Germany expat tax: residence, 2026 rates and the exit tax when you leave

Germany is one of the most expensive places in Europe to earn a salary. Not because of the 45% top rate, but because social security takes almost another fifth of your pay. A single employee on about US$100k loses around 41% to tax and contributions.

Germany is also hard to leave. If you own 1% or more of a company, you're taxed as if you'd sold it on the day you move out. And German nationals who move to a low-tax country can stay partly taxable for another ten years.

This guide covers German personal tax for people moving to, living in or leaving Germany in 2026. The tax year is the calendar year.

What's changed: for 2026 the tax-free basic allowance rose to €12,348 and the 42% rate now starts at €69,879 of taxable income. The solidarity surcharge starts once income tax passes €20,350. Social security ceilings rose to €101,400 (pension) and €69,750 (health), with a 2.9% average additional health rate. Since 2025 the exit tax also reaches large fund holdings, and a March 2025 ministry letter confirmed crypto held over a year is tax free.

📋 Germany tax at a glance for 2026

Leaving Germany: the exit tax and the 10-year tail

Most countries let you go once you've moved out. Germany has two rules that can follow you.

Image 1 — Germany can tax you after you leave

The exit tax on shareholdings

If you've been fully taxable in Germany for seven of the last twelve years and held 1% or more of a company (German or foreign) in the last five years, leaving counts as a sale of those shares at market value. You pay tax on a gain you haven't banked.

• Who it hits: founders, start-up staff with equity and family company owners. Listed shareholdings below 1% aren't caught.

• How much: 60% of the gain is taxed at your normal income tax rate (the partial income method).

• Paying: you can pay in seven equal yearly instalments, without interest, usually against security. Selling the shares makes the rest due at once, and you confirm your address to the tax office by 31 July each year.

• Coming back: if you return within seven years, the tax falls away, as long as you haven't sold the shares. The tax office can extend the period by up to five years.

👉 Foreign Tax Act section 6: the exit tax (in German)

If you leave after 31 December 2024, the exit tax also reaches investment funds: units in a fund where you held at least 1% in the last five years, or that cost you at least €500,000.

👉 Investment Tax Act section 19(3): exit tax on fund units (in German)

The 10-year extended tax liability for German nationals

This rule only applies to German citizens. If you were fully taxable for five of the last ten years and move to a low-tax country while keeping essential economic interests in Germany, you stay taxable on more German income for the year you leave and ten more years.

• Low tax means income tax on €77,000 is more than a third lower than in Germany, or you get a preferential regime.

• Economic interests include a German business, a 1% stake in a German company, or German income over €62,000 or 30% of your total.

• What's taxed: income that isn't "foreign income" under German rules, at your worldwide rate, in years when it exceeds €16,500.

Inheritance and gift tax has its own tail: German nationals stay fully liable for five years after leaving if they have no German home.

👉 Foreign Tax Act section 2: extended limited tax liability (in German)

When you become tax resident in Germany

You're fully taxable in Germany on your worldwide income if you have either of these:

• A domicile (Wohnsitz): a home you keep and use. You don't need to live there most of the time.

• A habitual abode: a stay that isn't just temporary. More than six months in a row always counts, from the first day, and short trips away don't break it. Purely private visits or holidays of up to a year are excluded.

There's no 183-day count. A flat you keep available can make you resident from day one.

How you stop being resident

You stop being fully taxable when you give up both your German home and your habitual abode, so sell, let or give up any home you could still use. Deregistering alone isn't enough if you keep a flat available.

If two countries claim you, a double tax treaty decides. But a treaty doesn't stop the exit tax, and Germany has no treaty in force with the UAE.

👉 Fiscal Code section 9: habitual abode and the six-month rule (in German)

👉 Fiscal Code section 8: domicile (in German)

Income tax rates for 2026

Germany uses a formula rather than simple bands, so your rate climbs smoothly from 14% to 42%.

Germany income tax rates for 2026 (single person)

Source: Income Tax Act section 32a, values from 2026. Married couples filing jointly pay twice the tax on half their combined income, which doubles every threshold.

