Does exit tax also apply to foreign companies or shares?
Question
I wonder if the German exit tax also applies to foreign companies or shares in companies. Because if not – meaning, if the German exit tax only applied to German companies (e.g. GmbHs) – then I could set up a foreign company before I move and gradually shift business activities there and wouldn't pay any exit tax – right?
Answer: Exit tax also applies to foreign companies
The short answer is that it doesn't work that way, since the German exit tax also applies to foreign companies or your shares in foreign companies.
The law explicitly states that corporate shares in corporations, where you hold more than 1% of the company, are affected by the German exit tax.
A few examples:
The law explicitly states that corporate shares in corporations, where you hold more than 1% of the company, are affected by the German exit tax.
A few examples:
- You hold 100% of a German GmbH --> Yes, affected by exit tax.
- You hold 2% of a German GmbH --> Yes, affected by exit tax.
- You hold 100% of a Singapore Pte. Ltd. --> Yes, affected by exit tax.
- You hold 100% of an Estonian OÜ --> Yes, affected by exit tax.
- You hold 100% of a US LLC --> Yes, affected by exit tax (special case see below).
What all these companies have in common is that they are corporations. And since you hold more than 1% in each of them, you are affected by the German exit tax through your shares.
Special case US LLC
The US LLC is an interesting special case – theoretically, it can be treated as either a corporation or a partnership. Ultimately, you effectively have a choice, depending on how you structure your operating agreement.
Whether incorporating a US LLC makes sense while still in Germany... I'm not so sure. I've looked into this in detail and it likely stands or falls on whether you can find a German tax advisor who is familiar with it and can handle your bookkeeping etc. for it.
Negative examples
Here are a few negative examples that would not fall under the German exit tax:
- You hold 100% of a US LLC classified as a partnership --> No exit tax.
- You hold 100% of a GmbH & Co. KG --> No exit tax.
However, it's not quite that simple, as with partnerships a so-called "Entstrickung" (disentanglement) occurs, simply put, a kind of exit tax on partnerships. The most relevant factor here is probably whether the permanent establishment actually remains in Germany; if that is the case, then no disentanglement would likely take place.
So concretely, if you had a GmbH & Co. KG that 1) has a German managing director (not you), 2) has substance in Germany (office etc.) and 3) is commercially active, then you would not pay exit tax here, since, simply put, the GmbH & Co. KG remains in Germany and is taxed there.
Summary
To answer the initial question briefly: Yes, the German exit tax also applies to your shares in foreign corporations.
Setting up a foreign company to avoid German exit tax therefore makes no sense in principle.
Setting up a foreign company to avoid German exit tax therefore makes no sense in principle.
By the way: Join our Telegram community to exchange ideas with other people who have solved the German exit tax for themselves!
Dr. Oliver Eidel
Ich bin Oliver und bin Unternehmer aus Deutschland - mein bekanntestes Unternehmen ist OpenRegulatory, welches eine Compliance-Software für Medizinprodukte-Hersteller anbietet.
Seit 2025 musste ich mich mit der deutschen Wegzugsteuer auseinandersetzen, da ich nach Thailand auswandern möchte. Auf dieser Webseite teile ich meine Erkenntnisse, die ich mir relativ mühsam durch (teure) Gespräche mit Steuerberatern erarbeiten musste. Hoffentlich spare ich dir dadurch Zeit und Steuerberatergebühren! :)
Seit 2025 musste ich mich mit der deutschen Wegzugsteuer auseinandersetzen, da ich nach Thailand auswandern möchte. Auf dieser Webseite teile ich meine Erkenntnisse, die ich mir relativ mühsam durch (teure) Gespräche mit Steuerberatern erarbeiten musste. Hoffentlich spare ich dir dadurch Zeit und Steuerberatergebühren! :)