Short answer: Your German tax residence ends only when you give up every residence (Wohnsitz) and your habitual abode in Germany. Deregistration (Abmeldung) alone is not enough. You will usually still file a German return for the year you leave, and German-source income such as rent from German property can remain taxable afterwards.
Many expats who are planning on leaving Germany ask us about the tax implications and what else they should consider before moving abroad. Leaving Germany can have important tax consequences and doing so does not automatically end all German tax obligations. Our clients often ask us what to consider before leaving Germany
Many expats who are planning on leaving Germany ask us about the tax implications and what else they should consider before moving abroad. Leaving Germany can have important tax consequences and doing so does not automatically end all German tax obligations. Our clients often ask us what to consider before leaving Germany.
This article answers three key tax questions expats should know before leaving Germany: how to end your tax residency in Germany, what ongoing tax obligations as a former German tax resident may remain and how and when to file your last German income tax return.
Tax Residence in Germany
As long as you have a residence (Wohnsitz) or a habitual abode (gewöhnlicher Aufenthalt) in Germany, you are generally subject to unlimited tax liability (unbeschränkte Steuerpflicht) in Germany. For details on the two concepts that establish a tax residence in Germany, see our blog article Tax Residency in Germany: Everything Expats Need to Know. As long as you are a tax resident in Germany, you are generally subject to taxation on your worldwide income. If you keep a home in another country, you may be considered a tax resident of both countries at the same time; see our article on dual tax residency. To end your German tax residence, you generally need to:
- give up any residence that remains available to you in Germany; AND
- end your habitual abode in Germany by leaving the country.
Your “Abmeldung” (deregistration) is an important practical step and can provide evidence of your departure. However, it does not by itself determine whether your German tax residence has ended. The actual circumstances of your residence and your overall living situation need to be assessed. Often, the German tax office requires further evidence, such as a travel calendar for the entire tax year.
Prinz.tax Practical Recommendation: Before leaving Germany, review your situation carefully to make sure your German tax residence ends. Your “Abmeldung” can serve as a strong indicator that your tax residence in Germany has ended. If you forgot to deregister, contact the municipal administration (“Einwohnermeldeamt”) of your former city of residence because the tax office often assumes that you are a tax resident if you have not done so. Additionally, we recommend maintaining a travel calendar to demonstrate that you have no habitual abode in Germany after leaving. If you need advice for your individual situation, we will be happy to assist you with a personal consultation.
Ongoing Tax Obligations
Even after you have ended your German tax residency, your tax obligations in Germany may continue. Continuing involvement in income-generating activities, such as rental income from German real estate, may subject you to limited taxation (beschränkte Steuerpflicht) as long as such activities exist. This will require you to submit a tax return to the German tax office, however, usually limited to income from German sources.
Further, we recommend that you review any German income tax prepayments (“Steuervorauszahlungen”), if any. If your German income will decrease or cease after leaving Germany, we recommend that you submit a formal request to the German tax office to reduce or cancel future prepayments.
Additionally, if you are self-employed or operate a business in Germany, you should also properly notify the relevant authorities when you discontinue your business activity (“Betriebsaufgabe”). If you don’t, the German tax office will usually require you to continue making income tax prepayments(“Steuervorauszahlungen”) and sales tax notifications (“Umsatzsteuervoranmeldung”). Failure to comply with such obligations may result in interest charges and penalties.
Finally, make sure that the Finanzamt has a valid correspondence address after leaving Germany so that tax assessments and other important correspondence can still reach you.
Prinz.tax Practical Recommendation: Before you leave, let us assist you with reviewing your ongoing tax requirements such as limited taxation, income tax prepayments, sales tax obligations and a valid mailing address. Our team can assist you with reviewing and managing these tax implications.
Last German Income Tax Return
If you are leaving Germany during a calendar year, you will generally still need to file a German income tax return for that year. The return is to be filed after the end of the calendar year. For the year in which you leave Germany, it is particularly important to correctly distinguish between the period during which you were subject to unlimited German tax liability and the period after having given up your tax residence in Germany.
During the period of unlimited tax liability, your worldwide income generally needs to be reported in your German income tax return. Depending on the type of income and your personal situation, income earned after your departure will usually not be subject to German income tax. However, it may need to be included in your German income tax return to assess your tax rate for the tax year. This concept is called income tax progression (“Progressionsvorbehalt”).
Prinz.tax Practical Recommendation: We recommend that you do not wait until after your move to think about your final German income tax return. Collect your documents before leaving and make sure you understand which income belongs to which period. At Prinz.tax, we prepare your tax return after the end of the year and communicate with the German tax office on your behalf. Where appropriate, this generally includes using our business address for official correspondence from the tax office.
Frequently Asked Questions
Does “Abmeldung” automatically end German tax residency?
No, your “Abmeldung” does not automatically end German tax residency. German tax residency generally ends when you no longer have a residence (“Wohnsitz”) or habitual abode (“gewöhnlicher Aufenthalt”) in Germany. Usually, “Abmeldung” is a strong indication that you have left Germany, but your actual living circumstances will need to be considered.
Do I have to file a German tax return after leaving Germany?
Yes, in most cases. If you leave Germany during a calendar year, you will generally need to file a German income tax return for the year of departure. Depending on your circumstances, you may also have German continuing filing obligations after your departure, for example if you continue to receive German-source income and are subject to limited tax liability in Germany.
Do I still have to pay German income tax after moving abroad?
Moving abroad does not necessarily end your German tax obligations. If you have ended your German tax residency, Germany may still tax certain German-source income, such as rental income from German real estate. In these cases, you may be subject to limited tax liability in Germany. Even with no ongoing German-source income you may be required to pay taxes in Germany for the year of departure.
How is foreign income treated in my final German tax return?
In your last tax return after leaving Germany, generally, your worldwide income needs to be reported. This includes foreign income earned while a German tax resident and after ending your tax residence in Germany. Depending on the type of income and the applicable tax treaty, such income will generally not be explicitly taxed in Germany but is relevant for determining your German tax rate under the income tax progression clause (“Progressionsvorbehalt”).
