German Exit Tax § 6 AStG: A Professional Guide for Shareholders

By Julian Thalmeir, Steuerberater & Fachberater für Internationales Steuerrecht · Last updated: May 2026 · ~22 minute read

THE SHORT ANSWER

For the first time since 2021, more people moved from the United States to Germany than the other way around. According to Germany’s Federal Statistical Office, around 19,300 people relocated from the US to Germany in the first three quarters of 2025 — up 3.4% year-on-year — while the opposite direction fell by 17.8%. Combined with record US expatriation numbers and a wave of high-earning professionals seeking stability, this creates a new kind of tax problem: people who built their wealth inside the US system (401(k)s, Roth IRAs, brokerage accounts, LLCs, trusts) are now landing inside one of the world’s most complex tax jurisdictions — Germany — and almost none of the US-side advice they received still applies. This guide explains, in nine concrete pitfalls and two checklists, exactly what to do before and after the move.

Key facts at a glance

Inverse migration confirmed: For the first nine months of 2025, ~19,300 people moved from the US to Germany (+3.4% YoY), while only ~17,100 moved from Germany to the US (–17.8% YoY) — the first net inflow since 2021 (Source: Destatis, November 2025).
125,800 US citizens now live in Germany — a 29% increase over the past decade (Destatis).
Roughly 180,000 US citizens left the United States in 2025 alone, part of a broader emigration of an estimated 2.2 million people from the US that year (Pew Research / Global Citizen Solutions, 2026).
Formal US expatriations jumped 102% year-on-year in Q1 2025 (1,285 expatriations), and the renunciation appointment queue at US embassies worldwide now exceeds 30,000 (Inman / Federal Register, 2026).
Germany’s new Chancenkarte (Opportunity Card) takes effect in March 2026, lowering the entry threshold for non-EU professionals. Blue Card salary threshold for 2026: €50,700 (€45,934 for shortage occupations).
Most expensive US tax structures in a German context: Roth IRA, US revocable living trusts, US mutual funds (PFIC mirror problem), and US municipal bonds — all four are commonly held by mid- and high-net-worth Americans and all four trigger unexpected German tax consequences.

The numbers: why this is a structural shift, not a blip

For two decades, the migration story between the United States and Germany followed a predictable pattern: roughly 12,000 Germans left for the US each year, slightly more Americans came in, and the German-American expat community in Germany hovered around 100,000. That pattern broke in 2025.

Three independent data sources confirm a structural reversal:

1.1 The Destatis numbers (November 2025)

Germany’s Federal Statistical Office reported that, in the first three quarters of 2025, around 17,100 people moved from Germany to the US — a 17.8% decline compared to the same period in 2024. Over the same nine months, around 19,300 people moved from the US to Germany, an increase of 3.4%. The last time the net direction looked like this was the pandemic-disrupted year of 2021.

Even more telling is the stock figure: in 2023, around 125,800 US citizens were living in Germany, up 29% over ten years. By contrast, the number of Germans in the US has fallen 11% in the same period to roughly 520,400.

1.2 The Pew and Global Citizen Solutions briefing (2026)

A briefing published by Global Citizen Solutions’ Global Intelligence Unit, drawing on Pew Research data, estimates that around 2.2 million people left the United States in 2025, of whom roughly 180,000 were US citizens. The numbers carry inherent uncertainty — the US discontinued its program tracking permanent departures in 1957 — but the trend line is unambiguous. Researchers describe it as the largest American emigration shift in decades.

1.3 The renunciation queue

Formal expatriations (citizenship renunciations published in the US Federal Register) jumped 102% year-on-year in Q1 2025, with 1,285 names listed in a single quarter. The global queue for renunciation appointments at US embassies and consulates now exceeds 30,000 people. Renunciation is the extreme end of the spectrum — most Americans relocating to Germany retain their US citizenship — but it captures the intensity of the trend.

