Germany–Switzerland · Section 6 AStG
German Exit Tax When Moving to Switzerland
If you leave Germany and hold substantial interests in companies, your move may trigger German tax on unrealised gains. Under certain conditions, the exit tax rules in section 6 of the German Foreign Tax Act (Außensteuergesetz, AStG) treat the move as if the shares had been sold at fair market value, even though no actual sale takes place.
The basic principle
Moving abroad can be treated as a sale of your shares for tax purposes
Section 6 AStG is intended to prevent Germany from losing its right to tax gains accrued during the period of German tax liability when a shareholder moves abroad.
Certain shareholdings are therefore treated on departure as if the taxpayer had sold them at fair market value. This creates a deemed capital gain for tax purposes even though the shares are still held.
The key question is therefore whether the move triggers one of the events covered by section 6 AStG, regardless of whether the shares are actually sold.
Section 6 AStG
When German exit tax may apply
Shareholdings under section 17 EStG
The rules cover shares in companies where, in particular, the taxpayer has held a direct or indirect interest of at least 1% in the company's capital at any time during the preceding five years.
Previous German tax liability
Under the current version of section 6 AStG, the individual must have been subject to unlimited German income tax liability for a total of at least seven years during the twelve years preceding the relevant event.
Departure or loss of taxing rights
A typical trigger is the end of unlimited German tax liability following the abandonment of German residence and habitual abode. Other events can also trigger section 6 AStG.
Beyond a straightforward move abroad
Section 6 AStG contains several triggering events
The classic case involves an individual moving abroad and ending their unlimited German tax liability. However, the provision may also apply in other circumstances.
- Giving up German residence and habitual abode
- A transfer without consideration to a person not subject to unlimited German tax liability
- Exclusion of Germany's right to tax the gain
- Restriction of Germany's right to tax the gain
- Shares in German companies
- Shares in foreign companies
Which companies are affected?
The rules extend beyond shares in German GmbHs
Section 6 AStG applies to shares within the meaning of section 17 of the German Income Tax Act (Einkommensteuergesetz, EStG). Exit tax can therefore affect shares in both German and foreign companies.
Typical examples include interests in a German GmbH or UG, a Swiss AG or GmbH, or a foreign corporation, provided the interest is classified as a share in a corporation for German tax purposes and the conditions of section 17 EStG are met.
The German tax classification of foreign entities should be assessed separately before departure.
Deemed capital gain
The tax generally applies to gains accrued up to departure
For the purposes of section 6 AStG, deemed sale proceeds are generally equal to the fair market value of the shares. The tax acquisition cost, in particular, is deducted from this amount.
of the shares
acquisition cost
capital gain
The gain is generally treated under the rules applicable to section 17 EStG. For shares held as private assets, the German partial-income method (Teileinkünfteverfahren) must be considered in particular.
Business valuation
Fair market value can be the decisive figure
The market value of listed shares is usually relatively straightforward to establish. Valuing shares in an unlisted GmbH, AG or foreign company is often considerably more complex.
Market value
Recent sales between independent parties, funding rounds or other market transactions may provide important evidence of value.
Earnings-based valuation
For operating businesses, sustainable earnings, future prospects, risks and market valuation parameters may be relevant to determining the company's value.
Documentation
The valuation assumptions and supporting evidence should be documented clearly as at the departure date. Subsequent changes in value generally do not replace the valuation required at departure.
Moving to Switzerland
The current section 6 AStG framework generally applies to Switzerland as it does to other destinations
The current instalment provisions in section 6 AStG generally do not distinguish between moving to an EU or EEA country and moving to Switzerland.
Moving to Switzerland therefore does not, solely because of the destination, automatically give rise to an indefinite, interest-free deferral of the entire exit tax liability.
- Establish the relevant departure date
- Assess the actual German residence position
- Examine treaty residence separately
- Identify shareholdings within section 17 EStG
- Determine the business value at departure
- Apply for payment by instalments in good time
Timing
The actual end of unlimited tax liability is decisive in the classic departure case
In the classic departure case, section 6 AStG applies when unlimited income tax liability ends as a result of giving up residence or habitual abode.
This can be particularly complex when moving to Switzerland while retaining a home in Germany. A German residence under section 8 of the German Fiscal Code (AO) may then continue to exist.
It is therefore necessary to establish first whether and when unlimited German tax liability actually ends. This determines the relevant date for the classic departure trigger under section 6 AStG; other statutory triggers must be examined separately.
Cash flow
Exit tax can be paid in seven annual instalments on application
Under the current version of section 6 AStG, the assessed tax attributable to the deemed capital gain may, on application, be paid in seven equal annual instalments.
The instalments are generally interest-free. However, the tax office will normally grant payment by instalments only if security is provided.
Seven annual instalments
The assessed exit tax can generally be spread evenly over seven annual instalments.
Generally interest-free
The statutory annual instalments under section 6(4) AStG do not bear interest.
Security
The tax authorities will normally approve the application only if suitable security is provided.
Payment becoming due
Certain events can make the outstanding tax payable early
An instalment is paid late
Failure to pay an annual instalment by the deadline can cause the outstanding tax to become payable early.
