German exit tax on private assets (ETFs, etc.): How it works
🇩🇪 Auf deutsch:
Wegzugsteuer auf Privatvermögen (ETFs usw.): So funktioniert sie
In Brief
- If you have been subject to tax in Germany for 7 of the last 12 years and now wish to leave Germany, you must pay the so-called exit tax.
- The exit tax covers, among other things, your shares in companies where you hold more than 1%.
- Additionally, there is an exit tax on your private assets. This includes funds where you hold an acquisition cost of more than €500k per fund.
- While solutions for optimizing the exit tax for corporate shareholdings (e.g., GmbHs) are often complicated, the solution here is relatively simple: You can simply sell your fund shares until you are back under €500k acquisition cost per fund.
In Detail: Exit Tax on Private Assets
While the German exit tax previously covered "only" corporate shareholdings, since January 1, 2025, it has been extended to the private assets of people leaving Germany.
To recap: Regarding corporate shareholdings, if one held a stake of more than 1% in a company, this holding was virtually deemed "sold" and the tax was paid on it upon moving away from Germany. Simplified greatly, this amount was calculated by multiplying the company's annual profit by 13.75 (!) and then taxing that amount at just under 30%. For a company with "only" €100k annual profit, this results in an exit tax of approx. €360k (!). Here is the link to the article with the basics and the calculation.
Previously, therefore, "only" corporate shareholdings were covered by the German exit tax. One could assume that the exit tax was targeted "only" at German entrepreneurs who might plan to move abroad to sell their company from there and pay no German taxes. "Normal" employees were therefore not affected by the exit tax until now.
As of January 1, 2025, this has changed. Now the exit tax has been extended to private assets. More specifically, funds in private assets where the acquisition cost exceeds €500,000 are now covered. These now also fall under the exit tax.
Calculation
As always, the disclaimer that I am not a tax advisor and am only compiling my notes here from (partly paid) conversations with tax advisors.
Generally, I would assume that the calculation proceeds analogously to the calculation for corporate shareholdings, i.e., only the profit is taxed and this is then taxed using the partial income method.
Concrete Example:
To recap: Regarding corporate shareholdings, if one held a stake of more than 1% in a company, this holding was virtually deemed "sold" and the tax was paid on it upon moving away from Germany. Simplified greatly, this amount was calculated by multiplying the company's annual profit by 13.75 (!) and then taxing that amount at just under 30%. For a company with "only" €100k annual profit, this results in an exit tax of approx. €360k (!). Here is the link to the article with the basics and the calculation.
Previously, therefore, "only" corporate shareholdings were covered by the German exit tax. One could assume that the exit tax was targeted "only" at German entrepreneurs who might plan to move abroad to sell their company from there and pay no German taxes. "Normal" employees were therefore not affected by the exit tax until now.
As of January 1, 2025, this has changed. Now the exit tax has been extended to private assets. More specifically, funds in private assets where the acquisition cost exceeds €500,000 are now covered. These now also fall under the exit tax.
Calculation
As always, the disclaimer that I am not a tax advisor and am only compiling my notes here from (partly paid) conversations with tax advisors.
Generally, I would assume that the calculation proceeds analogously to the calculation for corporate shareholdings, i.e., only the profit is taxed and this is then taxed using the partial income method.
Concrete Example:
- You have an ETF in your portfolio with an acquisition cost of €600k and it is now at €800k. You therefore have €200k in unrealized gains.
- You move away from Germany.
- The ETF is covered by the exit tax because you have an acquisition cost of more than €500k. Your profit is €200k (€800k - €600k). You must tax this using the partial income method, i.e., at approx. 30%.
Roughly estimated, you pay a tax of €200k * 30% = €60k.
So far, so "good". Here is another example of a scenario where you presumably would not fall under the exit tax on funds:
- You have an ETF in your portfolio with an acquisition cost of €400k, and now it is at €800k. You therefore have €400k in unrealized gains.
- You move away from Germany.
- The ETF is not covered by the German exit tax, as your acquisition cost is less than €500k. If you realize your profit of €400k in the future, i.e., after your move, you pay no (!) German capital gains tax or other German tax on this.
From the latter example, it also becomes clear why there is certainly a tax advantage here if one does not fall under the exit tax: One can realize previously unrealized gains after moving away from Germany and pay no capital gains tax on the profits.
Whether this is principally in the interest of the German state remains an open question – it would presumably be fair if one had to realize all unrealized gains before moving and pay capital gains tax. At the same time, that would affect a lot of people, since many "mobile" employees who move abroad have already set up private retirement provisions with ETFs.
So why only starting at €500k? One of the tax advisors I spoke with thought that it was likely that a wealthy German family entrepreneur wanted to move away from Germany. Since he held more than a 1% stake in his company, he would have fallen under the "normal" German exit tax on companies. With the help of an investment bank, however, he made a kind of "deal" where the bank buys his company, then sets up a fund (!) for him, properly with a WKN etc., which he receives in exchange and books into his portfolio. So he no longer owns his company directly, but now owns a fund based on his own company. And he could then sell that tax-free after moving away, at least if he moves to a country that has no capital gains tax.
According to the tax advisor, this loophole was then closed a short time later by the €500k rule.
Exciting story – I cannot verify if it is true, but it is a quite common observation that tax loopholes are closed by such additional rules shortly after their first "use". So it sounds at least plausible.
So what does a solution for the "exit tax on ETFs" look like?
Structure for Optimizing the "Exit Tax on ETFs"
The solution is basically quite simple: Structure your portfolio so that you hold an acquisition cost of less than €500k per ETF. The following portfolio would therefore be problematic:
- €600k iShares MSCI World (acquisition cost)
The following portfolio would be unproblematic:
- €499k iShares MSCI World (acquisition cost)
- €201k db xtrackers MSCI World (acquisition cost)
Yes, it is just as absurd as it looks – you can hold ETFs on the same index, but as long as they are "different" ETFs in the sense of different WKNs / ISINs and you hold less than €500k acquisition cost per ETF, this should be unproblematic.
At the same time, you should not sell all your holdings completely, since you don't have to get to €0, but only to less than €500k per ETF. So if you hold less than €500k per ETF and still have unrealized gains and move to a country that has a lower capital gains tax than Germany, you could realize the gains later in the more tax-favorable country. But you should probably discuss this again with a tax advisor.
Summary: Exit Tax on ETFs
I personally find it worrying that the exit tax has been repeatedly expanded in a historical context. Now it affects private assets for the first time. Furthermore, the threshold of €500k is not adjusted for inflation, i.e., the real, inflation-adjusted threshold will drop every year.
It is also conceivable that the threshold will be deliberately lowered politically at some point if more and more wealthy people leave Germany.
At the same time, I can understand why the exit tax was introduced here – because the fact that one can otherwise simply "take" unrealized capital gains abroad and then potentially realize the profits there without capital gains tax is a real loophole that principally disadvantages people who stay in Germany.
Whether one should therefore force everyone to realize their unrealized returns before moving away... that remains an open question.
It is also conceivable that the threshold will be deliberately lowered politically at some point if more and more wealthy people leave Germany.
At the same time, I can understand why the exit tax was introduced here – because the fact that one can otherwise simply "take" unrealized capital gains abroad and then potentially realize the profits there without capital gains tax is a real loophole that principally disadvantages people who stay in Germany.
Whether one should therefore force everyone to realize their unrealized returns before moving away... that remains an open question.
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! :)