2. The five forces driving the reversal

Macro statistics describe what is happening. They do not, on their own, explain why a software engineer in San Francisco, a partner at a New York law firm, or a retired physician in Boston would suddenly assemble a relocation plan for Germany. From conversations with our incoming clients in 2025 and early 2026, five forces dominate:

Political uncertainty and a sense of institutional drift, which surveys (Arton Capital, Immigration Advice Service) consistently identify as a top driver — 53% of US millionaires said they were more likely to leave the country regardless of who won the 2024 election.
Healthcare costs and access. For mid- and late-career professionals, the cost of US private healthcare past age 55 has reached a point where Germany’s statutory system (GKV) plus a private supplement (PKV-Zusatz) often costs less in absolute terms than US deductibles alone.
Education. Germany’s tuition-free universities and the strength of bilingual international schools in Munich, Frankfurt, Berlin, Heidelberg and Hamburg are pulling families with school-age children specifically.
Work-life infrastructure. Statutory paid leave of 20–30 days, paid parental leave (Elterngeld) of up to 14 months, and protected sick leave change the calculation for early-career professionals who can earn 70–80% of a US salary in Germany while keeping more of it after healthcare, childcare and tuition costs.
Visa accessibility. The Blue Card threshold has been progressively lowered (€50,700 for 2026, €45,934 for shortage occupations), and the new Chancenkarte (Opportunity Card), effective March 2026, allows skilled non-EU citizens to enter Germany for up to a year of part-time work and job search.

None of these forces, on its own, would create a measurable migration shift. Together, in 2025, they did.

3. The nine critical tax pitfalls for Americans moving to Germany

This is where almost every American arriving in Germany underestimates the complexity. The reason is structural: most US tax advice optimizes for the US side only and assumes the destination country will work out its own answers. Germany does not work that way. German tax law applies the worldwide income principle to anyone who establishes residence (Wohnsitz) or habitual abode (gewöhnlicher Aufenthalt), and it re-characterizes US tax instruments according to its own categories. The result: a 401(k) is not always a pension. A Roth IRA is rarely tax-free. A revocable living trust is sometimes a transparent vehicle and sometimes not — with dramatically different tax consequences. A US LLC can be a corporation in Germany while remaining a partnership in the US. And so on.

Below are the nine pitfalls that account, in our practice, for more than 90% of avoidable tax exposure on incoming US relocations.

3.1 Tax residency: the moment everything changes

The single most consequential question is not what you own, but when Germany starts taxing it. Under § 1 EStG, unlimited tax liability begins on the day you establish a Wohnsitz (a dwelling available for permanent use) or gewöhnlichen Aufenthalt (habitual abode, generally after 183 days). From that day forward, your worldwide income falls under German taxation, subject only to relief under the German-US double taxation treaty (DBA USA).

Two practical consequences are routinely missed. First, your German tax year begins on day one of residency, not on January 1 — meaning your income from the US between January and the move date is generally taxable in the US, while income from the move date onward is taxable in Germany under the Welteinkommensprinzip. Second, the US continues to tax you on your worldwide income regardless of where you live, because the US taxes by citizenship. You will file two parallel tax returns indefinitely. The DBA USA allocates which country has the primary right to tax which income, and a foreign tax credit (Anrechnung) on the German side or the FTC (Foreign Tax Credit) on the US side eliminates most — though not all — double taxation.

Practical action: the move date should be chosen deliberately, not reactively. Moving on December 1 versus February 1 can change the tax treatment of bonus payments, RSU vestings, capital gains realizations, and Roth conversions by amounts often exceeding $50,000.

3.2 401(k) and Traditional IRA: the most common misunderstanding

Almost every American arriving in Germany believes their 401(k) is “protected” or “tax-deferred” the same way it is in the US. It is not. Under Article 18A of the DBA USA (the 2008 protocol), distributions from US pension plans are generally taxable only in the state of residence — meaning Germany — once you become a German tax resident. The good news: Germany respects the deferral. You are not taxed on the unrealized growth inside the plan. The complicated news: when distributions begin (whether at age 59½ in the US or through Required Minimum Distributions at age 73), Germany treats the payouts under § 22 Nr. 5 EStG, and the taxable portion depends on whether the plan qualifies as a “qualified pension plan” under German rules.

Plans funded primarily through employer contributions and treated as occupational pensions tend to qualify for favorable treatment (Besteuerung als Leibrente or as betriebliche Altersversorgung). Plans funded largely through after-tax employee contributions sit in a different category and can be taxed at full marginal rates. The classification is fact-specific and depends on the plan documents — not on what the participant calls it.

