German Exit Tax for GmbH Owners:
What Wegzugsbesteuerung Means When You Leave Germany
If you own shares in a German company and you are planning to move abroad, one rule can turn your relocation into an unexpected tax bill: the German exit tax, known in German as the Wegzugsbesteuerung. It can tax the increase in value of your GmbH shares the moment you give up your German tax residency, even though you have not sold a single share and no money has reached your account.
The good news is that the exit tax is rarely as final as it first looks. With early, informed planning it can often be deferred, reduced, or in some situations avoided altogether. This page explains, in plain language, what the exit tax is, who it affects, how it is calculated, what you must declare, and what your realistic options are. It is general information rather than advice for your individual case.
At a glance
The German exit tax (Wegzugsbesteuerung) treats your company shares as if you sold them on the day you give up German tax residency, and taxes the unrealised gain, even though no sale took place and no cash was received.
- Who: private individuals holding 1 percent or more of a GmbH, UG or AG, resident in Germany for 7 of the last 12 years
- Triggers: moving abroad, gifting or leaving shares to someone abroad, or shifting your tax-treaty residence
- Tax base: 60 percent of the gain (Teileinkuenfteverfahren), at your personal income tax rate
- Main lever: the company valuation, which the default formula usually overstates
- Best time to plan: before you give up German tax residency
What is the German exit tax?
The German exit tax (Wegzugsbesteuerung) treats your company shares as if you had sold them at market value on the day you give up German tax residency, and taxes the unrealised gain. It is set out in Section 6 of the German Foreign Tax Act (Aussensteuergesetz, AStG).
In other words, Germany wants to tax the appreciation that built up in your shares while you were living here, before that value moves beyond its reach. Because the tax falls due without any actual sale and without any cash changing hands, tax professionals often describe it as a tax on “dry income.” You can owe real money on a paper gain you cannot yet access.
Who does the German exit tax affect?
It affects private individuals who hold at least 1 percent of a corporation such as a GmbH, UG or AG in their personal assets, and who were subject to unlimited German income tax for at least 7 of the last 12 years.
Two conditions therefore matter most. The first is your shareholding: a stake of 1 percent or more in a corporation, held privately. The second is your history in Germany: at least seven years of unlimited tax liability within the twelve years before you leave. This second condition was tightened in 2022, when the threshold dropped from ten years to seven, which means the rule now reaches people who only lived in Germany for a medium length of time.
The tax applies to you personally as the shareholder. It is not a tax on the GmbH itself.
What triggers the exit tax?
Three events can trigger it: moving your residence or habitual abode abroad, giving or leaving your shares to someone who lives abroad, and shifting your tax-treaty residence so that Germany loses its right to tax a future sale.
Most people think only of the first situation, the physical move. The other two matter just as much. Passing shares to a child, spouse or other relative who lives outside Germany, whether as a gift or through inheritance, can trigger the same tax. So can a change in where you are treaty-resident, even if your German address stays in place for a while.
How is the exit tax calculated?
The taxable gain is the difference between the market value of your shares on departure and their original cost. Under the partial income method (Teileinkuenfteverfahren), 60 percent of that gain is taxed at your personal income tax rate. For higher earners the effective burden lands at roughly 26 to 28 percent of the gain, including the solidarity surcharge.
There is no exit tax if your shareholding is below 1 percent, or if there is no gain at all. If your shares have fallen in value rather than risen, the gain can be zero, although a loss generally has to be shown to result from business reasons.
Why the company valuation is usually the real problem
When there is no recent sale price to rely on, German tax law applies a single statutory formula, the simplified income approach (vereinfachtes Ertragswertverfahren). It multiplies the average profit of the last three years by a fixed factor of 13.75, which routinely produces a value far higher than what the company would actually fetch on the market. For an owner-managed company there is a further twist: the salary the shareholder draws as managing director is added back to that profit first, so the figure the factor is applied to is higher than the profit shown in the accounts.
