Exit Tax: What Applies When You Move to Dubai

The exit tax (Wegzugsbesteuerung) is the most expensive item a move to Dubai can trigger, and the one most often overlooked. It taxes a gain that nobody has realised: when you move away, the tax office treats your shareholding as if you had sold it on that day.

Who is affected

Under § 6 of the German Foreign Tax Act (Außensteuergesetz, AStG), the rule applies when three conditions are met:

• You were subject to unlimited tax liability in Germany for at least seven of the last twelve years
• You hold at least one percent of a corporation: a GmbH, an AG or also a foreign company
• You give up unlimited tax liability, for example by moving away

The one percent threshold is lower than many assume. If you hold shares in a GmbH with five shareholders, you are almost always above it.

In the video: When unlimited tax liability actually ends, why deregistering with the residents' registration office is not enough, and what the tax office really looks at when you move away.

How high the tax is

The tax base is the value of the shares on the day you move away, less the acquisition costs. Taxation follows the partial income method (Teileinkünfteverfahren): 60 percent of the notional gain is subject to income tax, at your personal rate plus solidarity surcharge.

How much tax this results in depends on your personal rate; with a high income, the burden is in the high six figures. Payable without a single euro having been received.

What has changed since 2022

Previously, people moving within the EU and EEA could defer the tax indefinitely and interest-free. This option was abolished with the ATAD Implementation Act (ATAD-Umsetzungsgesetz) as of 1 January 2022.

What remains is payment in instalments: on application, the assessed tax can be paid in seven equal annual instalments. The instalments are interest-free but are generally only granted against security. This ties up assets over the entire term, a point that is easily lost in planning.

For a move to the Emirates, this change is particularly relevant because the UAE is outside the EU and EEA anyway. There was no special treatment here before either.

The tightening since 2025: funds and ETFs

With the Annual Tax Act 2024 (Jahressteuergesetz 2024), the exit tax was extended to investment fund units as of 1 January 2025. It is now set out in § 19(3) of the German Investment Tax Act (Investmentsteuergesetz, InvStG).

• Fund units are covered if you hold at least one percent of the units issued or the acquisition costs amount to at least EUR 500,000
• The thresholds apply per fund; holdings in several funds are not aggregated
• For units in special investment funds held as private assets, § 49(5) InvStG provides for no threshold
• Individual shares below one percent of the company remain out of scope

A broadly diversified portfolio is therefore not affected. But if you hold EUR 600,000 in a single ETF, you are.

The return rule

If you move away only temporarily and return within seven years, the tax can be reversed. On application, this period can be extended to up to twelve years.

This is not a planning tool but a fallback. If you are seriously planning to move away, you should not count on it; the return would actually have to take place.

Reporting obligations

Moving away must be reported to the tax office. Since 1 January 2026, the authorities have provided an official form for this in the form management system, which also covers the new cases under the Investment Tax Act.

If instalment payments are running, there is an additional annual obligation: your address and continued ownership of the shares must be confirmed as long as instalments are outstanding. Failures can cause the instalment arrangement to be revoked and the remaining debt to become due immediately.

What works in practice, and what does not

The most common misconception is that the destination country changes the amount. It does not. The tax is linked to the event of moving away, not to where you move. Dubai, Cyprus or Portugal lead to the same bill.

What the destination country influences is everything afterwards: ongoing taxation, residency and the question of a double tax treaty. There has been none between Germany and the UAE since the end of 2021; this makes planning more demanding, not the exit tax itself.

Planning measures therefore start before moving away, not afterwards: the structure of the shareholding, the valuation date and, where appropriate, a conversion. All of these routes need lead time and the involvement of your German tax adviser.

How we see it

Our division of roles is clear: we build and document the UAE side. The exit tax is German law and belongs in the hands of a German tax adviser.

What we can say from our client work: the most expensive mistake is the timing. If you move first and then have the numbers calculated, you no longer have any room for planning; the tax arose when you moved away. If you plan twelve to twenty-four months in advance, you do.

Our advice: have the shareholding valued before you set a date for deregistration. And at the same time, check whether you hold funds above the new thresholds; this point is so new that it still gets lost even in advisory meetings.

Clarify before moving away

• Do you hold at least one percent of a corporation?
• Were you subject to unlimited tax liability for seven of the last twelve years?
• Does a single fund have acquisition costs above EUR 500,000?
• Can you provide security for payment in instalments?
• Is a return within seven years realistic or ruled out?

As of 28 August 2026. This article does not replace individual tax advice.

How setting up in the Emirates follows on from this is explained on our page on tax planning.