Two specific risks: (1) a rollover from a Traditional 401(k) to a Roth IRA after German tax residence can trigger immediate German tax on the entire converted amount, without any corresponding US tax credit. (2) The German tax office may attempt to apply the so-called Altvertrag rules; whether a pre-2005 401(k) qualifies as an Altvertrag is currently litigated at the BFH and should be assessed individually before any distribution.

3.3 Roth IRA: “tax-free” in the US, often taxable in Germany

This is the most expensive single misunderstanding in the US-Germany relocation context. A Roth IRA is funded with after-tax dollars and grows tax-free in the US, with qualified distributions also tax-free. Many Americans treat it as the cornerstone of their retirement plan precisely because of this tax-free character.

Germany does not recognize the Roth structure as inherently tax-free. The DBA USA was negotiated before Roth accounts existed in their current form, and Article 18A’s reference to “pensions” does not automatically extend to Roth distributions. The current administrative position is that internal Roth growth is generally not currently taxable to a German resident (Germany respects the deferral inside the account), but the qualification of distributions is contested and depends on the precise structure of the account, the source of contributions, and the timing of conversions.

Worst case: a German resident takes a “tax-free” Roth distribution at age 60 and discovers that Germany treats the entire growth component (potentially decades of compounding) as ordinary investment income taxable at up to 45% plus solidarity surcharge. This is not a theoretical risk — it appears in our practice routinely.

Practical action: do not assume Roth distributions are tax-free in Germany. Document the cost basis, conversion history, and account composition before the move. In some cases, accelerating distributions before German residency begins is the right answer; in others, deferring is. The decision is highly fact-specific.

3.4 US revocable living trusts: from invisible to attributed

The US revocable living trust is so common in estate planning that most Americans forget they have one. In the US it is essentially a paperwork convenience — fully transparent for income tax purposes during the grantor’s lifetime. In Germany, the same trust can become a Vermögensmasse with its own legal classification under § 15 AStG, with three possible consequences:

Transparent grantor trust: assets and income attributed to the German-resident grantor as if held personally. Generally the most favorable outcome but requires documentation.
Non-transparent (opaque) trust: assets sit outside the grantor’s German tax base, but distributions to German-resident beneficiaries are taxed at distribution and Schenkungsteuer can apply on each distribution as a gift from the trust to the beneficiary — a far less favorable outcome.
Hybrid case: where the trust is revocable in form but functions opaquely in practice, the classification is contested and the risk of double taxation (income tax + gift tax + estate-tax interaction) is highest.

The decision tree depends on the trust deed, the grantor’s powers (revocation, replacement of trustee, direction of investments), and the historical pattern of distributions. The most expensive mistake is to leave the trust unchanged and hope for the best.

3.5 PFIC and US mutual funds: the mirror image of a familiar problem

Most US-Germany tax content focuses on the PFIC problem: when a US citizen invests in non-US mutual funds (including ordinary German ETFs), the US treats those funds as Passive Foreign Investment Companies, triggering punitive tax treatment under §§ 1291–1298 IRC. This is well known.

The mirror image is less well known and equally damaging. US mutual funds held by a person who becomes German tax-resident fall under the German Investmentsteuergesetz (InvStG). German law applies its own categorization (Aktienfonds, Mischfonds, Immobilienfonds, sonstige Investmentfonds) with different Teilfreistellung percentages, and it imposes the Vorabpauschale — a notional annual taxation of imputed growth — on accumulating funds. US-domiciled mutual funds typically do not produce a German tax certificate (Steuerbescheinigung), so the calculation must be reconstructed manually, year by year, and often involves the funds being treated as the least favorable category (sonstige Investmentfonds) for lack of better information.

Practical action: in many cases, the right answer is to liquidate US mutual fund positions before German residency begins, even at the cost of accelerated US capital gains, because the ongoing German tax inefficiency over a multi-year holding period exceeds the one-time US tax.

3.6 Brokerage accounts, municipal bonds, and capital gains

Three sub-problems combine here. First, individual stock and bond holdings in a US brokerage account: capital gains realized after German residency begins are taxable in Germany at 26.375% (Abgeltungsteuer plus solidarity surcharge), with the US-paid tax on the same gain creditable under the DBA USA. The risk is that the US broker withholds US tax that may or may not be fully creditable, depending on the asset class.

