Germany’s Federal Ministry of Finance has published a revised form for the application of the country’s exit tax rules. In addition to Section 6 of the Foreign Tax Act (AStG), it incorporates exit taxation for certain investment fund and special investment fund holdings introduced by the 2024 Annual Tax Act.
The form covers several groups of cases. These include events falling under Section 6 AStG from January 1, 2022, as well as cases under Section 19(3) or Section 49(5) of the Investment Tax Act (InvStG) occurring from January 1, 2025.
The associated reporting deadlines are particularly important. For cases under Section 6 AStG from 2022 and the covered investment and special investment fund holdings from 2025, taxpayers generally have to confirm their address and continued attribution of the holdings annually by July 31. Certain older cases dating up to the end of 2021 remain subject to a January 31 deadline.
Failure to submit the annual confirmation can have significant consequences. According to the Ministry’s instructions, in newer cases it results in the termination of the deferral or instalment arrangement. Any outstanding tax may then become payable within one month.
German exit taxation does not automatically apply to everyone who leaves Germany. Whether it applies in an individual case depends, among other factors, on the type and extent of shareholdings or investment fund interests and the relevant statutory requirements.
Relevance: Anyone permanently leaving Germany who holds substantial company interests or relevant investment fund holdings should check before moving whether German exit tax rules apply. Where a tax deferral or instalment arrangement already exists, the annual reporting requirements are particularly important because missing a confirmation can cause outstanding tax to become due.
