Germany does not wait for a sale. When a shareholder gives up their German residence, section 6 of the Außensteuergesetz treats the shares as sold at open market value on the way out and taxes the gain, although nothing has been received. That provision, the Wegzugsbesteuerung, was rewritten in full and applies in its present form from the 2022 assessment period.
The rewrite is why so much of what circulates about it is wrong. The regime described in older material, in which a move inside the European Union bought an indefinite deferral with no interest and no security, no longer exists. Anyone advising on a German departure today is reading a different statute from the one they read five years ago.
Three events, and only one of them is a move
Section 6(1) treats three events as a disposal at open market value in the hands of a person subject to unlimited German tax liability. The first is the termination of that unlimited liability through giving up a domicile or habitual abode in Germany. The second is a transfer of the shares for no consideration to a person not subject to unlimited liability, a gift abroad. The third, which applies only where the first two do not, is the exclusion or restriction of Germany’s right to tax a future gain on the shares. The charge accrues when unlimited liability ends, when the transfer is made, or, in the third case, immediately before the taxing right is lost or restricted.
Two of the three require nobody to move. A gift to a child already living abroad triggers the charge, and so does a change in the way a treaty applies to a shareholder who has gone nowhere.
One per cent, and seven of the last twelve years
Section 6 sets no threshold of its own. It borrows the definition in section 17(1) of the Einkommensteuergesetz, which catches a person who held, directly or indirectly, at least one per cent of the company’s capital at any point in the previous five years. One per cent at any point in five years is a low door: a founder diluted to two per cent across several rounds is inside it.
Set that beside the Dutch figure. A substantial interest in the Netherlands begins at five per cent, counted together with a partner and including indirect holdings and rights of acquisition. The same shareholder can be inside the German exit charge and outside the Dutch regime altogether. The two thresholds are not calibrated to each other and should never be quoted as one number.
The second condition is time spent in the country. Section 6(2) applies to individuals who were subject to unlimited German tax liability for at least seven years in total within the twelve years before the triggering event. It is seven of the last twelve, not seven consecutive years, and where the shares came by gift or inheritance the donor’s or the deceased’s own periods count towards the total. The regime before 2022 required ten years, which is what older material still says.
What is taxed, and at what rate
The gain is computed as on a real disposal under section 17, with open market value standing in for a sale price. Germany then applies the partial income method. Section 3, number 40, letter c, exempts 40 per cent of the disposal price or open market value, and section 3c(2) allows only 60 per cent of the related expenses, so in practice 60 per cent of the gain is taxed. Section 17(3) adds an allowance of 9,060 euros that fades out above 36,100 euros of gain, so it disappears in any case worth structuring.
There is no exit tax rate. The taxable portion enters the general income tax tariff of section 32a, which for the 2026 assessment period reaches 42 per cent from 69,879 euros of taxable income and 45 per cent from 277,826 euros. The solidarity surcharge of 5.5 per cent is added to the tax, and is itself due only where the income tax liability exceeds 20,350 euros in 2026, or 40,700 euros for jointly assessed couples.
The effective rate therefore depends on the rest of the taxpayer’s income that year. Any single percentage quoted as the German exit tax has been invented somewhere along the way.
Seven annual instalments, and the security that comes with them
Section 6(4) is the whole of the relief. On application, the tax may be paid in seven equal annual instalments, the first within one month of notification of the assessment and the others on 31 July of each following year. The instalments carry no interest, which is the favourable part. Against that, the application is as a rule to be granted only against the provision of security, so the deferral has a collateral cost from the outset.
The balance falls due within one month if an instalment is missed, if the reporting duties are breached, if the taxpayer files for insolvency, to the extent the shares are sold or transferred, or where distributions and repayments of capital exceed a quarter of the value used for the charge. Section 6(5) requires those events to be reported electronically within one month, and an address and the continued attribution of the shares to be confirmed by 31 July each year.