Second, US Treasury and corporate bond coupons follow the same logic. Third — and this is the trap — US municipal bonds, which are federally tax-free in the US and often state-tax-free as well, are fully taxable in Germany as ordinary investment income. There is no German equivalent of the US municipal bond exemption. A retired physician with $2 million in California municipal bonds yielding 4% will report $0 of taxable income in the US and around €72,000 of taxable income in Germany, taxed at a marginal rate that can exceed 45%.

Practical action: before the move, document every position with its tax character under both jurisdictions. Municipal bonds, in particular, are often the single largest avoidable tax cost in a US-Germany relocation, and the answer is usually to liquidate them and replace them with instruments that perform well under both systems.

3.7 Stakes in US entities: LLC, S-Corp, C-Corp, LP

US tax classification and German tax classification of business entities frequently diverge. The four most common problem cases:

US LLC (single-member): In the US, default treatment is a disregarded entity (income flows directly to the owner). In Germany, single-member LLCs are typically classified as Kapitalgesellschaften (corporations), meaning income inside the LLC is corporate-taxed at the LLC level and only distributions are taxed at the owner level. This can produce double taxation in the US-Germany interface — the same income is partnership-taxed in the US and corporate-taxed in Germany.
US LLC (multi-member): Default US treatment as a partnership; default German treatment depends on the LLC’s specific governance and is determined by a two-step “Rechtstypenvergleich” — the BMF letter of 19.03.2004 still provides the framework. Misclassification is common and the difference between transparent and non-transparent treatment can move the effective tax rate by 15–20 percentage points.
S-Corporation: Always a corporation for German purposes (Kapitalgesellschaft), never transparent. The S-Corp election is purely a US concept and has no effect on German taxation. Distributions are taxed as dividends; the corporation is taxed in Germany only if it meets thresholds under § 8 KStG, but the German shareholder is taxed regardless.
C-Corporation: Always a corporation in Germany. Dividends are taxed at 26.375% Abgeltungsteuer if held privately, or under the Teileinkünfteverfahren if held in a business context, with credit for US withholding tax under the DBA USA.

3.8 Gifts and inheritance: the worldwide trap

Germany applies the worldwide principle to inheritance and gift tax (Erbschaft- und Schenkungsteuer): a German tax-resident beneficiary is taxable on worldwide gifts and inheritances received, regardless of where the donor or estate is located. The German-US estate and gift tax treaty (which exists but is narrower than the income tax DBA) provides only partial relief and does not cover all asset types.

Three high-frequency scenarios produce unexpected tax:

Inheritance from a US parent of cash, securities, or real estate held in a revocable living trust. The trust dissolves on death in the US, and the German-resident beneficiary inherits — taxable in Germany at rates of 7% to 30% depending on tax class and amount, with US estate tax (rarely paid because of the high US federal exemption) generally not creditable.
Lifetime gifts above the spouse exemption (€500,000) or child exemption (€400,000 per child per donor over a rolling 10-year period). US donors frequently transfer assets at amounts well above these thresholds without realizing German tax is owed by the recipient.
US life insurance proceeds paid to a German-resident beneficiary. The German tax treatment depends on the policy structure; some products are treated favorably, others are not.

Reporting obligation: the German recipient must notify the responsible Finanzamt within three months of becoming aware of a gift or inheritance (§ 30 ErbStG), even before any tax return is filed. Failure to do so is a separate offense.

3.9 Reporting obligations: FBAR, FATCA, Form 3520 — and their German counterparts

US tax residents (including all US citizens regardless of where they live) face a layered reporting regime that does not disappear when they leave the US. The most consequential items for a Germany-resident American:

FBAR (FinCEN Form 114): Required for any non-US financial account or signature authority over $10,000 in aggregate at any point in the year. German bank accounts, brokerage accounts, and even some pension structures qualify. Penalties for willful non-filing reach $100,000 per violation or 50% of the account balance, whichever is greater.
Form 8938 (FATCA): Filed with the US tax return; thresholds are higher than FBAR but the asset categories captured are broader, including foreign pension interests and certain insurance products.
Form 3520 / 3520-A: Required for transactions with foreign trusts and for foreign gifts over $100,000 from individuals or $19,570 (2025) from foreign corporations or partnerships. Late filing penalties begin at $10,000 and scale to 35% of the gift/transfer.
Form 5471, 8865, 8858: Required for ownership of foreign corporations, partnerships, and disregarded entities respectively. Common trigger: a US citizen owns a UG, GmbH or German GbR. Penalty structure starts at $10,000 per form per year.

