Germany's Exit Tax When You Leave (Wegzugsbesteuerung): § 6 AStG After the 2022 Reform and the 2025 Extension to Fund Units

Most people who leave Germany think about the tax consequences of the move in terms of what they will pay in the new country. The more expensive question is what Germany charges on the way out. Under section 6 of the Foreign Tax Act (Außensteuergesetz, AStG), an individual who has been tax-resident in Germany long enough and holds a qualifying shareholding is treated, on the day residence ends, as if the shares had been sold at fair market value. There is no buyer, no cash and no transaction — only a deemed gain and a real tax assessment. Since the reform that took effect in 2022 the rules apply in the same way whether you move to Vienna or to Vancouver, and since 2025 they can also reach substantial investment fund holdings.

This guide explains how the provision works on the current text of the Act, as published on the federal government's legislation portal. It is written for people who own shares in a company — their own business, a family holding, a start-up they co-founded, or a portfolio stake — and for their advisers abroad. It does not give thresholds in euros for the tax itself or rates, because those depend on your personal circumstances and change with the annual tax legislation; where a figure matters, it is one that appears in the statute.

What the exit tax actually taxes

Section 6(1) AStG applies to shares within the meaning of section 17(1) sentence 1 of the Income Tax Act (Einkommensteuergesetz, EStG). Those are shares in a corporation — a GmbH, an AG, or a comparable foreign company — where the individual has held, directly or indirectly, at least one per cent of the capital at any time in the preceding five years. If you hold less than that, the exit tax does not apply to those shares at all, whatever their value.

When the provision is triggered, the law deems the shares to have been sold at their fair market value (gemeiner Wert) at that moment. The difference between that value and your acquisition cost is a capital gain of the kind section 17 EStG would tax on a real sale. Because it is a section 17 gain, it is taxed under the partial-income method (Teileinkünfteverfahren): a portion of the gain is exempt and the remainder is taxed at your personal rate. The mechanics of the rate are not the point of this guide; the point is that a gain you have not received in cash becomes taxable income in the year you leave.

Three practical consequences follow. First, the valuation date is fixed by the date residence ends, so a founder leaving during a funding round will be assessed on the value that round implies. Second, the tax is due even though the shares stay exactly where they are. Third, if you later sell the shares abroad for less, the German assessment does not automatically fall — the statute has specific mechanisms for that, described below, but no general clawback.

Who is caught: the seven-of-twelve rule

The exit tax does not apply to everyone who leaves. Section 6(2) AStG defines the person concerned as an individual who was subject to unlimited German income tax liability for at least seven years within the twelve years before the triggering event. This replaced an older test based on ten years of residence and is, in most cases, easier to meet: someone who lived in Germany for seven years, spent three abroad and returned for two would satisfy it, whereas the old test would not have been met.

Unlimited tax liability is the ordinary status of a German resident — anyone with a domicile (Wohnsitz) or habitual abode (gewöhnlicher Aufenthalt) in Germany. Years count whether or not any German tax was actually paid, and the twelve-year window is counted back from the day of departure. An expatriate who arrived in Germany on assignment, stayed eight years and acquired shares in a German employer or in a company back home is within the rule.

The three triggers

Section 6(1) sentence 1 AStG names three events that are treated as a sale.

1. The end of unlimited tax liability by giving up the German domicile or habitual abode. This is the classic case: the move abroad.
2. A gratuitous transfer of the shares to a person who is not subject to unlimited German tax liability — typically a gift to a child or spouse living abroad, or an inheritance passing to a non-resident heir. The donor or the estate does not leave Germany, but the shares do.
3. The exclusion or limitation of Germany's right to tax the gain on a sale of the shares for any other reason. The usual example is a change of treaty residence: a person keeps a German flat but becomes resident of another state under a double tax treaty, so that the treaty allocates the taxing right on the shares to the other state.

The third trigger is the one people miss. Someone who moves their family and centre of life abroad but keeps a German address may believe they have not "left". If the treaty tie-breaker places them abroad, Germany's taxing right on the shares is limited, and the exit tax is triggered on that day.

What changed in 2022

Before 2022, moves within the European Union and the European Economic Area were treated differently from moves to third countries: the tax was assessed but deferred interest-free and without time limit for as long as the person remained in the EU or EEA and the shares were not sold. That distinction has gone. Under the current section 6 AStG the rules are uniform regardless of the destination country, and the deferral has been replaced by a right to pay in instalments. Together with the seven-of-twelve residence test, this is the reform that people who relocated within Europe some years ago often have not caught up with.

