German Exit Tax 2026: Why Moving to Dubai Just Got More Expensive (and How to Plan It)

If you are a German entrepreneur or founder with a significant stake in a GmbH, AG, or similar corporation, the German exit tax Dubai calculation belongs in your relocation plan from the first day. Section 6 of the Außensteuergesetz (AStG), the German exit tax law, treats a permanent move abroad as if you had sold your shares. One correction before anything else, because the opposite is repeated all over the internet: no reform of Section 6 AStG took effect in January 2026. The rules that bite today were set by the ATAD implementation act, in force since 2022, and widened to investment fund units from 2025. This guide explains what the statute actually says, who is caught, and how to plan an orderly move from Germany to Dubai without a surprise tax bill the size of your company valuation.

This is not tax advice. It is a structured briefing for founders who want to walk into a conversation with a Steuerberater already understanding the rules.

What the German Exit Tax Actually Is

In plain language: if you have been a German tax resident for at least seven of the last twelve years, and you own at least 1 % of a corporation (at any point in the last five years), and you give up your unlimited German tax liability by moving abroad, German tax authorities pretend you sold your shares on the day you leave. They tax the imaginary capital gain as if you had cashed out.

You did not actually sell anything. You still own every share. But the state treats the move itself as a taxable realisation event.

The §6 AStG Trigger Threshold

• Shareholding threshold: ≥ 1 % in a domestic or foreign corporation, held at any point within the last five years
• Personal history test: you must have been subject to unlimited German tax liability for at least seven years within the last twelve, under Section 6 paragraph 2 AStG. Below that, the provision does not reach you at all
• Residency trigger: giving up unbeschränkte Steuerpflicht (unlimited tax liability) in Germany
• Tax base: the difference between the fair market value of the shares on exit day and the original acquisition cost
• Tax rate applied: the Teileinkünfteverfahren, 60 % of the gain is taxable, taxed at your personal progressive rate (up to 45 %) plus Solidaritätszuschlag and, if applicable, Kirchensteuer

A founder who built a GmbH worth 10 million euros from zero faces a notional gain of 10 million, of which 6 million enters the tax base, giving an effective tax liability somewhere north of 2.5 million euros. On a move. Before any liquidity event.

What the Statute Actually Says About Paying It

Many pages state that a 2026 reform cut the payment window to five years and added interest. The law does not say that. Section 6 AStG was last reshaped by the ATAD implementation act, in force since 2022, and widened to investment fund units from 2025. Here is the current text, point by point.

The Instalment Plan Runs Seven Years, Not Five

On application, the assessed exit tax can be paid in seven equal annual instalments. The wording of Section 6 paragraph 4 AStG is plain: the tax may "in sieben gleichen Jahresraten entrichtet werden". The application is normally granted only against security. The first instalment falls due within one month of the assessment notice. The rest fall due on 31 July of each following year. There is no five-year schedule and no front-loading anywhere in the provision.

The Instalments Carry No Interest

The same paragraph settles this in one sentence: "Die Jahresraten sind nicht zu verzinsen." The annual instalments bear no interest. So the carrying cost that many guides tell founders to plan for does not exist, as long as the instalments are paid on time.

Interest appears in one narrow case only. If you are inside the return relief below and you ask to be released from paying the annual instalments, deferral interest under Section 234 of the Abgabenordnung runs for the period of that postponement.

The Seven-Year Return Relief

If your absence is only temporary and you become subject to unlimited German tax liability again within seven years, the exit tax claim falls away. Three conditions attach. The shares must not have been sold, transferred or moved into business assets in the meantime. Distributions must not have exceeded a quarter of the exit-day value. And Germany's right to tax a later sale must be restored to the same extent as before. On application the tax office can extend the seven years by up to five more, where the intention to return still stands.

The claim that you must now prove the move was planned as temporary from the start runs against the case law. The Federal Fiscal Court held in its judgment of 21 December 2022, I R 55/19 that the temporary absence test is met independently of any return intention, provided the taxpayer becomes unlimitedly taxable again within the statutory period. The judgment was given on the earlier five-year version of the rule. The window is seven years now.