On the German side, the corresponding obligations are filed within the regular Einkommensteuererklärung (Anlage AUS for foreign income, Anlage KAP for investment income, Anlage SO for other income) plus the separate Erbschaftsteuer / Schenkungsteuer notifications and, where applicable, voluntary disclosure (Selbstanzeige) under § 371 AO for past omissions.

4. What the US taxes vs. what Germany taxes — at a glance

The following table summarizes the dominant treatment in each jurisdiction for the most common income types. It is not a substitute for individual advice — qualification depends on facts — but it captures the gravitational direction of each tax system.

Income / Asset type	US treatment	German treatment (post-move)	Net friction
Salary / wages	Taxed if US-source or US citizen	Taxed (worldwide principle from residency onward)	Low — DBA allocates; FTC eliminates double tax
401(k) / Trad. IRA growth	Tax-deferred	Tax-deferred (deferral respected)	Low (growth phase)
401(k) / Trad. IRA distribution	Ordinary income (US) if still US-resident	Taxed in DE under § 22 Nr. 5 EStG	Moderate — qualification as pension matters
Roth IRA growth	Tax-free in US	Generally deferred, but contested	High — case-by-case
Roth IRA distribution	Tax-free if qualified	Often taxable in DE (no automatic recognition)	Very high
US mutual funds	Standard US treatment	InvStG categories, Vorabpauschale applies	High — admin burden
US municipal bonds	Federally tax-free	Fully taxable in DE as investment income	Very high
US revocable living trust	Transparent	§ 15 AStG analysis; often attributed	High — depends on deed
US LLC (single-member)	Disregarded entity	Often a corporation in DE (Rechtstypenvergleich)	Very high
S-Corporation	Pass-through (US)	Always a corporation in Germany	High — qualification gap
C-Corporation dividends	Qualified dividend treatment in US	Abgeltungsteuer 26.375% (or Teileinkünfteverfahren)	Moderate
Brokerage capital gains	Short/long-term	Abgeltungsteuer 26.375% from residency	Low — FTC available
Inheritance from US parent	Federal exemption ~$13.6M (2025)	Worldwide principle; 7–30% in DE	High
Gifts above $19k / €400k	Annual exclusion logic in US	Notify Finanzamt within 3 months	High

5. The 12-step pre-move checklist

Confirm and document tax residency status: US citizen, green card holder, resident alien (substantial presence test), or non-resident alien. Determine prior years’ residency in each state to identify continuing US state tax exposure.
Inventory every US financial account: 401(k), Traditional IRA, Roth IRA, SEP IRA, SIMPLE IRA, HSA, brokerage, savings, checking, CD ladders, money-market accounts, and any signature authority over family accounts.
Inventory every entity stake: LLC (single- and multi-member), S-Corp, C-Corp, LP, LLP, and partnership interests. Note ownership percentage, voting rights, distribution history, and any guaranteed payments.
Identify every trust relationship: as grantor, trustee, protector, or beneficiary. Retrieve the trust deed, all amendments, the most recent statements, and any distribution notices.
Locate and digitize every US tax document: W-2s, 1099s, K-1s, plan statements, and brokerage consolidated statements for the past three years. These will be needed for both the US final-year return and the German opening return.
Determine the optimal move date. Date selection should consider RSU vesting cycles, bonus payment dates, capital gains realization opportunities, Roth conversion windows, and the German tax-year cutoff.
Decide which US investment positions to liquidate before residency. Default candidates: US-domiciled mutual funds and ETFs, US municipal bonds, and complex derivative positions.
Decide on Roth IRA strategy: accelerate distributions before move, hold and document, or convert further. The answer depends on age, expected German residency duration, and total Roth balance.
Audit US trust structures with a US-Germany lens. Common adjustments: dissolution of revocable living trusts, conversion to alternative structures, or formal documentation of grantor classification.
Plan US final-year return: confirm departure date, file Form 8854 if expatriating, document residency change for state tax purposes.
Pre-register with a German tax advisor (Steuerberater) specializing in US matters. The opening German tax return is the highest-risk filing in the entire arc — early engagement prevents structural mistakes that persist for years.
Prepare documentation for the Anmeldung (German residence registration), which triggers tax residency: passport, lease or property documents, marriage and birth certificates (apostilled if needed), and proof of health insurance compliant with German requirements.

