What is §6 AStG Wegzugbesteuerung and when does it apply?

Section 6 AStG (Außensteuergesetz — German Foreign Tax Act) imposes an exit tax when a German tax resident emigrates and held more than 1% of shares in a corporation (GmbH, AG, SE, etc.) at any point in the last 5 years before departure. The tax is calculated on the difference between the market value of the shares on the departure date and their original acquisition cost — even if no actual sale occurred. The deemed gain is taxed at approximately 25% + Solidaritätszuschlag (Kapitalertragsteuer rate). For non-EU/EEA destinations (UAE = non-EU), the full amount is due as a lump sum, without the 7-year installment plan available for EU/EEA emigrants.

Can I defer Wegzugbesteuerung payment when moving to Dubai?

No — not without collateral. For emigration to EU/EEA countries, §6(4) AStG allowed interest-free deferral in installments over 7 years. Post-2022 ATAD2 implementation, this is only available for EU/EEA destinations. Moving to the UAE (non-EU) means the full tax is payable, potentially with collateral required by the Finanzamt to secure the liability. Options: (1) Pay the tax in full, (2) Provide acceptable collateral (bank guarantee, asset pledge), (3) Restructure shareholdings before departure (consult adviser urgently — 12–18 months before move), (4) Consider intermediate EU residency step before UAE (complex and requires genuine residency).

What is erweiterte beschränkte Steuerpflicht (extended limited tax liability)?

Germany's §2 AStG extended limited tax liability applies to German citizens who move to a 'low-tax country' — the UAE qualifies (0% income tax). If you were a German tax resident for at least 5 of the last 10 years before departure, §2 AStG can extend German taxation on certain income types for up to 10 years post-emigration. It applies to income that would not normally be German-source under standard limited tax liability rules but is deemed to have a substantial German economic connection. This is distinct from the standard beschränkte Steuerpflicht on clear German-source income (rental, salary days in Germany, etc.).

What is the Germany-UAE DBA and how does it protect me?

The DBA (Doppelbesteuerungsabkommen) between Germany and the UAE entered into force in 2010. It is a bilateral tax treaty following the OECD Model Convention that allocates taxing rights between the two countries to prevent double taxation. Key DBA article allocations: Art. 15 (employment income) → country of work performance; Art. 6 (rental income) → source country (Germany); Art. 10 (dividends) → shared; 5–15% withholding limit; Art. 11 (interest) → residence country; Art. 18 (pensions) → Germany for state pensions; Art. 13 (capital gains) → residence country for most securities (Germany for real property). A UAE TRC confirms you as UAE treaty resident for DBA purposes.

How do I get a UAE Tax Residency Certificate (TRC)?

Apply to the UAE Federal Tax Authority (FTA) via their online portal. Requirements: (1) UAE residence visa, (2) Emirates ID, (3) Proof of 183+ days UAE physical presence (entry/exit record from UAE immigration), (4) UAE bank statement, (5) UAE tenancy/lease contract (Ejari registered), (6) Employer letter or UAE trade licence for business owners, (7) Passport copy. FTA review takes 4–8 weeks. Fee: AED 1,000 for individuals. The TRC is issued per calendar year. For the Germany-UAE DBA, the TRC is submitted to your German Finanzamt with an official cover letter to establish UAE treaty residency. Re-apply each year you need a TRC.

Do I have to pay German tax on my Dubai salary?

No — if you have genuinely broken German tax residency and are a UAE tax resident. Under DBA Article 15, employment income is taxable in the country where the work is physically performed. Since you are physically working in Dubai (UAE), your Dubai salary is taxed in the UAE — where the rate is 0%. Germany has no right to tax your Dubai salary under the DBA. Critical conditions: (1) You have formally deregistered in Germany (Abmeldung done), (2) You have no German Wohnsitz (no personally-used German property), (3) You spend fewer than 183 days in Germany, (4) You have a UAE TRC. If any of these conditions are not met, the Finanzamt may challenge your residency position.