The Trigger Events the Statute Lists

Section 6 paragraph 1 AStG lists three events that count as a deemed sale at market value:

1. ending unlimited German tax liability by giving up your residence or habitual abode
2. transferring the shares for free to a person who is not subject to unlimited German tax liability
3. any other exclusion or restriction of Germany's right to tax a gain on the shares

There is no 183-day trigger in the text. A long stay abroad matters only where it ends your residence or habitual abode under Sections 8 and 9 of the Abgabenordnung, which is the first of the three events rather than a separate one.

Security, and the Annual Notification Duty

The instalment application is granted, in the words of the statute, "in der Regel nur gegen Sicherheitsleistung", meaning as a rule only against security. Section 6 AStG does not say what counts as security. That is decided under the general rules in Section 241 of the Abgabenordnung, which lists cash deposits with the tax office, pledged qualifying securities and savings deposits, first-rank mortgages on German land, and a guarantee from a guarantor the tax office accepts under Section 244 of the Abgabenordnung.

There is also a running duty while the plan lasts. Once a year, by 31 July, you file your current address and confirm the shares are still attributable to you. Separately, you report within one month any event that accelerates the balance. The whole unpaid amount falls due within a month if you miss an instalment, fail to meet the cooperation duties, file for insolvency, sell or transfer the shares, or take distributions above a quarter of the exit-day value.

Fund Units Came Into Scope in 2025

One genuine widening is easy to miss, because it does not sit in the AStG at all. Since 2025, privately held investment fund units are treated the same way on a move abroad. Section 19 paragraph 3 of the Investmentsteuergesetz catches them where you held at least 1 % of the units at any point in the last five years, or where the units you hold cost at least 500,000 euros to acquire. A private ETF portfolio can therefore trigger an exit charge with no company shares involved.

Where Dubai Actually Sits in This

Dubai has long been one of the most attractive destinations for DACH founders because of its 0 % personal income tax, 9 % corporate tax ceiling, and residency pathways tied to business setup or property investment. The UAE is not in the EU or the EEA. For years that single fact decided the German exit tax Dubai outcome, because EU and EEA movers could defer the tax indefinitely and interest free until a real sale, while everyone else had to pay.

That gap is gone. The ATAD implementation act removed the open-ended EU and EEA deferral with effect from 2022. Section 6 paragraph 4 AStG now draws no line at all between an EU move and a move to a third country. A founder moving to Dubai applies for the same seven interest-free annual instalments as a founder moving to Vienna.

What still makes the German move to Dubai different is the treaty position, not the payment plan. Germany's double taxation agreement with the UAE lapsed at the end of 2021 and has no successor. Our piece on what the lapsed German treaty means in practice covers that side of it.

How the Tax Is Calculated: A Worked Example

Assume a founder holds 100 % of a GmbH. Acquisition cost: 25,000 euros (original share capital). Fair market value on exit day: 5,000,000 euros.

That 1.35 million is assessed on the day you deregister in Germany. On application it is paid in seven equal annual instalments of roughly 193,000 euros, with no interest added. The first falls due within a month of the assessment notice, the rest on 31 July of each following year. The bill is real; the cash is not, because no shares have been sold.

This is the central planning problem: the tax arrives before the liquidity.

Planning Steps Before You Move

1. Valuation Before Relocation

Get a defensible, documented company valuation from a qualified auditor before you deregister. The Finanzamt will challenge weak valuations and apply its own, usually higher, figure. A conservative but well-argued valuation report is the single most important document in any §6 AStG filing. For businesses with irregular earnings, consider the IDW S1 valuation standard or a DCF with clearly stated assumptions.

2. Restructure Before the Trigger, Not After

Options that must be executed before residency changes include:

• Gifting minority stakes to family members already tax-resident in Dubai or another suitable jurisdiction, reducing your personal shareholding under planning rules
• Converting corporate holdings into a partnership (KG or GmbH & Co. KG) where §6 AStG does not apply in the same way to the partnership interest itself (though other rules still do)
• Selling to an employee participation plan or external investor before the move, triggering real capital gains (also taxable, but at least matched by actual cash)

Each option has its own pitfalls under German anti-abuse rules (§42 AO). None of them are casual paperwork exercises.

