German tax perspective · Retirement Germany–USA
U.S. retiree in Germany
If you retire in the United States and later move to Germany, you may bring several types of retirement income with you: U.S. Social Security, a 401(k), Traditional IRA, Roth IRA or private pension benefits. For German tax purposes, these items should not be grouped together or simply reported using the U.S. taxable amount. Each benefit must first be analyzed under the Germany–U.S. tax treaty and then classified under German domestic tax law.
German tax residence
Once you become tax resident in Germany, worldwide income generally becomes relevant
If you establish a residence or habitual abode in Germany, you may become subject to unlimited German income taxation. As a result, retirement and pension income from the United States can become relevant for German tax purposes.
For cross-border retirement benefits, the Germany–U.S. tax treaty must also be applied. The treaty first determines which country has the right to tax the specific benefit. German domestic tax law then determines how the benefit is classified and how the taxable amount is calculated.
Systematic analysis
Three separate levels must be considered for U.S. retirement income
The U.S. name of a benefit does not automatically determine its German tax treatment. The specific retirement arrangement must first be identified, then the treaty applied, and finally the German taxable amount calculated.
After a move to Germany, contribution history, pension commencement dates, rollovers and previously taxed contributions can remain important for many years.
- identify the type of U.S. retirement benefit
- determine German and treaty residence
- allocate taxing rights under the treaty
- determine the German income category
- calculate the taxable amount under German law
- coordinate the separate U.S. tax side
German pension taxation
The U.S. taxable amount is not simply copied into the German tax return
For German income tax purposes, the Social Security benefit must be calculated independently under German law. The portion taxable in the United States is therefore not automatically the taxable amount in Germany.
Where the benefit is classified within the German basic pension system, the taxable share generally depends on the year in which the pension began. For a pension commencing in 2026, the statutory taxable share is generally 84 percent.
401(k)
A 401(k) generally remains a treaty-protected pension plan after the move
A qualifying 401(k) generally falls within the pension-plan rules of Article 18A of the Germany–U.S. tax treaty. Income accruing inside the plan is generally not taxed in Germany at participant level until an amount is distributed.
The move to Germany therefore does not generally trigger annual German taxation of dividends, interest or capital appreciation inside the 401(k).
401(k) distributions
Contribution type, distribution year and prior tax relief can all affect the German result
Traditional 401(k) contributions generally received U.S. tax benefits during the accumulation phase. Roth 401(k) contributions, by contrast, were generally made from already-taxed income.
This history matters in Germany. Since 2025, Section 22 No. 5 EStG expressly takes comparable foreign tax relief for pension contributions into account. A current distribution may therefore be treated differently from a distribution made under the earlier rules.
Traditional IRA
A Traditional IRA is also expressly covered as a pension plan under the treaty
Individual Retirement Accounts under Section 408 IRC are expressly listed in the protocol to the Germany–U.S. tax treaty. A Traditional IRA can therefore generally benefit from Article 18A tax deferral during the accumulation phase.
Once distributions are received in Germany, the contribution history becomes important. Relevant questions include whether the original contributions were deductible, whether the account contains nondeductible contributions and whether some of the balance originated in a former 401(k) rollover.
Rollover IRA
A rollover does not automatically erase the tax history of the underlying assets
Many U.S. retirees have rolled former 401(k) accounts into a Rollover IRA. For German tax purposes, the historical source of the assets and the tax treatment of the original contributions can remain relevant.
Former employer-plan documentation should therefore be retained even after the rollover has been completed.
Roth IRA
U.S. tax-free treatment does not automatically mean German tax-free treatment
Roth IRAs are generally recognized as pension plans under the treaty. However, the protocol treats Roth IRAs differently from Traditional IRAs and other qualifying U.S. plans under certain correspondence rules.
Regular Roth contributions are generally made from already-taxed income. It is therefore important to distinguish contribution basis from later investment earnings and any Roth conversion amounts.
Roth conversion
Conversions should be reviewed from a German tax perspective before they are executed
If a taxpayer converts a Traditional IRA to a Roth IRA after moving to Germany, the analysis should not focus only on the U.S. tax consequences. A Roth conversion can also create German tax questions.
Before execution, the original plan, contribution basis, conversion amount and current German tax residence should therefore be reviewed and documented.