6. The 10-step post-arrival checklist

- Complete the Anmeldung within 14 days of moving in. This is the legal moment tax residency starts.
- Obtain the Steuer-ID (tax identification number), which is mailed automatically after Anmeldung.
- Open a German bank account. Direkt-Banks (N26, ING, comdirect) are simpler; legacy banks (Sparkasse, Volksbank) sometimes require more documentation but offer better local support for property matters.
- Confirm health insurance enrollment: statutory (GKV) for employees under the threshold, private (PKV) for higher earners and self-employed. The choice has multi-decade tax and cash-flow implications and is difficult to reverse.
- File any Erbschaftsteuer or Schenkungsteuer notification (§ 30 ErbStG) within three months of becoming aware of a gift or inheritance event occurring after the move date.
- Notify the responsible Finanzamt of US tax obligations and request the relevant forms (Fragebogen zur steuerlichen Erfassung for self-employed activity).
- Continue US tax compliance: FBAR by April 15 (automatic extension to October 15), Form 1040 by June 15 (automatic extension for expats) plus FATCA Form 8938 if thresholds met.
- Reconstruct the opening balance sheet of every investment account in EUR, using the official ECB rate or HMRC-style daily rate on the move date — this becomes the German cost basis.
- If you hold US-domiciled mutual funds you did not liquidate, calculate the Vorabpauschale manually starting January 1 of the relevant year.

File the opening German tax return (Einkommensteuererklärung) by July 31 of the following year (or 28 February of the year after that with tax advisor representation), using the Anlagen AUS, KAP, R, V, SO as applicable.

7. Worked example: a tech professional from San Francisco

To make the abstract concrete, consider an anonymized but realistic case: a 41-year-old software engineering manager (the client) moving from San Francisco to Munich in July 2026 with his German spouse and two school-age children. The pre-move position:

Annual base salary: $340,000.
RSU vesting schedule: $180,000 in 2026, of which $90,000 vests after the move date.
401(k) balance: $620,000 (Traditional).
Roth IRA balance: $145,000 (built through backdoor conversions over 12 years).
Brokerage account: $480,000 (60% US individual stocks, 30% US-domiciled total-market ETFs, 10% California municipal bonds).
HSA balance: $48,000.
Revocable living trust holding the family home in Palo Alto (kept as rental after the move): mortgage $1.1M, market value $2.3M.

The interventions

Working backward from the move date, the team executed seven structural adjustments before the move. The municipal bonds (~$48,000) were liquidated in March 2026, accepting modest US tax in exchange for avoiding annual German taxation on $19,200 of municipal coupons that would otherwise have been fully taxable in Germany. The US-domiciled ETFs ($144,000) were liquidated and re-invested in UCITS-compliant equivalents domiciled in Ireland, eliminating both the German Vorabpauschale problem and the US PFIC risk on the German side. The RSU vesting schedule was reviewed with the employer’s stock-plan administrator and timing of two tranches was shifted by a few weeks to keep them on the US side of the residency line. The Roth IRA was documented thoroughly with contribution history and conversion records, ready for German tax-office review. The Traditional 401(k) was left in place — distributions are decades away, German treatment under Article 18A is favorable for plans of this structure. The HSA was documented but left in place; the German treatment of HSAs is not yet settled in administrative practice, and immediate distribution would have triggered US tax.

The revocable living trust holding the Palo Alto home was the most consequential decision. The trust was dissolved before the move, the home was retitled to the client and his spouse personally, and the rental was set up as a personal real estate holding. This eliminated the § 15 AStG risk of trust attribution and the related Schenkungsteuer exposure on every implicit distribution to the German-resident spouse, in exchange for a one-time US filing and the modest cost of retitling. Rental income from the Palo Alto home, going forward, is taxed in the US (Article 6 DBA USA gives the US primary taxation right for US real estate) and progression-relevant but not separately taxed in Germany (Anrechnungsmethode in conjunction with Progressionsvorbehalt).