The shares are sold
A sale or certain transfers of the shares can cause the outstanding tax to become payable early.
Substantial distributions
Profit distributions or repayments of capital contributions can become relevant if their aggregate fair market value exceeds one quarter of the relevant value of the shares.
Reporting obligations are not met
Failure to comply with statutory notification and evidence requirements can also cause the outstanding tax to become payable early.
Reporting obligations
Payment by instalments comes with ongoing obligations to the tax office
Section 6 AStG contains specific notification requirements for events relevant to continued deferral or payment by instalments. Certain events must generally be reported within one month.
In addition, the taxpayer must notify the responsible tax office of their current address and confirm that the shares remain attributable to them by 31 July each year.
These continuing obligations should be monitored after departure. Missing a requirement can have significant consequences for the payment arrangements.
Temporary absence
Returning to Germany can eliminate the exit tax liability
Section 6(3) AStG provides special relief for returning taxpayers. If the departure is due to a temporary absence and unlimited German tax liability is re-established within the statutory period, the exit tax liability may cease to apply, subject to the statutory conditions.
- The standard return period is seven years
- An extension of up to five additional years may be granted on application
- The shares must generally not be sold
- Certain transfers must be avoided
- The limit on distributions and repayments of capital contributions must be observed
- Germany's taxing rights must be restored
Return relief
Returning to Germany alone is not sufficient
The tax liability ceases to apply only if the statutory conditions for return relief are met. Among other requirements, the shares must generally not have been sold, transferred or contributed to business assets in the meantime.
Substantial distributions or repayments of capital contributions may also prevent the exit tax liability from being eliminated. In addition, Germany's right to tax a subsequent capital gain must be restored to at least the extent required by law.
Anyone initially planning to live in Switzerland for only a few years should therefore take these conditions into account from the outset.
Additional rules since 2025
Certain investment fund holdings can also be taxed on departure
The traditional exit tax under section 6 AStG applies to shareholdings within the meaning of section 17 EStG. Since 2025, the German Investment Tax Act (Investmentsteuergesetz, InvStG) has also contained separate exit tax rules for certain investment funds and special investment funds.
For ordinary investment funds held as private assets, the rule is particularly relevant if the investor has held at least 1% of the fund's issued units during the preceding five years, or holds units in the particular fund with acquisition costs of at least EUR 500,000 at departure. The statutory test also requires an overall positive sum of taxable gains.
High-net-worth private investors should therefore review their investment fund portfolio as well as their direct company shareholdings before moving abroad.
A substantial fund holding
The rule may apply if the investor has held at least 1% of an investment fund's issued units during the preceding five years.
High acquisition costs
Alternatively, the rule may be relevant if the acquisition costs of the units held in the particular fund at departure are at least EUR 500,000.
Additional exit tax cases
For departures since 2025, the new investment tax provisions are an additional issue to review alongside the traditional exit tax on company shareholdings under section 6 AStG.
Before moving
An exit tax review should take place before relocating
Identify all relevant holdings
Prepare a complete list of direct and indirect interests in German and foreign companies, together with relevant investment fund holdings.
Review ownership percentages and history
The relevant percentage may be the interest held during the statutory look-back period, rather than only the interest held on the departure date.
Establish the period of German tax liability
For section 6 AStG, assess whether unlimited German tax liability existed for at least seven of the preceding twelve years.
Determine business values
For unlisted shareholdings, establish fair market value at the relevant date and document the valuation clearly.
Model the tax liability
Calculate the deemed capital gain and the resulting German tax before departure.
Plan funding and payment by instalments
As no sale proceeds are received, determine how the first instalment and subsequent payments will be funded and what security can be provided if required.
Document the intention to return
If the stay in Switzerland is expected to be temporary, consider the potential application of return relief from the outset.
Common scenarios
When exit tax is particularly relevant
A GmbH shareholder moves to Switzerland
If a shareholder holds a substantial interest in a German GmbH and ends their unlimited German tax liability, section 6 AStG will normally be a central issue to review.
A founder holds valuable start-up shares
Where the company's value has increased significantly, the tax liability may be substantial even though the shares have not been sold and no cash has been realised.
Shares in a foreign corporation
Shares in foreign companies can also fall within the rules. The company's place of incorporation or registered office does not provide protection from section 6 AStG.
The family initially remains in Germany
First establish whether German residence actually ends. If unlimited German tax liability continues, the classic departure trigger may not yet have occurred.
A stay in Switzerland for only a few years
Where the absence is genuinely temporary, the return relief provisions in section 6(3) AStG may play a central role.
A large investment fund portfolio
Since 2025, it is also necessary to check whether individual investment fund holdings meet the new thresholds in the German Investment Tax Act.
Further reading
Related topics
Frequently asked questions
German exit tax when moving to Switzerland
Does every move from Germany to Switzerland trigger exit tax?
How large must my interest in a GmbH be?
Does the company have to be a German GmbH?
Is a sale actually deemed to take place?
Do I have to pay the entire exit tax immediately?
What happens if I sell the shares later?
What if I return to Germany after a few years?
Can I receive dividends while living in Switzerland?
Does exit tax now also apply to ETFs and investment funds?
What is the most important step before moving?
Germany–Switzerland tax advice
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