How is German rental income taxed while I live in Dubai?

German rental income is taxable in Germany regardless of where you live. DBA Article 6 assigns the right to tax real property income to the country where the property is situated — Germany. As a non-resident, you are beschränkt steuerpflichtig (limited tax liable) in Germany on rental income. You file an annual German Einkommensteuererklärung (tax return) declaring the rental income. You can deduct: mortgage interest, maintenance costs, management fees, Grundsteuer (property tax), insurance, and Abschreibung (depreciation: 2%/yr pre-2023 buildings, 3%/yr newer). Net income is then taxed at German progressive rates, with the personal allowance partially accessible for non-residents from DBA countries (EUR 11,604 in 2026).

What happens to my German state pension (DRV) when I live in Dubai?

The DRV (Deutsche Rentenversicherung) state pension is earned based on years of contribution and is fully portable internationally. While in Dubai, you do not make further DRV contributions (your UAE employer does not contribute to German pension). Existing contribution years remain fully vested. When you reach the pension age (67 for full pension; 63/65 for reduced), the DRV pays your pension to any bank account worldwide. German state pension income is taxable in Germany under DBA Article 18 — even while you live in UAE. The taxable portion is 83–100% depending on year of retirement (fully 100% from 2040). File a German tax return for pension years.

How does German inheritance tax work for Dubai residents?

German inheritance tax (Erbschaftsteuer) has a 5-year tail rule for emigrants: if you were a German tax resident within the 5 years before an inheritance event, German inheritance tax can apply. During those 5 years in Dubai, German inheritance tax may apply to: (1) German assets inherited by you, and (2) Inheritances FROM you to German-based heirs. After the 5-year post-emigration period, German inheritance tax applies only to German-situs assets (German property, German business interests) — not to UAE assets or other non-German assets. The German spouse/child allowance of EUR 400,000–500,000 still applies. Tax rate: 7–30% (Class I family) above the allowance.

What is Kapitalertragsteuer (KeSt) and does it affect me as a Dubai resident?

Kapitalertragsteuer (KeSt) is Germany's capital gains and investment income withholding tax at 25% + Soli (~26.375%). German banks automatically withhold KeSt on dividends from German companies, German-source interest, and capital gains on German securities. As a UAE tax resident, you can apply for a reduced withholding rate under the DBA — typically 5–15% for dividends depending on shareholding percentage (DBA Art. 10). File a Freistellungsantrag with your German bank. Excess withholding can be reclaimed via German tax return. Note: §6 AStG exit tax uses Abgeltungsteuer rate (25% + Soli) for deemed disposal calculation.

Do I need to file a German tax return if I live in Dubai?

Only if you have German-source income. If you have sold your German property, have no German rental income, no German pension, no German employment days, and no German dividends — and have fully broken German tax residency — then no German return is required. Most German Dubai expats DO have ongoing German obligations: German rental income (most common), German pension once drawing, German work visits. File an Einkommensteuererklärung annually via ELSTER or via your German Steuerberater. Late filing attracts Verspätungszuschlag (surcharges). The Finanzamt retains jurisdiction over German-source income indefinitely.

What is the 'centre of life interests' test for German tax residency?

The DBA residency tie-breaker applies when both Germany and UAE could claim an individual as tax resident. The sequential test: (1) Where do you have a permanent home? (2) Where is your centre of vital interests (personal and economic relations)? (3) Where is your habitual abode (where you spend more time)? (4) Which nationality applies? In practice: if you have a German property (Wohnsitz), a German spouse and children still in Germany, and your primary employer is German, the Finanzamt may argue Germany is your centre of life interests — even if you have a UAE lease and TRC. Genuinely moving your family to Dubai, surrendering or commercially renting your German property, and demonstrating UAE economic integration is the strongest position.

How should I time a German property sale around the exit?

