Germany's Exit Tax (Wegzugsbesteuerung) Explained: How Section 6 AStG Works in 2026

Germany's exit tax, the Wegzugsbesteuerung, is one of the most frequently misunderstood features of the German tax system. It is set out in Section 6 of the Aussensteuergesetz (AStG), the German Foreign Tax Act. In simple terms, it can treat certain assets as if they had been sold at fair market value at the moment a person stops being a German tax resident, and it can tax the resulting unrealised gain even though no sale has actually taken place.

This article explains how the rule works and, importantly, corrects a common myth: that a second citizenship has anything to do with it. It does not. The information below is general and educational, and it is not a substitute for advice from a qualified German tax adviser (Steuerberater) who has reviewed your specific circumstances.

Mirabello Consultancy is a Swiss investment migration advisory. We are not a tax or legal firm and we do not provide tax advice. For questions about how citizenship and residency programmes work in general, you can book a free consultation, and we will always recommend that tax matters be confirmed with qualified counsel in the relevant country.

What is the Wegzugsbesteuerung under Section 6 AStG?

The Wegzugsbesteuerung is Germany's exit tax under Section 6 AStG. When a qualifying German tax resident ceases to be subject to unlimited German taxation, Germany can treat certain qualifying holdings as disposed of at fair market value on that date and tax the unrealised gain. No actual sale is required for the charge to arise.

The mechanism has existed in German law since 1972 and is designed to secure Germany's right to tax gains that built up while a person was resident. When the triggering event occurs, the difference between the acquisition cost and the fair market value of the qualifying assets is treated as a taxable gain in the person's final period of unlimited German tax liability.

It is important to be precise about scope. The rule does not reach every asset a person owns. It targets specific categories of holdings, principally substantial shareholdings and, since 2025, certain investment fund positions. Personal bank deposits and many other assets fall outside its scope. The exact treatment of any given holding is a technical question for a German tax adviser.

Who does the German exit tax apply to?

Section 6 AStG broadly applies to individuals who have been subject to unlimited German taxation for at least seven of the twelve years before they cease that unlimited tax liability, and who hold qualifying assets such as a shareholding of at least 1 percent in a corporation. Meeting these conditions, and then ending unlimited German residence, is what brings the rule into play.

The typical qualifying conditions for shareholdings are as follows:

• The person was subject to unlimited German tax liability for at least seven of the last twelve years before departure.
• The person held at least 1 percent of the share capital of a corporation, whether domestic or foreign, within the relevant period under Section 17 of the Income Tax Act (EStG).
• The person ceases to be a German unlimited taxpayer, which is the triggering event.

The phrase to focus on is ceasing unlimited German tax liability. That is the trigger. It usually happens when a person moves their residence and centre of vital interests abroad. Nothing about the number or type of citizenships a person holds forms part of these conditions.

Does holding a second citizenship trigger or avoid German exit tax?

No. A second citizenship neither triggers nor avoids the German exit tax. The Wegzugsbesteuerung is triggered by ending unlimited German tax residence, and nationality is not a condition of the charge. Under German law, citizenship and tax residence are distinct concepts that are assessed separately.

This is worth stating plainly because the point is often confused. A German citizen who also holds another passport, but who continues to live in Germany and remains a German tax resident, is in exactly the same exit tax position as any other German tax resident. Acquiring an additional nationality does not, by itself, change a person's tax residence and does not create or remove any Section 6 AStG liability. Equally, a second passport does not shield anyone from the charge if they do cease German residence and the conditions are met.

Tax residence is determined by where a person actually lives and has their centre of vital interests, not by the documents in their pocket. Any decision that could affect tax residence should be assessed by a qualified German tax adviser before it is taken.

What changed for ETFs and investment funds in 2025?

Since 1 January 2025, Section 6 AStG also applies to certain investment fund and ETF holdings, broadly where a person holds at least 1 percent of a fund's units or where the acquisition cost of a position reaches a defined threshold. This extended the exit tax beyond corporate shareholdings to capture substantial fund positions that previously fell outside its scope.

Before this change, the rule generally reached significant corporate shareholdings but not fund units. The 2025 extension broadened the categories of qualifying assets so that large investment fund and ETF positions can now fall within the exit tax where the statutory thresholds are met. The precise thresholds, definitions and transitional details are technical, and they should be confirmed against the current statute and official guidance rather than assumed.

For anyone with a meaningful fund or ETF portfolio, the practical consequence is simply that these holdings may now need to be considered in the same analysis as company shareholdings. This is a reason to seek professional review, not a reason to make hurried decisions.

How is the exit tax collected, and what is the EU/EEA deferral?

On a move to another EU or EEA state, an interest-free deferral of the German exit tax, known as a Stundung, generally applies until the qualifying assets are actually disposed of, subject to conditions. This means the charge is calculated at departure but its collection can, in qualifying cases, be suspended rather than paid immediately.

The deferral is a suspension of collection, not a cancellation of the assessed amount. Depending on the circumstances, the deferred tax can become payable on a later actual disposal of the asset, or if the qualifying conditions cease to be met. Whether a deferral is available, on what terms, and for how long, depends on the destination and on the individual's facts. These are precisely the kinds of questions that a German tax adviser is qualified to answer.

It should not be assumed that any particular destination produces any particular outcome. The rules distinguish between EU/EEA situations and others, and the details have changed over time. The correct approach is to obtain a written analysis of your own position from qualified counsel before relying on any deferral.

Do German reporting duties and CRS continue after leaving?

Yes. German notification and reporting obligations, and the international exchange of financial account information under the Common Reporting Standard (CRS), continue to apply. Ceasing German residence does not switch off reporting, and financial institutions in participating jurisdictions report account information to tax authorities under the OECD CRS framework.

In practice, this means transparency is the norm. Relevant notifications connected with the exit tax must be filed with the German tax authorities, and financial accounts held abroad are generally reportable between participating countries. Because the exact filings and deadlines depend on individual facts, they should be handled with professional support. Failure to comply with German reporting duties can carry consequences, which is a further reason to work with a qualified adviser.

How do citizenship and residency programmes relate to this topic?

Citizenship by investment and residency by investment programmes are entirely separate from the German exit tax and should never be presented as a way to reduce or avoid it. They are lawful routes to additional nationality or residence rights that people pursue for many reasons, such as mobility, family security, and long-term planning. They do not change how Section 6 AStG operates.

Because the exit tax turns on tax residence and not on nationality, acquiring a passport through a citizenship programme has no effect on a person's German tax residence by itself. Where a person is genuinely considering a change of residence, the tax consequences in Germany and in the destination country are matters for qualified tax counsel in each jurisdiction, engaged before any move.

For readers who simply want to understand the programmes themselves, Mirabello Consultancy maintains neutral, factual overviews. You can review European residency options such as the Greece Golden Visa, the Portugal Golden Residence Permit, and Cyprus permanent residency, or non-EU options such as the United Arab Emirates Golden Visa. Broader comparisons are available on our residency by investment and citizenship by investment hubs. None of these pages should be read as tax guidance.

Where to find the official rules

The primary source for the German exit tax is the statute itself, Section 6 AStG, together with official guidance published by the German Federal Ministry of Finance (Bundesministerium der Finanzen). You can consult the ministry at the German Federal Ministry of Finance. For the international reporting framework that continues to apply after departure, the OECD Common Reporting Standard is the authoritative reference. Both should be read alongside advice from a qualified German tax adviser.

Frequently asked questions

The questions below are answered for general information only and do not constitute tax or legal advice. Please confirm your own position with qualified German tax counsel.