Moving to Germany
The start of German tax residence is particularly important in the year of the move
If a U.S. retiree moves to Germany during the calendar year, the start of German unlimited tax liability and German treaty residence must be established.
Payments received before and after that point can be subject to different tax allocations. The timing can therefore be particularly important for substantial IRA or 401(k) distributions.
German residence
The date the home becomes available and the actual facts of occupancy should be documented.
Treaty residence
If substantial connections with the United States continue, the treaty tie-breaker rules may need to be reviewed.
Payment dates
Social Security, pension distributions and other income should be allocated by the relevant receipt dates.
Large distributions
Planned 401(k) or IRA withdrawals should ideally be coordinated before the move.
German income tax return
U.S. retirement income must be reported in euro and calculated under German tax rules
For German income tax purposes, the relevant U.S. amounts must be converted into euro. Depending on the benefit, annual amounts, individual distributions or historical contributions may need to be translated.
Documents such as Form SSA-1099 or Form 1099-R provide important source information, but they do not replace the German tax calculation.
Other income
Retirees often have taxable income beyond pension benefits
U.S. retirees frequently also own brokerage accounts, bank deposits, real estate or other investments. Once unlimited German tax liability applies, income from these assets can also become relevant in Germany.
Ordinary U.S. investment accounts should therefore be analyzed separately from treaty-protected pension plans.
Brokerage account
Stocks, ETFs and funds held outside a pension plan are generally subject to the normal German rules for investment income.
U.S. bank accounts
Interest can be taxable in Germany even where the account remains with a U.S. bank.
U.S. real estate
Rental income from U.S. real estate follows separate treaty rules and should be distinguished from pension income.
German income
German pension, rental or other income is also included in the German income tax assessment where applicable.
U.S. tax perspective
U.S. citizens generally remain within the U.S. tax system after moving to Germany
For U.S. citizens, U.S. federal tax obligations generally continue after the move to Germany. German and U.S. taxation may therefore both be relevant.
Saving Clause issues, Foreign Tax Credits, U.S. reporting and the detailed U.S. treatment of retirement plans are covered more extensively on taxrep.us. This page focuses on the German tax side.
- Form 1040
- Saving Clause
- Foreign Tax Credit
- Social Security
- 401(k) and IRA distributions
- U.S. reporting
Common mistakes
Common mistakes U.S. retirees make after moving to Germany
Grouping all U.S. pensions together
Social Security, 401(k), Traditional IRA and Roth IRA are different tax categories.
Using the U.S. taxable amount
The taxable amount reported in a U.S. tax return or on Form 1099-R does not automatically determine German tax.
Treating a 401(k) like a brokerage account
Article 18A generally protects tax deferral inside a qualifying pension plan.
Assuming a Roth IRA is automatically tax-free
A qualified distribution may be tax-free in the United States without automatically receiving the same treatment in Germany.
Ignoring the year of the move
The start of German tax and treaty residence can be decisive for the timing of a distribution.
Discarding historical records
Contribution basis, rollovers and former plan records may still be needed years later for the German tax calculation.
Related guidance
U.S. retirement arrangements in detail
Frequently asked questions
U.S. retirees in Germany
Do I have to pay German tax on my U.S. retirement income?
Where is U.S. Social Security taxed?
Does Germany tax gains inside my 401(k) every year?
Does the same rule apply to a Traditional IRA?
Is my Roth IRA tax-free in Germany?
What is particularly important in the year I move to Germany?
Which records should I keep before moving?
Do U.S. citizens still have to file U.S. tax returns after moving to Germany?
Germany–U.S. tax advice
Are you planning to retire in Germany or have you already moved?
We review U.S. Social Security, 401(k), Traditional IRA, Roth IRA and other retirement benefits under German tax law and the Germany–U.S. tax treaty, analyze the year of the move and coordinate the German tax return with the U.S. tax side.
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U.S. Social Security
U.S. Social Security is generally taxable in Germany once you are treaty-resident here
Article 18(5) of the Germany–U.S. tax treaty contains a special rule for Social Security benefits. If U.S. Social Security is paid to a person who is resident in Germany for treaty purposes, Germany generally has the right to tax the benefit.
The treaty also requires Germany to treat the U.S. Social Security payment in a manner corresponding to benefits under the German social security system. The German taxation therefore follows German pension-tax principles rather than the U.S. Social Security tax calculation.