German Spekulationssteuer (speculation tax) applies to capital gains on properties sold within 10 years of acquisition — unless it was your primary residence for the 3 years preceding sale or the year of sale and the 2 preceding calendar years. If you have owned your German property for less than 10 years and it was a rental/investment property, selling before departure avoids the complexity of non-resident sale but may trigger Spekulationssteuer. If you have held it 10+ years, 0% Spekulationssteuer applies whenever you sell (as a resident or non-resident). Strategy: if close to the 10-year mark, wait. If primary residence and living in it up to departure, the 3-year primary residence exemption may apply. Consult your Steuerberater for the calculation.

Can the German Finanzamt reach assets I have in Dubai?

Germany has broad international information exchange via the Common Reporting Standard (CRS). UAE banks report account information annually to UAE authorities, which then share with Germany (and other CRS signatory countries) for German-identified account holders. So the Finanzamt can see UAE bank account balances and income. However, Germany can only tax income that is German-source or covered by the extended limited tax liability under §2 AStG — the Finanzamt cannot simply tax UAE-earned income because they can see your UAE bank balance. The CRS data exchange is most relevant for identifying unreported German-source income being deposited abroad, not for taxing UAE-source income.

What documentation should I keep to defend my UAE tax residency position?

To defend genuine UAE tax residency against Finanzamt challenge, maintain: (1) UAE TRC (issued annually by FTA — apply every year you need DBA protection), (2) UAE residence visa + Emirates ID (photocopies with dates), (3) UAE bank statements showing regular activity, (4) UAE lease contract (Ejari registered), (5) UAE employer payslips or invoices if business owner, (6) Travel records — passport stamps + airline boarding passes showing 183+ UAE days and under 183 German days, (7) UAE utility bills, gym memberships, club memberships (evidence of habitual abode), (8) German Abmeldung certificate (deregistration confirmation from municipality). The burden of proof in a Finanzamt challenge lies with you to demonstrate genuine UAE residency.

Taxes for German Expats in Dubai 2026

Comprehensive guide to German tax obligations for Dubai residents: §6 AStG Wegzugbesteuerung exit tax, Germany-UAE DBA treaty, German rental income, DRV pension, Erbschaftsteuer 5-year tail, and how to establish UAE tax residency correctly.

Last updated: May 2026

James Ho· Digital Nomad & Tax Correspondent

5 years location-independent, 3 of them in Dubai. Chartered accountant (ICAEW). Holds a UAE Virtual Working visa.

German Tax — More Complex Than Most Nationalities

German expats in Dubai face a more complex tax transition than most nationalities. Germany has aggressive anti-avoidance legislation (§6 AStG exit tax, §2 AStG extended limited liability) and one of the world's most thorough international information-exchange networks. Done correctly, German Dubai residents can achieve a very clean 0% UAE tax position. Done incorrectly, the Finanzamt can maintain significant tax claims for years after departure.

This guide covers the key German tax issues specific to Dubai residents: the §6 AStG Wegzugbesteuerung (exit tax), the Germany-UAE DBA (double tax agreement), ongoing German-source income obligations, the UAE Tax Residency Certificate (TRC) process, inheritance tax tail, and how to structure a clean break.

Critical: four German tax risks for Dubai expats

(1) Wegzugbesteuerung (§6 AStG):If you held >1% of any company shares in the last 5 years, exit tax may be due — potentially six figures. No EU installment plan for UAE. (2) Erweiterte beschränkte Steuerpflicht (§2 AStG): 10-year extended German tax liability for German citizens moving to low-tax countries (UAE qualifies). (3) Erbschaftsteuer 5-year tail: German inheritance tax applies for 5 years post-emigration on worldwide assets. (4) Residential ties: Any personally-used German property can re-establish German tax residency, negating the UAE benefit entirely. All four require specialist advice.

