Germany’s exit tax catches founders and directors by surprise more often than almost any other tax. Not because it is obscure, but because the planning window is before you move, not after. Once you have formally changed your tax residency, most of the options to reduce or defer the liability have closed.
This checklist covers the ten steps every GmbH shareholder, UG founder, and corporate equity holder should work through before leaving Germany. For the full explanation of how the tax works and how it is calculated, see our guide to This article is the practical pre-departure checklist. Step 1: Confirm whether exit tax applies to you at all
Two conditions must both be met for § 6 AStG to trigger.
Residency condition: You have been subject to unlimited German tax liability (unbeschränkt steuerpflichtig) for at least 7 of the last 12 years before your departure date. This is not 10 years as sometimes stated in English-language sources. The correct threshold from § 6 AStG is 7 of the last 12.
Shareholding condition: You hold, or have held at any point in the last 5 years, at least 1% of shares in any corporation, domestic or foreign. This includes GmbH, UG, AG, and equivalent foreign legal forms. It includes indirect holdings through a personal holding company. It includes equity granted through employee participation schemes if it constitutes a qualifying shareholding.
If both conditions are met, proceed. If either is not met, exit tax under § 6 AStG does not apply, though other German tax obligations on departure may still exist.
From 2025: Investment fund units where your acquisition cost exceeds €500,000 are also in scope. If you hold significant ETF or fund positions above that threshold, these need separate analysis alongside your corporate shareholdings.
Step 2: List every qualifying shareholding
Before you can calculate anything, you need a complete picture of what is in scope.
Work through the following:
Every GmbH, UG, AG, or foreign corporation where you hold 1% or more directly. Every corporation where you hold 1% or more indirectly through a holding company or trust. Any shareholdings you disposed of in the last 5 years that may still be relevant to the assessment. Equity received through advisory, employment, or founder arrangements where you may hold a qualifying stake. Dormant or minimal-activity companies that have accumulated value without recent activity. Investment fund units with acquisition cost above €500,000.
Each qualifying shareholding is assessed separately. A gain on one cannot be offset by a loss on another.
Step 3: Commission a professional valuation early
The Finanzamt uses the going-concern value (gemeiner Wert) of your shares, not book value, not the amount you originally paid in, and not a simplified multiple you calculate yourself.
If you do not submit a professional valuation, the Finanzamt applies a simplified income-based approach that typically produces a higher value than a properly documented professional assessment. The simplified approach works in their favour, not yours.
Commission an IDW S1 valuation from a qualified Wirtschaftsprüfer at least 6 months before your planned departure date. The valuation date is the day before your formal departure. Late valuation instruction is one of the most common and costly mistakes we see in exit tax cases. By the time most founders ask for a valuation, the departure is weeks away and the options to plan around it are already closed.
Step 4: Calculate the estimated tax bill
With a valuation in hand, the calculation works as follows.
The taxable gain is the fair market value of your shares on the day before departure minus your original acquisition cost. Under the Teileinkünfteverfahren, 60% of that gain is taxable. The taxable 60% is then subject to Germany’s progressive income tax rates, up to 45% plus 5.5% solidarity surcharge, giving a maximum effective rate of approximately 47.5% on the taxable portion. On the full gain, the effective rate works out to roughly 28.5%.
Illustrative example: GmbH shares worth €500,000 at departure, original acquisition cost €50,000. Gain: €450,000. Taxable under Teileinkünfteverfahren: €270,000. At 42% marginal rate plus solidarity surcharge: approximately €120,000 due.
The exact figure depends on your marginal rate in the year of departure and the specific gain on each shareholding. This is a planning calculation, not a filing number. The professional valuation and a tax adviser are both required for the actual figure.
Step 5: Establish your destination country before moving
Where you move changes your deferral options significantly.
EU or EEA destination (e.g., Portugal, Cyprus, Netherlands, Ireland): You can apply for 7 annual interest-free instalments under § 6 Abs. 4 AStG. No security is typically required for EU/EEA moves. This is the most favourable deferral route.
Non-EU destination (USA, Switzerland, UAE, UK): You can still apply for 7 annual instalments, but the Finanzamt will typically require security (Sicherheitsleistung) such as a bank guarantee or asset pledge. If security cannot be provided, the full tax may be demanded immediately on departure.
Switzerland sits in a particular position. The 2022 reform of § 6 AStG changed the treatment for Swiss moves. Post-2022 departures to Switzerland fall under the general instalment rules with a security requirement. Earlier moves had different treatment under the EU-Switzerland free movement agreement.
The destination country decision is irreversible once made. It must be established before departure, not reconsidered after.
Step 6: File the instalment application with your final tax return
If you are deferring via instalments, the application must be filed with the tax return for your year of departure. It is not automatic.
