No GmbH. Still a possible tax bill before a sale.

“I do not own a GmbH” answers the wrong question

The personal German exit tax in Section 6 AStG applies, subject to its other requirements, to certain shares within Section 17 EStG. Operating as a sole proprietor does not by itself create that kind of shareholding. That distinction matters. It says nothing conclusive about business assets, the value of a professional practice or relevant corporate shares the same person might also own privately.

“Asset exit tax” or “Entstrickungssteuer” is a common shorthand, not the name of one single tax in the statute. The German rules can bring unrealised gains into account if Germany loses or restricts a taxing right that it previously had. A third-party sale is not always required.

The table cannot replace a legal opinion. It does prevent a costly shortcut: when there is no qualifying private shareholding, the Section 6 shareholder analysis may end. The business asset analysis then begins.

Start with taxing rights, not the removal truck

The statute treats the loss or restriction of Germany's taxing right over the gain from “the disposal or use of an asset” as equivalent to a withdrawal for non-business purposes. Its express example is an asset previously attributable to a domestic permanent establishment becoming attributable to a foreign one. A value may therefore be brought into tax although the business has received no sale proceeds.

Do not imagine that one single block of goodwill flies out with the founder. Ask four questions about each material value:

1. What is the legally relevant asset? A specific right, software, a machine, an interest, the practice as a whole or something else? Client relationships and goodwill require their own classification. A contact list is not automatically a separately transferable tax asset.
2. Where does it belong now? To the sole proprietor, a German permanent establishment, the partnership, a partner's special business assets or private property?
3. What will actually change? Who will use, develop and manage the value? Who will carry its opportunities and risks? Who will sign contracts? Which establishment can support its attribution after the planned move?
4. What could Germany tax before and after? Domestic law and the applicable double tax treaty must both be read. The statutory trigger needs a real loss or restriction of a German taxing right.

That sequence sounds less exciting than “move abroad without exit tax.” It is more useful. It tells you whether you are planning a private relocation, an operating business move, a cross-border business with two working locations, or merely an untested story about one.

“Show me which business supports the asset today, which function will actually move tomorrow and when the first payment might fall due. Then we can talk about country and date.”

Three founders, three different answers

These scenarios are deliberately simplified. None approves an individual move.

Case A · The person leaves. The business stays.

A founder relocates privately with her family. A German operation continues with actual premises, people, decisions and attributable assets. Germany may keep taxing rights over those assets and related income.

Section 12 of the Fiscal Code describes a permanent establishment as a fixed place of business or facility serving an enterprise. Section 49 EStG can continue to bring certain domestic income into German taxation after non-residence.

The relevant treaty needs separate review. Her move alone does not establish asset exit taxation. A polished German business address alone does not prove that an operating establishment remains.

Case B · The work moves. A right may follow.

A software founder has developed and exploited a right through a German business. An overseas team and establishment later take on the key functions, and attribution of that specific right may change.

Section 4(1), sentences 3 and 4 EStG become a serious line of inquiry. The question is not simply where the server is located. It is what economic function and German taxing right actually move with the right.

If there are cross-border related-party dealings or a real transfer of functions, Section 1 AStG can raise a separate arm's-length issue. A sole proprietor's private relocation alone does not constitute a transfer of functions.

Case C · The whole practice moves.

An independent professional closes the substantive German activity and develops a practice abroad. If Germany's right to tax disposal gains on all assets of the business or a distinct part is lost or restricted, a deemed cessation under Section 16(3a) EStG has to be assessed.

Section 18(3) EStG applies relevant Section 16 provisions to professional income. This is a different inquiry from the exit of one individual asset. Intangible practice value calls for documented facts about transferability and continuation; a revenue multiple is not a legal valuation rule.

Your first action after these cases: Write down which of the three changes you actually propose. “I want to live abroad” does not describe any of them completely.

The hidden number is an unrealised gain, not your bank balance

Asset exit taxation can bring a value into account that the business does not hold in cash. A smaller founder can face the same liquidity problem as a large shareholder.

Consider a purely hypothetical example. The tax records show a business right at €80,000. A properly supported fair market value at the relevant date is €380,000. The €300,000 difference is a possible unrealised gain, not the tax and not automatically the final taxable exit gain.

First establish the asset's character, its old attribution, a real loss of taxing rights, the correct valuation date and the applicable income calculation. Only then can a tax adviser model the tax consequences, possible loss offsets and payment schedule.

You may have spent years building that right. It has not put another €300,000 in your bank account. Put three figures side by side before you decide: the possible tax after professional calculation, cash genuinely available in the business and the private reserve you need to protect for your family.

For each affected asset, the destination-country adviser must also establish its local tax basis and whether and how later double taxation may be avoided. A German exit value does not automatically become the same recognised starting value in the destination country.

Only then can you draw the useful timeline: When does the taxable event occur, when does the assessment arrive, when is the first payment due and when does cash actually come in? Without a sale, the last date may be unknown. Calculating the gain alone misses how you fund the transition.

A partnership is not a shield. The partner's special business assets may be the real story

For a German partnership, separate at least three layers: the partner as an individual; the partnership and its business assets; and any special business assets attributable to a particular partner. Section 15(1), sentence 1, no. 2 EStG addresses the co-entrepreneur relationship and special remuneration. German tax law also expressly recognises special business assets in Section 6(5) EStG. “We have a GmbH & Co. KG” answers none of those attribution questions.

If the partnership continues with a genuine German permanent establishment, Germany may retain taxing rights over associated values even if a limited partner moves privately.