Wegzugbesteuerung (§6 AStG) — Exit Tax Deep Dive

The Wegzugbesteuerung (exit tax) under §6 AStG is the most significant tax risk for German entrepreneurs and business owners relocating to Dubai. It applies if:

You held more than 1% of a corporation (GmbH, AG, SE, etc.) at any point in the last 5 years before departure
You were a German tax resident for at least 7 of the last 12 years
You emigrate to a non-EU/EEA country or otherwise lose German unlimited tax liability

The tax is calculated as if you sold your shares at market value on the day of departure. The market value minus acquisition cost equals a deemed capital gain, taxed at approximately 25.38% (25% Abgeltungsteuer + 1.375% Soli).

Post-2022 reform: stricter for non-EU emigration

The 2022 ATAD2 reform tightened §6 AStG significantly. For emigration to non-EU/EEA destinations (UAE): the full Wegzugsteuer is due without installments. The Finanzamt may require collateral (Sicherheitsleistung) — such as a bank guarantee, asset pledge, or escrow — before allowing departure in practice. Early planning (12–18 months) is essential to explore restructuring options before the exit.

§6 AStG payment options comparison

Wegzugbesteuerung (§6 AStG) payment terms by emigration destination
Emigration Destination	Payment Terms	Collateral Required?	Post-2022 Reform Status	Planning Options
EU / EEA countries (France, Netherlands, Austria, etc.)	7-year interest-free installments available (if permanent EU/EEA residency obtained)	Generally not required for EU/EEA if deemed low risk	Improved — ATAD2 compliance; EU freedoms maintained	Maximize installment election; plan re-entry to Germany carefully to avoid early crystallisation
Non-EU/EEA — including UAE (Dubai)	Full lump sum due immediately (or on first installment due date)	Finanzamt may require security/collateral for deferral — e.g. bank guarantee or pledge of assets	Tightened by 2022 ATAD2 reform — lump-sum requirement confirmed for non-EU; collateral rules stricter	Plan shareholding restructure pre-departure; consider EU intermediate step; value shares accurately pre-exit
Return to Germany within 7 years (§6(3) AStG)	Tax may be reversed / waived if you return and re-establish German tax residency within 7 years	TBC based on Finanzamt assessment	7-year return window maintained post-2022	Some expats plan a 7-year Dubai stay specifically to avoid permanent crystallisation; then return
Deemed re-emigration after German return	If you return to Germany and then re-emigrate, §6 AStG can re-trigger on accumulated new gains	Same rules as original emigration apply	Anti-avoidance rules prevent simple cycling between Germany and non-EU	Multi-step emigration via EU country is complex but can optimise; specialist advice essential

Emigration DestinationEU / EEA countries (France, Netherlands, Austria, etc.)

Payment Terms7-year interest-free installments available (if permanent EU/EEA residency obtained)

Collateral Required?Generally not required for EU/EEA if deemed low risk

Post-2022 Reform StatusImproved — ATAD2 compliance; EU freedoms maintained

Planning OptionsMaximize installment election; plan re-entry to Germany carefully to avoid early crystallisation

Emigration DestinationNon-EU/EEA — including UAE (Dubai)

Payment TermsFull lump sum due immediately (or on first installment due date)

Collateral Required?Finanzamt may require security/collateral for deferral — e.g. bank guarantee or pledge of assets

Post-2022 Reform StatusTightened by 2022 ATAD2 reform — lump-sum requirement confirmed for non-EU; collateral rules stricter

Planning OptionsPlan shareholding restructure pre-departure; consider EU intermediate step; value shares accurately pre-exit

Emigration DestinationReturn to Germany within 7 years (§6(3) AStG)

Payment TermsTax may be reversed / waived if you return and re-establish German tax residency within 7 years

Collateral Required?TBC based on Finanzamt assessment

Post-2022 Reform Status7-year return window maintained post-2022

Planning OptionsSome expats plan a 7-year Dubai stay specifically to avoid permanent crystallisation; then return

Emigration DestinationDeemed re-emigration after German return

Payment TermsIf you return to Germany and then re-emigrate, §6 AStG can re-trigger on accumulated new gains

Collateral Required?Same rules as original emigration apply

Post-2022 Reform StatusAnti-avoidance rules prevent simple cycling between Germany and non-EU

Planning OptionsMulti-step emigration via EU country is complex but can optimise; specialist advice essential

German vs UAE Tax Treatment by Income Type

Once you have established UAE tax residency and broken German unlimited tax liability, German taxation is limited to German-source income under the DBA. The following table shows how each income type is treated.