Two surcharges can apply on top:

• Solidarity surcharge: 5.5% of income tax, only once your income tax exceeds €20,350 (€40,700 jointly). It phases in up to about €37,800 of income tax, and always applies to the flat tax on investment income.

• Church tax: 8% or 9% of income tax, depending on the state, only for members of a church that levies it.

👉 Income Tax Act section 32a: the 2026 tax formula (in German)

👉 Solidarity Surcharge Act section 3: the €20,350 exemption limit (in German)

👉 Federal Ministry of Finance: An ABC of Taxes (church tax and trade tax)

Worked example

• You're single, have no children, aren't a church member and earn €87,000 (about US$100k) as an employee in 2026, with statutory health insurance.

• Your employee social security is €16,999: pension €8,091, unemployment €1,131, health €6,103 and long-term care €1,674.

• After the €1,230 employee allowance and deductions for pension, health and care contributions, your taxable income is €70,110. Income tax is €18,310. That's below the €20,350 limit, so there's no solidarity surcharge.

Your all-in bill is about €35,310, or 41% of your salary. Income tax alone is 21%; the other 19.5% is social security. Church tax at 9% would add about €1,650.

Freelancing in Germany

Germany splits the self-employed into two groups.

• Freelancers (Freiberufler): the liberal professions, such as doctors, lawyers, engineers, architects, journalists, translators and teachers. You pay income tax on your profit and no trade tax.

• Businesses (Gewerbe): everyone else who trades. You also pay municipal trade tax on profit above a €24,500 allowance, but sole traders can claim a credit for it against income tax.

Most freelancers pay no compulsory pension contributions. Exceptions include self-employed teachers, carers, midwives, artists and writers.

Health insurance is compulsory for everyone living in Germany. In the statutory system a freelancer pays the whole contribution: 14.0% (without sick pay) plus the average 2.9% additional rate, plus 3.6% long-term care (4.2% if childless and 23 or over), on income up to €69,750. Private cover is the alternative.

On €87,000 of profit that's about €14,720 of health and care contributions and €19,207 of income tax, about 39% all-in.

👉 Social Code Book VI section 2: self-employed people who must pay pension contributions (in German)

👉 Insurance Contract Act section 193: the duty to hold health insurance (in German)

Crypto, investments and pensions

Dividends, interest and gains on shares and funds are taxed at a flat 25%, plus the 5.5% solidarity surcharge and any church tax, usually deducted by your bank. The first €1,000 a year (€2,000 for a married couple) is tax free.

How is crypto taxed in Germany? Privately held crypto isn't treated like shares. The private sales rules apply instead.

• Held more than one year: the gain is tax free.

• Held one year or less: taxed at your normal rate, unless your total private sale gains for the year are under €1,000. At €1,000 or more, all of it is taxed.

• Swaps count: exchanging one crypto for another, or paying with it, is a sale.

• Staking and lending don't stretch the holding period to ten years.

A German state pension is taxed on a share set by the year it starts: 84% for pensions starting in 2026. How a foreign pension is taxed depends on the type of pension and the treaty with the paying country.

Germany has an inheritance and gift tax. Allowances are €500,000 for a spouse, €400,000 for each child, €200,000 for each grandchild and €20,000 for most other people. Rates run from 7% to 30% for close family and up to 50% for unrelated heirs. There's no wealth tax in Germany at present.

👉 Federal Ministry of Finance letter of 6 March 2025 on crypto-assets (in German)

👉 Income Tax Act section 23: private sales and the one-year rule (in German)

👉 Income Tax Act section 20: investment income and the €1,000 saver's allowance (in German)

👉 Income Tax Act section 22: the taxable share of pensions by starting year (in German)

👉 Inheritance and Gift Tax Act section 16: tax-free allowances (in German)

Social security

Employees and employers share most contributions equally. The employee shares for 2026 are:

• Pension: 9.3% (half of 18.6%) on earnings up to €101,400 a year.