This is the part that surprises owners the most. A small, profitable company can be assigned a seven-figure value on paper, and the tax is then charged on that inflated figure. The crucial point is that this formula is only the default. You are not obliged to accept it. An independent professional valuation, or a genuine recent transaction price, can be used to set a more realistic and often much lower value as the basis for the tax. For founder-led companies whose worth depends heavily on the owner, this single step can change the outcome dramatically.
How much could you owe?
Use the estimator below for an indicative figure. One detail trips up almost every do-it-yourself estimate: if you are both the shareholder and the managing director, the salary you draw as Gesellschafter-Geschaeftsfuehrer has to be added back to the company’s profit before the factor is applied. The valuation measures the earning power of the business, not what is left after your own remuneration, so leaving that salary out understates the result.
As a simple illustration, a company with about 200,000 euros of annual profit on that basis, that is, after the managing-director salary is added back, would be valued at about 2.75 million euros under the statutory formula. Sixty percent of that, around 1.65 million euros, would be taxable, which at a high personal rate can mean a tax bill well above 700,000 euros, on shares you have not sold.
GmbH Tax Services
German Exit Tax Estimator
A quick, indicative read on whether the exit tax (Wegzugsbesteuerung) might apply to you, and roughly how large the bill could be, if you leave Germany while owning shares in a GmbH, UG or AG.
Step 1
Could the exit tax apply to you?
Three questions. Answer as best fits your situation.
Step 2
Estimate your potential exposure
This uses the statutory default valuation, so treat the figure as an upper bound. A realistic, independent valuation can lower it considerably.
Estimated exit tax (indicative)
€0
How this is calculated
Where there is no recent sale price, the value defaults to the simplified income approach: average profit of the last three years multiplied by 13.75 (the capitalisation factor under Section 203 of the German Valuation Act).
Your share of that value, less your acquisition cost, is the gain. Under the partial income method, 60% of the gain is taxed at your personal income tax rate, plus the solidarity surcharge.
Since 2022 the tax can be paid in up to seven annual instalments on application, usually against security. If your move is temporary and you return within seven years (extendable to twelve), the tax can be cancelled retroactively under conditions.
This estimator is general information, not tax advice, and gives a deliberately cautious upper-bound illustration based on the statutory default valuation. Your actual liability depends on your personal tax rate, your acquisition cost, how your company is valued, your destination and your individual circumstances. The rules under Section 6 AStG are complex and change frequently. Please obtain advice on your specific situation from a Steuerberater. Current as of June 2026.
That illustration is deliberately a worst case. Your real exposure depends on your actual personal tax rate, your original acquisition cost, and above all on how the company is valued. In our own practice, across more than a hundred exit tax cases, the figure owners actually end up facing has very often been materially lower than a worst case of this kind, once the valuation and the available reliefs are properly worked through. That is exactly why an early review tends to pay for itself.
What must you declare, and when?
The exit tax is assessed through your German income tax return for the year in which you give up your tax residency. The deemed gain is reported as a capital gain on your shares, and the shares are valued as at your departure date.
This means the timing of your move within a tax year can matter, because the valuation is fixed on the day residency ends. If you apply to pay in instalments, the tax office usually asks for security, most often a pledge of the shares themselves. Because the charge is triggered by the act of leaving rather than by a tax notice, the planning has to happen before departure, not when the assessment arrives.
Can the exit tax be deferred or reduced?
In many cases, yes. There are four main levers, and most of them only work if they are arranged before you leave. And the one with the largest impact can only be done ahead of time.
Pay in instalments. Since 2022 the tax can be paid in up to seven equal annual instalments on application. This spreads the cash-flow impact across several years. The tax office usually requires security, such as a pledge of the shares.
Use the return rule. If your move is temporary, the return rule (Rueckkehrerregelung) can cancel the exit tax retroactively. You must return to German tax residency within seven years, a period that can be extended to up to twelve years on application. You must also keep the shares and not transfer them in the meantime.
Value the company realistically. The statutory formula is only the default. An independent valuation or a genuine recent transaction price can lower the taxable base, often substantially for founder-led companies.
