The Ultimate Guide to UAE Tax for German Expats in 2025

German shareholders of companies trigger an exit tax upon relocation: the move abroad is treated as if you sold your shares at fair market value, and any hidden capital gain becomes taxable immediately.

For German citizens relocating to the UAE, the allure of a zero-percent personal income tax rate is powerful, but navigating the complexities of German tax law from abroad requires careful planning and expert advice. This guide provides a detailed analysis of the UAE tax for German expats, covering everything from severing German tax residency to understanding the new corporate tax system, ensuring you are equipped to make the most of your move.

The Main Concern: Understanding German Unlimited Tax Liability in the UAE

German citizens who relocate to the UAE must navigate a complex tax landscape. Germany taxes its residents on their worldwide income, whereas the UAE has no personal income tax. To successfully end your German tax residency, you must give up any German abode and definitively move your "center of life" to the UAE. A simple deregistration (Abmeldung) may not be enough if you still own or lease a dwelling in Germany that is available to you. The key to how to avoid German tax in Dubai is to provide clear evidence to the German tax office (Finanzamt) that your primary home and personal ties are now firmly in the UAE.

Even after you sever tax residency in Germany, a limited German tax liability may still apply to any German-source income, such as rental income from German property. A special rule known as erweiterte beschränkte Steuerpflicht (extended limited tax liability) specifically targets moves to low-tax countries like the UAE, potentially extending German taxation on certain German-source income for up to 10 years after you emigrate. Furthermore, German shareholders of companies (e.g., holding ≥1% of a GmbH) trigger an "exit tax" upon relocation, where the move is treated as a taxable sale of the shares.

The Expired Double Taxation Agreement Between Germany and the UAE

It is critical for expats to understand that there is currently no double taxation agreement between Germany and the UAE. The last treaty expired on December 31, 2021, and has not been renewed. As of January 1, 2022, German expats are taxed solely under German domestic law. This means Germany will determine your tax status strictly by its own rules (domicile, habitual abode, etc.), and formerly treaty-protected benefits no longer apply, making meticulous planning essential.

UAE tax for German expats: Business and the UAE Corporate Tax for German Entrepreneurs

While personal income is tax-free, the UAE introduced a federal corporate income tax (CIT) in mid-2023. The UAE corporate tax for German entrepreneurs is set at 0% on profits up to AED 375,000 and 9% on taxable profits above that threshold.

Crucially, the UAE will honor existing free-zone incentives. A qualifying free-zone company that meets substance requirements can generally continue at a 0% rate on its "qualifying" income. The choice between a Mainland and Free Zone setup is therefore a key strategic decision. Mainland companies face the 9% CIT but can trade freely across the UAE, while Free Zone companies offer greater tax efficiency for international business. Expert advice from a German financial advisor in Dubai is highly recommended to ensure your business is structured for optimal tax efficiency.

A German shareholder of a UAE company can repatriate profits (e.g. by dividends) without UAE tax deductions.

Banking, Pensions, and How to Repatriate Profits from the UAE to Germany

The UAE's banking system is modern and accessible, with no capital controls, allowing you to freely transfer funds. A key benefit is the ability to repatriate profits from the UAE to Germany without any withholding tax on dividends or service fees from the UAE side.

Regarding pensions, once you work in the UAE, you typically stop paying into the German public system. However, German nationals can make voluntary contributions to the Deutsche Rentenversicherung from abroad to preserve or increase their pension entitlements, a crucial aspect of long-term financial planning.

The Social Side: The German Expat Community in Dubai

Beyond the numbers, establishing your "center of life" involves building a new social and professional network. The vibrant German expat community in Dubai provides a strong support system for newcomers. With thousands of German nationals and over 800 German companies in the UAE, there are numerous formal and informal networks, business councils, and social groups that can ease the transition and provide valuable connections.

Tax Implications of Moving Back to Germany from the UAE

If you decide to return to Germany, your unlimited tax liability on worldwide income resumes immediately. The tax implications of moving back to Germany from the UAE are significant, as the tax benefits enjoyed abroad will no longer apply. Any retained capital or ongoing income from UAE assets would need to be declared on your German tax return.

Key Takeaway for German Expats

The UAE tax for German expats offers immense benefits, but it demands a rigorous and well-documented exit from the German tax system. On the UAE side, the new corporate tax laws require professional advice to ensure your business is set up for success. Given the complexities, working with an advisor experienced in Germany-UAE fiscal matters is not just recommended—it's essential for compliance and financial optimization.