very visible. Exit tax is assessed in your final German return.
How it fits the bigger picture
Exit tax is one piece of a German exit. The other pieces: ending residency properly (leaving Germany), extended limited tax liability for moves to low-tax countries, and – if you set up a new company abroad – CFC rules for anyone still connected to Germany.
For destinations, see the country guides and the optimize tax overview. Everything here is general information, not tax or legal advice.
Want to know what your exit would cost and which levers exist? Book a strategy session.
Sources
- §6 AStG – exit taxation of shareholdings
- §17 EStG – disposal of shares in corporations
- §3 EStG – tax-exempt income (No. 40, partial-income method)
- §200 BewG – simplified earnings value method
- §203 BewG – capitalization factor
- Federal Ministry of Finance – international tax law
- Council Directive (EU) 2016/1164 (ATAD), Article 5 exit taxation
- CJEU, case C-581/17 (Wächtler)
- §16 ErbStG – personal allowances