The result

Total avoidable German tax exposure in years one through five, before adjustments: approximately €78,000 (Roth misclassification risk, Vorabpauschale on US ETFs, municipal bond income, trust attribution scenarios). After adjustments: approximately €4,500. The cost of the pre-move advisory and structural changes: approximately €18,500. The net protection in years one through five: approximately €55,000, with the larger benefit accruing in years six through fifteen as US-domiciled position values compound.

8. Frequently asked questions

When exactly does German tax residency start?

German unlimited tax liability begins when you establish a Wohnsitz (a dwelling available for permanent use) or gewöhnlichen Aufenthalt (habitual abode, generally after 183 days of presence). The Anmeldung (residence registration), required within 14 days of moving in, is the standard administrative trigger. From day one of residency, your worldwide income is subject to German taxation, with relief under the German-US double taxation treaty.

Do I still file US taxes after moving to Germany?

Yes. The United States taxes its citizens and green card holders on worldwide income regardless of where they live. You will file Form 1040 every year for as long as you hold US citizenship or a green card, plus FBAR (FinCEN 114) for non-US financial accounts and Form 8938 if asset thresholds are met. Double taxation is mitigated, not eliminated, by the foreign tax credit and the DBA USA.

Is my 401(k) taxable in Germany?

The growth inside the 401(k) is generally not taxable to a German resident — Germany respects the deferral. Distributions are taxable in Germany under § 22 Nr. 5 EStG once they begin, and the tax treatment depends on whether the plan qualifies as a pension under German rules. Plans funded primarily through employer contributions tend to qualify; plans funded primarily through after-tax employee contributions sit in a less favorable category.

Is my Roth IRA tax-free in Germany?

Not automatically. Germany did not exist Roth accounts in its current form when the DBA USA was negotiated, and the qualification of Roth distributions is contested. The internal growth is generally deferred (Germany does not tax unrealized growth inside the account), but distributions may be taxable in Germany as ordinary investment income. The treatment is fact-specific and depends on the account composition, conversion history, and the precise structure of contributions.

What happens to my US mutual funds when I move?

US-domiciled mutual funds fall under the German Investmentsteuergesetz (InvStG) once you become German tax-resident. The funds are classified into categories (Aktienfonds, Mischfonds, Immobilienfonds, sonstige Investmentfonds) with different partial-exemption rates, and the Vorabpauschale — a notional annual taxation of imputed growth — applies to accumulating funds. US funds typically do not produce a German tax certificate, so the calculation must be done manually and often results in the least favorable classification by default. In many cases, liquidation before the move and reinvestment in UCITS-compliant alternatives is the right answer.

Are US municipal bonds tax-free in Germany?

No. US municipal bonds are federally tax-free in the US and often state-tax-free as well, but Germany has no equivalent exemption. Coupons are fully taxable as investment income at the marginal German rate, which can exceed 45% plus solidarity surcharge. This is one of the single largest avoidable tax costs in a US-Germany relocation and the answer is almost always to liquidate before the move.

Do I need to dissolve my US revocable living trust?

Not always, but every revocable living trust needs to be reviewed under § 15 AStG and the related German classification rules before the move. The risk is that Germany may treat the trust as a separate Vermögensmasse with attribution to the grantor or treatment of distributions as gifts, both of which can generate unexpected German tax. In many cases, dissolution and personal retitling of the underlying assets is the cleanest solution; in others, the trust can be documented and maintained.

What is the German exit tax (Wegzugsbesteuerung), and does it apply to me?

The German exit tax under § 6 AStG applies to people leaving Germany who hold at least 1% in a corporation. For incoming Americans, it is generally not relevant on entry, but it becomes relevant if you later leave Germany while holding qualifying shareholdings. The 2022 reform tightened the rules significantly, and the EU “Gena” case before the ECJ may further reshape them. For incoming Americans, this is a topic to revisit before any future onward move.

How are German real estate purchases taxed?

Real estate transfer tax (Grunderwerbsteuer) ranges from 3.5% to 6.5% depending on the federal state, payable by the buyer once. Ongoing property tax (Grundsteuer) is modest by US standards. Rental income from a German property is taxed in Germany regardless of the owner’s residency. For US citizens, the rental income is also reportable in the US, with FTC for German tax paid.

Should I keep my US bank accounts when I move to Germany?

