Frankfurt, Germany

10 Tax Tips You Should be Aware of Before Relocating to Germany

By Oliver Biernat, Benefitax GmbH

Many people wish to live in Germany because of its beautiful landscape, clear air and economic success but few think about the tax consequences. Germany is not a low-tax jurisdiction and has many anti-tax-avoidance rules. It is therefore extremely important for people with high incomes or wealth to have a German tax expert review their tax situation before moving to Germany, especially in these cases:

  1. If you create a residence (one out of many is suffcient) or stay more than 183 days per year in Germany, you will be subject to unlimited taxation in Germany. There is no remittance principle and you must declare your worldwide income.
  2. Registration or de-registration with the municipality is not decisive for your tax status. Inform the German tax offce and prove your presence or non-presence.
  3. If you have income from foreign sources, they will be taxed in Germany unless there is a Double Taxation Treaty that grants exemption from taxation or allows you to credit taxes paid abroad.
  4. If you own companies abroad, hidden reserves gained before coming to Germany may be taxed in Germany as capital gains.
  5. No matter how your foreign LLC or other company is treated abroad, the German tax authorities will decide themselves if it is to be treated as transparent or opaque.
  6. If you are a legal representative of a foreign corporation, you may create a place of management in Germany, even if you work from home. All income of the foreign corporation may then be subject to German corporation tax.
  7. If you inherit or receive gifts from abroad, this is subject to gift tax in Germany.
  8. If you own foreign companies, or own more than 10% of the shares in such before coming to Germany, you ned to report this to the tax authorities.
  9. If you are a beneficiary of a trust, double taxation is likely to happen since trusts do not exist in German law.
  10. If you leave Germany, there is an exit taxation. Fictitious profits of assets with hidden reserves may be taxed.

Oliver Biernat

Oliver Biernat

GGI member firm
Benefitax GmbH Steuerberatungsgesellschaft Wirtschaftsprüfungsgesellschaft
Advisory, Auditing & Accounting, Corporate Finance, Fiduciary & Estate Planning, Tax
Frankfurt am Main, Germany
Frankfurt am Main, Germany T: +49 69 256 227 60
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Benefitax GmbH Steuerberatungsgesellschaft Wirtschaftsprüfungsgesellschaft is a tax consultancy and public auditing company located in Frankfurt, which is widely recognised as the financial centre of Germany. Benefitax predominantly serves German entities of foreign multinational groups, mid-sized German companies with cross-border activities, and wealthy private individuals.

Oliver Biernat is the Founder and Managing Partner of Benefitax. He is a German chartered accountant, certified tax advisor, and specialist advisor for international taxation, with more than 20 years of experience. Since 2008, he has chaired GGI’s International Taxation Practice Group (ITPG), increasing its size to more than 570 experts from 90 countries in the process.


Published: International Taxation Newsletter, No. 15, Autumn 2021 l Photo: Philipp - stock.adobe.com

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