Paying: seven instalments, security and the events that accelerate everything

Section 6(4) AStG allows the tax to be paid, on application, in seven equal annual instalments. The instalments are interest-free, but the tax office will as a rule require security — a bank guarantee, a pledge over the shares or another acceptable collateral — before granting the arrangement. Whether security can be dispensed with depends on the tax office's assessment of the risk, and the statute leaves that judgement to it.

The instalment arrangement is conditional. The outstanding balance becomes due at once if certain events occur, and the events are the ones a departing shareholder is most likely to bring about without thinking of the German consequences:

• the shares are sold, or transferred in a way that would itself count as a sale;
• distributions or repayments of capital are made on the shares which, taken together, exceed a quarter of the fair market value that was used for the exit tax assessment;
• an instalment is not paid when due;
• the reporting duties described below are not complied with.

The distribution rule is the one that catches owner-managers. A founder who leaves, keeps the company and then takes out large dividends over the following years to fund life abroad can cross the 25 per cent line without noticing, at which point the entire remaining exit tax is payable immediately.

The return rule: temporary absence

Section 6(3) AStG addresses the person who leaves for a limited period. If the individual again becomes subject to unlimited German tax liability within seven years of the departure, the tax claim lapses — provided that in the meantime the shares were not sold, that distributions or repayments did not exceed a quarter of their value, and that Germany's taxing right on the shares is restored. On application, the tax office may extend the seven-year period by up to a further five years, giving a maximum of twelve, where the intention to return has been maintained.

The rule matters for secondees, academics, diplomats' families and founders who relocate for a defined project. It does not require proof at the moment of departure that the absence will be temporary, but it does require that the conditions be met throughout, and the instalment arrangement remains the practical way of managing the interim.

Since 2025: investment fund units

Until 2024 the exit tax was confined to section 17 shareholdings, and holdings in investment funds were outside it. That gap was closed by the Annual Tax Act 2024. Under section 19(3) of the Investment Tax Act (Investmentsteuergesetz, InvStG), section 6 AStG now applies by analogy to units in an investment fund where the investor has held, directly or indirectly, at least one per cent of the units issued at any time in the preceding five years, or holds units in the fund whose acquisition cost is at least EUR 500,000. The two tests are alternatives, and holdings in different funds are not aggregated: three funds with EUR 300,000 each do not trigger the rule, one fund with EUR 600,000 does. A parallel rule covers special investment funds.

The provision applies to departures from 1 January 2025. For private investors with concentrated positions in a single fund — a family-office vehicle, a single-strategy fund, or an employer's fund — it moves the exit tax from a corporate-shareholder concern to a portfolio one.

Reporting duties

Section 6(5) AStG imposes obligations that are independent of the payment arrangement. The individual must notify the competent tax office of the triggering event within one month, electronically, using the prescribed form. Thereafter, while instalments are outstanding or the return rule is being relied upon, the person must confirm each year their current address and that the shares are still held. Failure to comply is itself one of the events that can accelerate the outstanding tax.

What to do before you move

• Map every holding against the one per cent test, including indirect holdings through a personal holding company and, since 2025, concentrated fund positions.
• Count the years. Seven of the last twelve years of unlimited tax liability is the gate. Someone about to cross the seventh year may have a choice about timing.
• Obtain a valuation before the departure date, because the fair market value on that day is what will be assessed, and a documented valuation prepared for the purpose is better evidence than one reconstructed later.
• Model the instalment arrangement and its security, and decide in advance how dividends will be handled so that the 25 per cent line is not crossed by accident.
• Consider the return rule honestly. If the absence is genuinely temporary, structure it as such and keep the evidence.
• Check the treaty. A treaty residence shift can trigger the tax before you have physically moved.

The figures in this guide are those written into the statute. The actual tax depends on personal circumstances, the value of the shares and the rules of the year in question, and the position should be confirmed with a German tax adviser before the departure date is fixed.

Frequently asked questions

Official sources

Rules, fees and thresholds change. Confirm anything in this guide with the official source before you act.

• BAMFimmigration authority
• Bundesrechtsanwaltskammerbar association — verify a lawyer