By Dubai Tax Resident Editorial Team · Last reviewed: October 2026
Germany’s exit tax (Wegzugsbesteuerung) applies when you give up German tax residency after at least seven of the last twelve years, and you hold at least 1% of a corporation. Germany taxes the unrealised gain on those shares as if you had sold them on the day you leave. 60% of the gain is taxed at your personal income tax rate, and the tax can be paid in seven annual instalments, usually against security. Because there has been no Germany-UAE tax treaty since 2022, moving to Dubai also requires a particularly clean break from Germany.
Key facts
- Legal basis: section 6 of the Foreign Tax Act (AStG)
- Residence condition: unlimited tax liability for at least 7 of the last 12 years
- Holding: at least 1% of a corporation, German or foreign, at any time in the last 5 years
- Taxation: 60% of the gain taxed at your personal rate (partial-income method)
- Payment: 7 annual instalments on application, generally against security
- Treaty: no Germany-UAE double tax treaty since 1 January 2022
Who has to pay German exit tax?
The exit tax applies if all of these conditions are met:
- you end your unlimited German tax liability, for example by giving up every home available to you in Germany and your habitual abode there,
- you were subject to unlimited German tax liability for a total of at least seven years in the twelve years before leaving, and
- you hold, or held at any point in the last five years, at least 1% of the capital of a corporation, such as a GmbH, AG or a foreign equivalent like a UAE free zone company.
Transferring shares to a person abroad by gift or inheritance, or other events that remove Germany’s right to tax the gain, can also trigger the tax.
How is the exit tax calculated?
The taxable gain is the difference between the fair market value of the shares on departure and their acquisition cost. Under the partial-income method, 60% of that gain is added to your taxable income and taxed at your personal rate, which can reach 45% plus solidarity surcharge. Valuing an unlisted company is often the most contested part, so a documented valuation is essential.
Example: shares in your GmbH cost EUR 25,000 and are worth EUR 2,025,000 when you leave. The gain is EUR 2,000,000, of which EUR 1,200,000 is taxable. At a top rate of about 47.5% including solidarity surcharge, the exit tax would be roughly EUR 570,000.
Payment in instalments
Since the 2022 reform, the old interest-free indefinite deferral for EU and EEA moves no longer exists. Instead, for all destinations, you can apply to pay the tax in seven equal annual instalments. The tax office generally requires security, such as a bank guarantee or a pledge of the shares. Outstanding instalments become due immediately if you sell the shares, receive certain distributions or miss a payment.
If you return to Germany within seven years and still hold the shares, the exit tax can be cancelled. The period can be extended to twelve years in certain cases if you show you intend to return.
No treaty with the UAE: why it matters
Germany allowed its 2010 tax treaty with the UAE to expire at the end of 2021. In September 2026 both countries said they expect to conclude negotiations on a new treaty, but until one is in force:
- There is no tie-breaker. If you keep any home available to you in Germany, you remain fully taxable in Germany regardless of your UAE residency.
- Extended limited tax liability can apply. German citizens who were resident for at least five of the last ten years and move to a low-tax country while keeping significant economic interests in Germany can remain taxable on a wider range of German income for ten years.
- Your UAE company can be at risk. If it is effectively managed from Germany, Germany may treat it as German tax resident.
Official guidance is published by the Federal Ministry of Finance and the Federal Central Tax Office (BZSt).
Checklist for leaving Germany for Dubai
- Map all shareholdings of 1% or more held in the last five years.
- Get a defensible valuation of unlisted companies as at the planned departure date.
- Plan financing or security for the seven instalments.
- Give up every home available to you in Germany, including furnished flats you could use.
- Deregister (Abmeldung) with your local registration office, while remembering that deregistration alone does not end tax liability.
- Move management of your companies out of Germany.
- Build your UAE position: visa, home, Emirates ID and, once eligible, a Tax Residency Certificate.
Leaving Germany with a company?
We help you assess your exit tax exposure, plan the timing and build a UAE residency that works without a treaty.
Frequently asked questions
The German exit tax, or Wegzugsbesteuerung, taxes unrealised gains on shares of at least 1% in a corporation when you give up German tax residency after being resident for at least seven of the last twelve years.
60% of the unrealised gain is taxed at your personal income tax rate, which can reach 45% plus solidarity surcharge. In practice, the effective rate on the full gain is often around 28%.
Yes. Since 2022, you can apply to pay the exit tax in seven annual instalments for any destination, usually against security. The remaining instalments fall due if you sell the shares.
Yes. The 1% threshold applies to shares in any corporation, German or foreign, including UAE free zone companies, if you are leaving German tax residency.
No. The treaty expired on 31 December 2021. Both countries announced in 2026 that they expect to conclude a new treaty, but none is currently in force.
No. Deregistration (Abmeldung) is required, but you remain fully taxable as long as you have a home available to you in Germany or your habitual abode is there.
German citizens who were resident for five of the last ten years and move to a low-tax country while keeping significant economic interests in Germany can remain taxable on a wider range of German income for ten years.
If you return within seven years and still hold the shares, the exit tax can be cancelled. The period can be extended to twelve years in some cases if you can show an intention to return.
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Disclaimer: This article provides general information only and is not tax advice. German exit tax rules are complex; consult a qualified German tax adviser (Steuerberater) before leaving.