What is the Wegzugsbesteuerung (exit tax) when leaving Germany?

Wegzugsbesteuerung is an exit tax triggered when a German tax resident who holds at least a 1% stake in a corporation (GmbH, AG, or foreign equivalent) moves abroad and ceases to be a German tax resident. Under §6 AStG, Germany treats the shares as if they were sold at market value on the date of departure and taxes any unrealised gain as income.

The purpose is to tax capital gains that accrued during German residency before the taxpayer moves to a jurisdiction where Germany can no longer collect. The gain is calculated as the difference between the fair market value of the shares at departure and their original acquisition cost. This deemed gain is subject to income tax at the personal rate, which can result in a significant tax bill even though no actual sale has occurred.

For moves within the EU or EEA, the tax can be deferred interest-free and paid only when the shares are actually sold. For moves outside the EU/EEA (e.g. to the UK post-Brexit, Switzerland, the US, or Australia), the tax is generally due immediately, though payment can be spread over seven annual instalments on request. Returning to Germany within seven years of departure may result in a partial reversal of the Wegzugsbesteuerung if the shares were not sold. This tax is particularly relevant for founders, investors, and entrepreneurs with significant equity stakes who are planning to relocate.

This is general information only, not professional tax advice. Consult a qualified tax professional for your specific situation.