Structure ahead of time. The legal form of your holding, the timing of your move, and your other income in the year of departure can each make a meaningful difference. Each route carries its own conditions and anti-abuse limits, so none should be attempted without individual advice.
When do you need to act?
Before you move is far better than after. The planning levers that make the biggest difference, namely how the company is valued, how your holding is structured, and the return rule, all work best when they are in place before you give up your German tax residency.
“Owners who reached us before giving up German tax residency kept all the main planning levers open to choose from; those who came to us only after relocating usually have just 1 of 3 left.”
Birgit Augustin, Steuerberaterin
Leaving does not shut the door completely, though. The shares are valued as at your departure date, so the timing of the move within a tax year still matters, and some options remain useful afterwards.
“Even among clients who had already moved abroad, we were still able to improve the result in nearly every case.”
Birgit Augustin, Steuerberaterin
The simple rule is that the earlier you look at this, the more options you keep open. If a relocation is anywhere on your horizon, the right moment is now.
Recent changes you should know about
The 2022 reform tightened the rules, the net widened again in 2025, and parts of the regime are being tested in the courts. This is a fast-moving area, so any plan should be based on the current position.
The 2022 reform lowered the residency threshold to seven years and replaced the old open-ended deferral for moves within the EU with the seven-year instalment option. From 2025, the exit tax also reaches significant private holdings in investment funds and ETFs, not only company shares. At the same time, recent court decisions are reshaping how the rules apply to moves within the EU and to Switzerland. The direction of travel is clear: more people are affected, and individual review matters more than ever.
Frequently asked questions
Yes. It applies to shares in any corporation, including a UG (haftungsbeschraenkt), an AG, and comparable foreign companies, where you hold at least 1 percent.
Possibly. Since 2022 the tax can arise on EU moves too, though it can usually be paid in up to seven annual instalments, and recent case law continues to shape how EU moves are treated.
If you return to German tax residency within seven years, extendable to up to twelve on application, the exit tax can be cancelled retroactively, provided you keep the shares and meet the other conditions.
You are. The exit tax falls on you personally as the shareholder on the unrealised gain in your shares. The GmbH itself is not the taxpayer here.
If there is no gain in the value of your shares, there is no exit tax. A drop in value generally has to be shown to result from business reasons.
It can. Transferring shares to a person who lives outside Germany, whether by gift or inheritance, is one of the three triggers, even if you do not move yourself.
It depends on the country. Some countries grant a step-up to market value when you arrive, which can reduce double taxation on a later actual sale. A double taxation treaty may also affect which country can tax that future sale, which is why the destination matters.
By the statutory simplified income approach (vereinfachtes Ertragswertverfahren) as a default, unless you provide an independent valuation or a recent sale price that sets a more realistic figure.
The best options need to be in place before departure, so your room to act is smaller once you have gone. In our experience, though, it is not entirely closed: levers such as the instalment option and, for a temporary move, the return rule, can still be relevant after you leave. It is usually worth a review rather than assuming nothing can be done.
How GmbH Tax Services can help
Birgit Augustin is a fully licensed German tax advisor (Steuerberaterin) and a specialist in international tax law (Fachberaterin fuer Internationales Steuerrecht), advising English-speaking owners of German companies from Munich, throughout Germany. We have helped more than a hundred owners reach a materially better exit tax outcome than the default assessment would have produced, and the clearest pattern across those cases is simple: the best results come from planning before departure. If a move abroad is on your horizon, an early review of your exit tax position can protect you from an avoidable bill and keep your options open, and even if you have already left, it is usually still worth a conversation.
Book an exit tax review with GmbH Tax Services.
When you are mapping out a move, two related resources are useful: our Holding GmbH calculator for comparing direct ownership with a holding structure, and our explainer on the asset-managing GmbH (vermoegensverwaltende GmbH). For the underlying tax mechanics, see corporate tax in Germany.
This article provides general information on the German exit tax (Wegzugsbesteuerung) under Section 6 AStG and does not constitute individual tax advice. The rules are complex and change frequently. Please seek advice on your specific situation. Current as of June 2026.