German vs UAE tax treatment by income type for Dubai-resident Germans (2026)
Income Type	German Tax Treatment (while Dubai resident)	UAE / Dubai Tax Treatment	DBA Treaty Allocates To	Key Notes
UAE employment income (Dubai salary)	0% (DBA: income taxable only where work performed if UAE tax resident)	0% — no UAE income tax	UAE (country of employment)	Must establish genuine UAE tax residency; obtain UAE TRC; keep German ties minimal
German employment income (work days in Germany)	Taxable in Germany — proportionate to days worked in Germany	0% UAE tax	Germany (source country)	Even a few German work days can create German taxable income; track carefully
German rental property income	Taxable in Germany at progressive rate; deduct mortgage interest + maintenance + Abschreibung	0% UAE tax	Germany (real property sourced to Germany)	File annual German Einkommensteuererklärung; non-resident Steuerpflicht
Dividends from German company (GmbH/AG)	German withholding tax: 25% Kapitalertragsteuer + Soli; DBA reduces to 5–15% for qualifying shareholders	0% UAE tax	Germany (source); limited to 5% for >10% shareholding under DBA Art. 10	§6 AStG exit tax may have crystallised gain already; adviser essential
Capital gains on German shares (non-§6 AStG)	0% for non-residents on most share disposals (different from property gains)	0% UAE tax	UAE (residence country) for non-property gains	Anti-avoidance: if you return to Germany within 5 years, gain may be retrospectively taxable
Capital gains on German property	Taxable in Germany (Grundstücksgewinne). 0% if owned 10+ years (Spekulationssteuer exemption).	0% UAE tax	Germany (real property rule)	10-year speculation-free window is key planning timing tool
German state pension (DRV Rente)	Taxable in Germany (progressively increasing taxable portion — 100% for new pensioners from 2040)	0% UAE tax	Germany (state pension sourced to Germany per DBA Art. 18/19)	File German return when drawing DRV pension; UAE residency does not exempt German pension
Private pension / occupational pension	Generally taxable in Germany if German-source; DBA may allow UAE residence country taxation	0% UAE tax	Depends on pension type; DBA Art. 18 analysis required	Rürup: treated as retirement annuity — German-source. Riester: complex, consult adviser.
Interest income (German bank accounts / bonds)	German Kapitalertragsteuer 25% + Soli withheld at source; DBA may reduce	0% UAE tax	UAE (residence country) generally per DBA Art. 11	Refund of excess withholding available via German tax return if DBA rate applies
Inheritances / gifts from German relatives	German Erbschaftsteuer/Schenkungsteuer applies for 5 years post-emigration if you were German tax resident. Then depends on beneficiary's status.	0% UAE inheritance/gift tax	No DBA inheritance article; domestic law applies	5-year tail on German inheritance tax post-emigration is critical planning point

Income TypeUAE employment income (Dubai salary)

German Tax Treatment (while Dubai resident)0% (DBA: income taxable only where work performed if UAE tax resident)

UAE / Dubai Tax Treatment0% — no UAE income tax

DBA Treaty Allocates ToUAE (country of employment)

Key NotesMust establish genuine UAE tax residency; obtain UAE TRC; keep German ties minimal

Income TypeGerman employment income (work days in Germany)

German Tax Treatment (while Dubai resident)Taxable in Germany — proportionate to days worked in Germany