Wegzugsbesteuerung, what every long-term expat should know

Wegzugsbesteuerung (§6 AStG) is a fictitious sale tax. If you have held substantial shareholdings in a corporation (≥1% at any time in the last 5 years) and you stop being a German tax resident, Germany taxes the latent capital gain as if you had sold on the day you moved, even though no money actually changes hands.

It applies to shares in corporations (AG, GmbH, foreign corporations), not directly to ETFs, partnerships or operating sole proprietorships. The tax rate follows the normal partial-income (Teileinkünfteverfahren) rules for capital gains on substantial shareholdings.

Anyone who (a) has been an unlimited German tax resident for at least 7 of the last 12 years and (b) holds ≥1% in a corporation. The 1% threshold is per company, not per portfolio.

Classic cases: GmbH founders, employees with significant stock-option grants from corporate parents, expats who inherited stakes in family corporations.

Not exposed by default: typical retail investors holding ETFs and listed stocks below 1% per issuer.

Germany sets a 'fictitious sale price' for your shareholding at the day of move. The latent gain (fictitious price minus acquisition cost) is treated as a capital gain in your final German tax year.

Tax on this gain follows the partial-income method: 60% of the gain is taxable at your personal income-tax rate. The remaining 40% is tax-free.

If the company is hard to value, the tax office uses simplified valuation methods (often a multiple of average profits), which can produce unrealistic values, and disputes.

Since the 2022 reform, the exit tax is generally payable on departure (interest-free instalment payments over 7 years are available).

If you return to Germany as an unlimited tax resident within 7 years (extendable to 12 years on application) without having sold the shares, the exit tax is cancelled retroactively.

Translation: planned, time-limited moves can avoid the tax, but the planning has to be documented in advance, not improvised later.

Restructure into a partnership (KG/GmbH & Co. KG) before the move: §6 AStG targets corporations, so a converted holding can escape the trigger in some cases. Tax-heavy and not always worth it; needs a tax advisor.

Reduce the holding below 1% before the move (gift, sale to co-shareholders, dilution): removes the trigger entirely if structured cleanly and far enough in advance.

Move to an EU/EEA country and structure as a temporary stay: combined with the 7-year return rule, exposure can be eliminated.

Time the move to a low-valuation year. The fictitious price is set at the day of move, moving during a downturn produces a lower latent gain.

Step 1: identify whether you ever crossed 1% in a corporation in the last 5 years, including indirectly. Most people who think they're exempt actually need to check.

Step 2: if yes, get a Steuerberater specialised in international tax involved at least 12–24 months before the planned move. Last-minute planning rarely works.

Step 3: document everything. The Finanzamt will assume the highest defensible valuation; your job is to evidence a realistic one.