Generally yes, for ongoing US tax filings, RSU and equity proceeds, and Social Security receipts. The accounts must be reported on FBAR and may need to be reported to Germany on Anlage KAP for any interest earned. The choice of which US accounts to keep, and how to consolidate, is part of the pre-move plan.

Can I keep my US health insurance after moving to Germany?

Generally no, for routine care — Germany requires statutory or private health insurance compliant with German law, and US ACA plans do not qualify. Some clients maintain a US travel/medical policy for visits home, but the primary coverage must be German. The choice between GKV (statutory) and PKV (private) is one of the most consequential medium-term financial decisions and depends on income, age, family structure, and intended length of stay.

How long does the US-Germany double taxation treaty actually prevent double taxation?

The DBA USA assigns primary taxing rights to one country for each income type, and the other country provides relief via the foreign tax credit. In practice, double taxation is mitigated for most common income types (salary, pensions, dividends, interest, real estate income) but not always fully eliminated — qualification conflicts and timing differences leave residual exposure. The largest gaps tend to be in Roth IRA treatment, trust treatment, and gift/inheritance tax interactions.

Do I need a German tax advisor (Steuerberater) and a US CPA, or just one?

For any meaningful asset base, you need both. The two systems do not map onto each other, and tax advisors licensed in one jurisdiction cannot file in the other. The right model is a German Steuerberater specializing in US matters working alongside a US CPA who understands German residency — coordinated, not parallel. Our practice operates this way with several US CPA partners across the US.

What is the deadline for my first German tax return?

The default deadline for filing a German tax return is July 31 of the year following the tax year, with an extension to the last day of February of the year after that when filing with a tax advisor. For the opening return after a move, the practical timing is usually six to nine months after year-end.

Can I deduct my US tax payments on my German return?

Not as a deduction. US tax paid on income that is also taxable in Germany is credited against German tax under the Anrechnungsmethode (foreign tax credit method), up to the German tax that would otherwise be due on that same income. Excess US tax cannot be deducted against other German income. The mechanics are filed via Anlage AUS.

9. Sources and further reading

Statistisches Bundesamt (Destatis), Press Release 421 of 10 November 2025 on migration between Germany and the United States, January to September 2025.
Pew Research Center / Global Citizen Solutions Global Intelligence Unit, Briefing on US emigration trends, May 2026.
US Federal Register, Quarterly Publication of Individuals Who Have Chosen to Expatriate, Q1 2025.
Association of Americans Resident Overseas (AARO), Estimates of US Citizens Abroad, 2025/2026.
Convention Between the United States of America and the Federal Republic of Germany for the Avoidance of Double Taxation, in particular Article 18A as amended by the 2008 Protocol.
German Income Tax Act (EStG), §§ 1, 2, 22, 49 in particular.
German Investment Tax Act (InvStG), §§ 6, 16, 18.
German Foreign Tax Act (AStG), §§ 6, 15 in particular.
German Inheritance and Gift Tax Act (ErbStG), §§ 2, 16, 30.
BMF Letter of 19.03.2004 on the classification of foreign legal forms (Rechtstypenvergleich).
BFH judgment of 06.09.2023, I R 35/20 (Wächtler successor case) on exit tax deferral.

About the author

Julian Thalmeir is a licensed German tax advisor (Steuerberater, Steuerberaterkammer München) and Fachberater für Internationales Steuerrecht (Specialist Advisor for International Tax Law). His Augsburg-based boutique, Kanzlei Thalmeir, focuses exclusively on internationally mobile individuals, US citizens and green card holders in Germany, internationally active entrepreneurs, and high-net-worth families navigating two tax systems. The firm was recognized by Handelsblatt as one of Germany’s Best Tax Advisors 2026 (independent analysis, around 4,000 tax advisors reviewed) and holds a 4.9-star Google rating across 150+ verified reviews. Julian publishes in IWB (NWB Verlag) and works exclusively bilingual (German / English) with a fully digital workflow.

PLAN YOUR MOVE WITH CONFIDENCE

Every relocation is different, and every tax structure carries its own tradeoffs. If you are planning a move from the United States to Germany — or have already moved and want to make sure nothing has been missed — book a free 15-minute initial call. We will tell you within the first conversation whether and how we can help. www.stb-thalmeir.de · julian.thalmeir@stb-thalmeir.de · +49 151 10182818