3. Time the Move Around Business Events

If your GmbH is about to receive a large commission, sign a major contract, or raise capital, these events will push valuation up. Moving after such an event means a higher tax base. Moving just before a valuation-lifting event, without signals you were timing it, can be defensible.

4. Set Up the Dubai Structure Before, Not During

A Dubai holding company, a mainland UAE LLC, or a free zone entity takes weeks to establish. If you deregister in Germany without receiving entities in place, you create a window where your German shares are dangling and your receiving structure is not ready. Our guide on setting up a company in Dubai: costs and steps 2026 walks through the timeline.

5. Line Up the Security for the Instalment Plan

The instalment plan is granted as a rule only against security, so what you can pledge belongs in the plan before the move. The general list in Section 241 of the Abgabenordnung covers cash deposits with the tax office, pledged qualifying securities and savings deposits, first-rank mortgages on German land, and a guarantee from a guarantor the tax office accepts.

Whether a particular asset is accepted is a decision of your tax office in your case. Get that in writing rather than assuming it. If no acceptable security can be given, the application can be refused and the full tax falls due on a single date.

6. Coordinate With Your Dubai Residency

A UAE Golden Visa, investor visa, or mainland business licence does not itself change the German exit tax calculation, but it can reinforce the case that the move is genuine and permanent. This matters for anti-abuse challenges from the Finanzamt, who may argue a short-term move was never real. If you are exploring visa options, our Dubai Golden Visa guide for 2026 covers the routes.

Common Mistakes That Trigger Bigger Bills

• Deregistering in Germany before the Dubai entity or residency is confirmed, creating a tax residency gap
• Budgeting for interest on the instalments, or for a five-year schedule, neither of which exists in the statute
• Assuming the return relief is narrower than it is, and writing it off before checking the seven-year window
• Assuming a particular asset will be accepted as security without asking the tax office first
• Missing the annual 31 July notification, or a single instalment, which makes the whole remaining balance due within one month
• Relying on a home-built valuation instead of a certified report
• Forgetting that partnership conversions have their own exit-tax cousins under §16 EStG
• Moving before receiving final written guidance from a German tax advisor on your specific trigger

The Interaction With Dubai's Tax System

Dubai does not levy personal income tax on capital gains, which is why the move is attractive in the first place. Corporate tax in the UAE applies at 9 % on profits above AED 375.000, with free zone companies potentially qualifying for 0 % on specific qualifying income. But none of this helps with the German exit tax itself. That liability is settled with the German Finanzamt, in euros, on the schedule Germany sets. Dubai simply provides the zero-tax environment the shares will live in from that point forward. For a fuller picture of the UAE side of the equation, see our taxes in Dubai for German expats guide.

When the Math Still Works

Even with the exit tax paid in full, a Dubai move can be net positive for founders whose companies will generate significant future income that would otherwise be taxed at German rates. A one-time exit tax of 1 to 2 million euros looks different against 20 years of income that would have faced combined German personal and corporate tax approaching 45 to 48 %. The calculation hinges on:

• Expected earnings of the corporation after relocation
• Expected dividend or sale path
• How long the founder intends to stay in Dubai
• Whether the company can plausibly be wound down and relaunched rather than transferred

For most founders in the 5 to 50 million euro valuation range, the break-even point on moving versus staying sits somewhere between three and seven years of post-move earnings. Below that, the exit tax is the dominant number in the decision. Above it, the Dubai move is still the better number.

What to Do Next

The German exit tax Dubai calculation is solvable, but not with a weekend of research. Any founder with shareholdings above the threshold should build the relocation plan with a German Steuerberater experienced in §6 AStG cases, supported by a UAE-side advisor who understands the residency and company structure options. START's consultation includes a structured intake of the exit tax picture as part of the full Dubai setup: company formation, residency, banking, and the sequencing that keeps your move clean. Contact START for a free consultation to get started.