There is a further cost, almost never explained. Under the third sentence of section 6(1), the shares count as acquired at open market value only to the extent the tax on the deemed gain has actually been paid; otherwise they continue to count as acquired at their original cost. Someone who takes the seven instalments and sells in year three has no step-up for the part still unpaid. Instalments are not the same thing as paying the same tax later.
The European Union makes no difference
This is the point on which most published material is wrong. The current section 6 draws no distinction whatever between a move to another member state and a move to a third country. Read in full, the provision contains no reference to the European Union, none to the European Economic Area and none to a member state. The seven instalments and the general requirement of security apply to a move to Amsterdam exactly as they apply to a move to Singapore.
The indefinite, interest free and security free deferral for intra-community moves was real, and it sat in the old section 6(5). It survives only for events completed before 1 January 2022, under the transitional rule in section 21(3), and even those cases were tightened afterwards: a deferral granted under the old regime is also revoked where distributions and repayments of capital exceed a quarter of the value of the holding, for distributions made after 16 August 2023.
The two circulars issued by the Bundesministerium der Finanzen in 2025 do not change this. Both carry Wegzugsbesteuerung in the title, but both address the version of section 6 in force before 2022, and the second concerns moves to Switzerland alone. Citing them as doctrine on the current regime is an error of substance.
The threshold that catches an investor with no company at all
Since 2025 the charge has stopped being a founder’s problem. Section 19(3) of the Investmentsteuergesetz applies the same three triggering events to fund units held outside a business, where the gains determined under that act are positive in the aggregate and one of two conditions is met. Either the investor held at least one per cent of the units issued by the fund at some point in the previous five years, or the investor holds units in that fund with an acquisition cost of at least 500,000 euros.
The second limb surprises people, because it has nothing to do with control. A private investor with half a million euros of acquisition cost in one fund, holding a fraction of a per cent of it, is inside the German exit charge on leaving. The provision borrows the machinery of section 6 wholesale: the same seven years of unlimited liability out of twelve, the same seven instalments, the same return rule.
It applies for the first time where the investor’s unlimited liability ends after 31 December 2024, so the first assessment period affected is 2025. A portfolio review carried out before that date will not have looked for it.
Leaving for a while: the seven year return
Section 6(3) removes the charge where the absence turns out to be temporary. If the taxpayer becomes subject to unlimited liability again within seven years, the tax claim lapses. The competent tax office may extend that period by up to five further years on application, where the intention to return has remained unchanged, which takes the outer limit to twelve.
Three conditions run alongside it. The shares must not have been sold, transferred or contributed to a business in the meantime. Distributions and repayments of capital must not have exceeded a quarter of the value used for the charge. And Germany’s right to tax a future gain must be restored at least to the extent it had when unlimited liability ended. Equivalent rules cover the third triggering event and the gift abroad.
Here too the old numbers persist: the regime before 2022 gave five years, not seven.
The arrival side, and what the Dutch treaty settles
The way out raises a question about the way in, and the treaty answers part of it. Article 13(6) of the convention of 12 April 2012 between the Netherlands and Germany allows the state a person has left to tax, under its own law, the increase in value of shares and similar rights attributable to the period of residence there. The clause then does the thing that matters: the increase in value taxed by the first state is not included in the taxable base of the other state when that state determines the subsequent increase in value.
It is drafted symmetrically, without naming either country, and carries no time limit. So the treaty divides the gain expressly into a period before the move and a period after it, and obliges the state of arrival to leave the first part out of its base. What cannot be said is that this makes double taxation impossible: the German charge arises on departure and the Dutch step-up on arrival, the two valuations meet at different moments, and the interaction has to be worked through in the individual file rather than assumed.
The regime is settled for the moment and politically live. As at August 2026 no reform of section 6 appears anywhere in the German legislative record, and the one parliamentary motion of this term to abolish the Wegzugsbesteuerung was rejected on 19 December 2025. What is durable is the structure rather than the numbers: the tax falls due when the person leaves, not when the shares are sold, the destination does not soften it, and a departure planned on the pre-2022 statute is planned wrong.