Relocation: Inbound & Outbound
Inbound relocations to Germany — from the United States, the United Kingdom, or elsewhere — are best addressed before the move, not after. The facts that will define the client’s German tax position for years are often decided in the final weeks before arrival: whether and when to realise pre-arrival gains, how to treat existing retirement accounts and investment positions, whether to restructure trust or corporate holdings, and what documentation to preserve for the inevitable German audit years later. Advice that arrives after the Anmeldung has already happened works with a shorter list of options.
German Exit Tax (§ 6 AStG)
Outbound moves from Germany raise exit taxation under § 6 AStG where the client holds a substantial shareholding in a corporation. The provision treats the emigration as a deemed sale, with hidden reserves in the shareholding realised at the point of departure. The valuation, the availability of interest-free deferral within the EU/EEA, the interaction with the departure-year income-tax return, and the consequences of a later return to Germany each require coordinated analysis. Where no substantial shareholding is in play, other provisions may still apply — § 17 EStG on dispositions, § 23 EStG on property within the speculation window, the § 49 EStG catalogue for continuing German-source income, and the § 50d Abs. 9 EStG treatment of employment income earned across the transition.
Cross-Border Severance Payments (Fünftelregelung, Treaty Allocation)
Severance structuring under § 34 EStG — the Fünftelregelung — remains one of the most material optimisation opportunities in German employment taxation, and one of the most poorly handled. Whether a particular payment qualifies turns on several simultaneous tests: the requirement of Zusammenballung (concentration of the payment in a single assessment period), the distinction between ordinary and extraordinary income, and the timing of the actual inflow. A severance structured correctly can save a six-figure sum; a severance structured carelessly forfeits the entire benefit.
Sabbatical and temporary-absence arrangements raise the § 8 AO residence question. A taxpayer who leaves Germany for twelve or eighteen months with the intention to return may or may not interrupt German unlimited tax liability, depending on the concrete circumstances. The analysis affects not only income taxation during the absence, but the application of § 6 AStG and the treatment of the eventual return.
Asset reorganisation in advance of a change in residence — the restructuring of holdings, the timing of realisations, the placement of low-basis assets in appropriate vehicles — is work that must be done months, sometimes years, before the move. Once residence has changed, the options narrow quickly.