• Unemployment: 1.3% (half of 2.6%) on earnings up to €101,400.

• Health: 7.3% plus half your fund's additional rate (2.9% on average), on earnings up to €69,750.

• Long-term care: 1.8% (half of 3.6%), or 2.4% if you're 23 or over and childless, up to €69,750. In Saxony employees pay 0.5 points more.

That's up to 21.75% of pay below the health ceiling. Employees earning over €77,400 can choose private health insurance.

👉 Federal Ministry of Health: health insurance contributions for 2026 (in German)

👉 Federal Ministry of Health: long-term care rates and 2026 contribution ceilings (in German)

Double tax treaties

Does Germany have double tax treaties? Yes. The Federal Ministry of Finance list at 1 January 2026 shows income tax treaties with 96 countries and territories. Two of them aren't currently applied: the UAE treaty expired at the end of 2021, and the Belarus treaty has been suspended since 2025. Russia has suspended most of its treaty from its side.

Partners include the UK, the United States, France, Spain, Italy, the Netherlands, Switzerland, Austria, Canada, Australia, India, China, Japan and Cyprus.

👉 Federal Ministry of Finance: status of double tax treaties at 1 January 2026 (in German)

Living in Germany as a remote worker

Germany has no digital nomad visa. EU, EEA and Swiss citizens can simply move. For everyone else there are two practical routes.

• Freelance residence permit (section 21 of the Residence Act): you show you can fund your work, and over-45s need pension provision. It's first issued for up to three years.

• Opportunity Card: a job-search permit for up to a year, needing at least €1,091 a month in 2026. You can work up to 20 hours a week while you look.

Neither route has a tax break. Once you have a home in Germany or stay more than six months, you're taxed on your worldwide income.

👉 Make it in Germany (federal government portal): visa for self-employment and freelancers

👉 Make it in Germany (federal government portal): the Opportunity Card

Who is Germany good for?

How does Germany compare for different kinds of mover? Ratings are relative to the 150+ countries TaxPilot covers, based on 2026 rules and the all-in cost including social security and health contributions.

☑️ Who is Germany good for? Tax ratings for expats in 2026

Filing and deadlines

Employees have tax deducted through payroll, and many with only a salary don't have to file. Freelancers and most people with untaxed income must file, usually online through ELSTER.

• Filing yourself: the 2026 return is due seven months after the year ends. 31 July 2027 is a Saturday, so the deadline moves to Monday 2 August 2027.

• With a tax adviser: the deadline moves to the last day of February in the second year, which is 29 February 2028 for the 2026 return.

If you leave Germany with an exit tax bill paid in instalments, remember the yearly 31 July confirmation to the tax office.

👉 Fiscal Code section 149: filing deadlines (in German)

Frequently asked questions

What are the income tax rates in Germany in 2026?

The first €12,348 of taxable income is tax free. The rate then rises from 14% to 42% at €69,879 and 45% above €277,825. The 5.5% solidarity surcharge only applies once your income tax exceeds €20,350, and church members pay 8% or 9% church tax.

When do I become tax resident in Germany?

When you have a home in Germany that you keep and use, or stay more than six months in a row. There's no 183-day test.

How does the German exit tax work?

If you've been fully taxable for seven of the last twelve years and own 1% or more of a company, leaving counts as selling the shares at market value. Since 2025 it can also reach large fund holdings. You can pay in seven yearly instalments, and it falls away if you return within seven years.

Can Germany still tax me after I leave?

Yes, if you're a German national, were fully taxable for five of the last ten years and move to a low-tax country while keeping essential economic interests in Germany. The extended liability lasts for the year you leave and ten more years.

Is crypto taxed in Germany?

Not if you hold it privately for more than a year. Earlier sales are taxed at your normal rate, unless your total private sale gains for the year are under €1,000.

How many double tax treaties does Germany have?

The official list at 1 January 2026 shows income tax treaties with 96 countries and territories, including the UK, the US, France and Switzerland. The UAE treaty expired in 2021 and the Belarus treaty is suspended.