The application should request 7 equal annual interest-free instalments under § 6 Abs. 4 Satz 1 AStG. For non-EU moves, prepare the security proposal at the same time. If you are considering the 12-year extension (available where departure is for professional reasons), this must also be applied for at the same time.
File the Steuererklärung for the departure year on time. Late filing reduces your negotiating position with the Finanzamt and can complicate the instalment arrangement.
Step 7: Understand the conditions that revoke the deferral
The instalment arrangement is not unconditional. Several events can trigger immediate payment of the remaining balance.
Selling your shares during the instalment period: If you sell the qualifying shares before the instalments are complete, the deferral is revoked and the remaining balance becomes immediately due.
Dividend distributions above 25% of the assessed fair market value: Since 16 August 2023, distributions exceeding this threshold during the instalment period can trigger revocation. If you plan significant distributions, time them carefully relative to your departure date.
Moving to a third country during the instalment period: If you subsequently move from an EU/EEA country to a non-EU country while instalments are running, the arrangement may be affected depending on the destination and the remaining balance.
Plan dividend policy and any anticipated share transactions around these constraints before you move. Changing them afterwards is significantly harder.
Step 8: Evaluate the return-within-7-years option
Under § 6 Abs. 3 AStG, if you return to Germany and re-establish unlimited tax liability within 7 years of departure, the exit tax is cancelled retroactively. The 7-year period can be extended to 12 years on application if the departure was for demonstrable professional reasons.
If your move is genuinely temporary (a fixed-term assignment, a specific project, or a planned return) the return relief may make the exit tax a manageable administrative step rather than a permanent liability. Document the intent and circumstances of your departure clearly from the outset. Retrospective reconstruction of a return plan is difficult.
Step 9: Review pre-departure structuring options with a specialist
Several structuring options can reduce exit tax exposure, but all of them require significant lead time. None of them work if implemented in the weeks before departure.
Conversion of GmbH to GmbH & Co. KG: A GmbH & Co. KG is a partnership structure that is tax-transparent and not subject to § 6 AStG. Conversion needs to be completed well in advance and must not trigger Entstrickung under § 4 EStG.
Transfer to an inländische Familienstiftung: A domestic family foundation holding the shares may avoid exit tax on the departure of the individual founder. The foundation rules and tax treatment are complex and require specialist input.
Partial disposal before departure: Selling shares to bring a holding below 1% removes it from scope, but any actual disposal triggers realisation of the gain under § 17 EStG. This is a calculation that depends on whether the exit tax or the realisation tax is the better outcome.
All of these options require specialist tax legal advice and implementation time measured in months, not weeks.
Step 10: File all required notifications and maintain annual reporting obligations
Exit under § 6 AStG comes with ongoing reporting obligations that continue during the instalment period.
The departure and the qualifying shareholdings must be reported in the final German tax return. Annual notifications to the Finanzamt about changes in shareholding, distributions, or circumstances may be required during the instalment period. Changes in your country of residence during the instalment period must also be reported.
Missing these notifications does not make the liability disappear. It typically makes it worse.
Frequently asked questions
Does exit tax apply if I hold shares in a foreign company, not a German GmbH? Yes. § 6 AStG applies to shareholdings in any corporation, domestic or foreign, including foreign holding companies, foreign startups, and listed or unlisted equity held as a private asset.
What if my shares are worth less than I paid for them? Exit tax is only triggered on gains. If the fair market value is below your acquisition cost, there is no taxable gain under § 6 AStG. A loss cannot be applied against other gains.
Does exit tax apply to freelancers operating as sole traders? No. § 6 AStG applies only to shareholdings in corporations. Freelancers who operate as individuals without a qualifying corporate shareholding are not affected by this specific provision, though other departure-related tax obligations may apply.
How long does the valuation process take? A proper IDW S1 valuation for a GmbH typically takes 4 to 8 weeks. Starting the process at least 6 months before departure gives enough time for the valuation, the calculation, and any pre-departure structuring decisions.
Can I move to Ireland and still have to pay German exit tax? Yes. Moving to Ireland does not exempt you from German exit tax. Ireland is an EU country, which means you qualify for the 7 annual instalment deferral, but the underlying liability still exists and must be reported and managed.
The bottom line
Exit tax planning is one of the areas where the gap between acting early and acting late is most financially significant. The valuation, the destination country choice, the instalment application, the dividend policy, and any pre-departure structuring all need to be in place before you change your tax residency. Afterwards, the options narrow sharply.
If you are planning to leave Germany and hold a qualifying shareholding, the right time to start is now. Your first consultation with Richmond Blackwood is free. and we will work through your specific exposure and the options available before your move. Disclaimer
This article is for general informational purposes only and does not constitute tax or legal advice. Exit tax treatment depends on your individual facts, shareholding structure, residency history, and destination country. The rules described reflect § 6 AStG as in force in 2026 and are subject to legislative change. Always take advice from a qualified German tax professional before making any decisions about your departure.