If a particular asset, its use or its tax attribution changes across the border, an exit charge may still need to be considered. Separately owned qualifying corporate shares can still present a personal Section 6 AStG question.

The Federal Fiscal Court decision published in 2026 shows how deep that distinction runs. In I R 41/22, the claimant was a German GmbH & Co. KG. Shares in a Spanish S.L. were held as special business assets II of limited partners. The court accepted that a change in law or treaty can, in principle, cause passive asset exit taxation without an active transfer.

Whether the new treaty actually restricted Germany's right in this case remained open. The tax authority still lost on the disputed year. Any gain would have arisen before the legal change took effect. Timing is part of the legal test, not a later calendar correction.

“in der letzten juristischen Sekunde”

The companion decision, I R 6/23, provides the countercheck. For an Australian property, there was no passive exit charge of the kind asserted because Germany had no right to tax the disposal gain even under the earlier treaty.

The claimant was a GmbH in the disputed tax year. Its later conversion into a partnership does not make the case a partnership asset-exit decision. A country cannot lose a taxing right it never held.

“I want to see where each asset actually works and who may tax it after the move before a partnership impresses me. A line in the accounts does not settle that question.”

Creating a new partnership to hold GmbH shares is a restructuring question with its own contribution, valuation and later-exit risks. Our separate analysis Can German exit tax be avoided? tests that structure. This chapter deals with the existing partnership and its assets. It is not a restructuring instruction.

Five years, five payments, one fifth: three different rules

‘We can spread that over five years’ is not a plan. Ask exactly what is being discussed: taxable profit, payment of assessed tax or calculation of the tax attributable to qualifying income. These are three different mechanisms.

Section 4g spreads taxable profit, Section 36(5) spreads payment, and Section 34(1) calculates tax within one year. For a deemed cessation under Section 16(3a), relief for a qualifying gain may be available; the explanatory memorandum expressly refers to Sections 16 and 34. Whether it applies to your case belongs in the tax adviser's calculation.

There is another question under Section 16(4). From age 55, or for someone permanently occupationally disabled within the meaning of social insurance law, a once-only allowance of up to €45,000 may be available on application for a qualifying disposal or cessation gain. It starts to taper above €136,000 of gain and is exhausted from €181,000. Section 34(3) provides an alternative reduced rate under its own conditions. These are not concessions for the isolated move of an asset under Section 4(1), sentence 3.

Take a separate illustration: a €300,000 cessation gain already confirmed by a specialist as qualifying for relief. Under Section 34(1), one fifth (€60,000) enters the tariff comparison, and the resulting tax difference is multiplied by five. The gain still belongs to the same tax year; the Section 16(4) allowance has already tapered to zero at €300,000. This €300,000 is expressly not the automatically taxable amount from the earlier unrealised-value example.

The seven instalments for personal shareholder exit tax under Section 6 AStG are a separate, fourth route. Have three questions calculated separately: How large is the taxable gain? Which rate relief genuinely applies? What payment falls due when, including security and acceleration? None of these rules creates sale proceeds where no sale took place.

A printable asset and function map: eight checks before the first contract

Print this asset map and tick only what you can document. An empty box is a useful question for the first specialist meeting.

• □ Person: Who moves where, and when? Where are homes, habitual presence and business functions in fact located?
• □ Entity and ownership: Have you separated the sole proprietorship, professional practice, partnership, private corporate shares and investment funds?
• □ Assets: Which rights, software, equipment, data, contracts, shareholdings and potential practice goodwill are material? Which are separate assets in law and tax?
• □ Attribution today: Who owns each asset? Which German establishment, business, partnership balance sheet or partner's special business assets support it?
• □ Functions tomorrow: Who develops, uses and directs it after the move? Who carries the risk? Which people, premises and contracts remain in Germany?
• □ Taxing rights: What German rights existed before, and what rights remain under domestic law and the applicable treaty for disposal and use?
• □ Value and cash: What book value, valuation range, unrealised gain and destination-country tax basis need review? When might assessment, first payment and security follow?
• □ Clearance: Which German tax adviser and destination-country expert will confirm the attribution, any corporate or professional-law issues, applications and sequence before an irreversible step?

What this map can do: It supports an initial decision to obtain a rights-and-value opinion, document the operating model or pause implementation. It calculates no individual tax and provides no legal, tax or professional advice. Your marks on paper remain with you.

For tax advisers and specialist lawyers

You provide the tax or legal conclusion. Your client may also need an executable decision about location, family, governance and timing. No Borders Founder works with professionals when responsibilities and a shared fact base are defined from the outset.

Our Decision Office coordinates facts and handoffs. Regulated tax and legal judgments stay with the appropriately instructed advisers. We welcome complementary specialists as the network grows.

The real decision: which value may move, and when?

The decisive day is rarely the day you deregister an address. It may come earlier, when you sign a contract, move the work or change how a right is used. Afterwards you must be able to explain which business held the value before and what actually changed. That answer belongs before the signature.

Your family may be able to move while the business genuinely continues in Germany. Or a function may move with them whose unrealised value has not been separately assessed. Those paths call for different specialist questions and different funding plans.

Write down the next binding step. Which asset attribution could it change? Which specialist question must be resolved, and which payment funded, before it happens? If the answers are missing, postpone the operating step—not automatically your family's plans.

“I do not want an owner to learn only after moving that the value of a practice may have moved for tax purposes. Let us establish what remains here and what actually changes first.”