Situation · Germany–U.S.
Moving From the United States to Germany With Investments
Anyone moving to Germany with an existing U.S. brokerage portfolio should review cost basis, unrealized gains, dividends, interest and funds before the move. Once German tax residence begins, Germany generally taxes worldwide income; for later disposals, an automatic step-up to fair market value on the date of arrival should not be assumed.
Start of German Tax Residence
Once You Move, the U.S. Portfolio Enters the German Tax System
If the investor establishes a residence or habitual abode in Germany and thereby becomes subject to unlimited German income taxation, Germany generally taxes foreign investment income as part of worldwide income.
This includes dividends, interest, distributions from investment funds and later gains from the sale of assets already held in the U.S. brokerage account.
The U.S. broker itself does not change. It continues to issue U.S. statements and U.S. tax documents; the German tax calculation must be developed separately from those records.
Framework
Four Questions Should Be Answered Before the Move
Which Assets?
Individual stocks, U.S. ETFs, mutual funds, bonds, money-market funds and cash can follow different German tax rules.
What Cost Basis?
Historical acquisition cost, tax lots and corporate actions should be documented completely.
What Unrealized Gains?
Large unrealized gains can affect whether a sale before or after the move is more tax-efficient.
Cost Basis
No Automatic German Step-Up to Fair Market Value on Arrival
For ordinary privately held securities, it should not be assumed that Germany automatically resets tax basis to fair market value when the investor moves into Germany.
Historical acquisition cost can therefore remain relevant for a later German disposal. Appreciation that economically arose before the move can consequently affect the German taxable gain.
The specific taxing rights must also be reviewed under the applicable treaty rules and the type of asset involved.
- retain historical purchase records
- export complete tax-lot history
- document transfers between brokers
- track stock splits and reinvestments
- do not rely solely on broker “adjusted basis”
- record fair market values on the arrival date anyway
- model planned disposals before the move
German Gain Calculation
After the Move, the Relevant Gain Is the German Gain in Euros
Historical Acquisition
Acquisition cost is determined under German rules. For purchases made in U.S. dollars, the historical euro value is relevant.
Later Sale
Sale proceeds are converted into euros at the time of sale. Exchange-rate movements can materially affect the German taxable gain.
U.S. Broker Gain
The capital gain reported by the broker in U.S. dollars is not automatically the German taxable gain.
Treaty Allocation
For ordinary portfolio shares of a non-U.S. investor resident in Germany, the taxing right typically lies with Germany; special cases require separate analysis.
Dividends & Interest
Current Investment Income Becomes Taxable in Germany After the Move
U.S. dividends are generally taxable in Germany once the investor is resident there. For a non-U.S. investor, the treaty generally limits U.S. withholding tax on typical portfolio dividends to 15%.
Ordinary U.S. interest can generally be taxable only in the residence state under Article 11 of the Germany–U.S. tax treaty. For a non-U.S. investor resident in Germany, this often results in 0% U.S. withholding tax.
For U.S. citizens and other U.S. taxpayers, the position is different because U.S. worldwide taxation continues and foreign tax credits must be coordinated.
ETFs & Investment Funds
U.S. Funds Also Become Subject to German InvStG After the Move
U.S.-domiciled ETFs can qualify as investment funds under the German Investment Tax Act once the investor becomes taxable in Germany.
Distributions, advance lump sums and disposal gains can therefore become relevant under the InvStG. For qualifying equity funds, private investors can generally benefit from a 30% partial exemption.
- classify U.S. ETFs under German InvStG
- review equity-fund status and partial exemption
- consider the advance lump sum after German tax residence begins
- retain historical acquisition cost
- review KAP-INV for foreign-custodied funds
- U.S. brokers generally do not calculate these German tax figures
U.S. Person or Non-U.S. Person?
U.S. Taxpayer Status Determines the Second Tax Dimension
Non-U.S. Person
After the move, Germany becomes the main taxing jurisdiction. The United States remains relevant as source country for certain U.S.-source items such as dividends.
U.S. Citizen
U.S. taxation on worldwide income continues. German and U.S. tax must be coordinated through the treaty, foreign tax credits and, where relevant, treaty re-sourcing.
Green Card
U.S. tax residence can also continue for green-card holders. Treaty residence and U.S. immigration/tax status should be analyzed separately.
German or European Funds
A U.S. taxpayer who buys new non-U.S. funds after moving can create additional PFIC and Form 8621 issues.
Pre-Arrival Planning
Before the Move, Sales and Portfolio Structure Can Be Reassessed
Large unrealized gains should be analyzed before German tax residence begins. Depending on U.S. taxpayer status, U.S. tax rates, future German tax rates and the investment horizon, it can be advantageous to realize certain positions before the move or deliberately continue holding them.
It is also worth reviewing which funds remain administratively practical after the move. An investment product that is simple in the United States can require additional InvStG calculations in Germany.
For U.S. taxpayers, any German planning must also be checked against U.S. consequences. Looking at only one country can produce a worse overall result.
Pre-Move Checklist
Which Records Should Be Preserved?
Broker History
Download annual statements, activity statements, trade confirmations and tax-lot reports in full.
Cost Basis
Document original acquisition dates and later adjustments from splits, reinvestments and corporate actions.
Arrival-Date Market Values
Even without an automatic step-up, fair market values on the arrival date are useful for planning, evidence and later treaty analysis.
Asset Classification
Separate individual stocks, ETFs, mutual funds, bonds, money-market funds and cash clearly.
Related Guidance
Related Topics
Frequently Asked Questions
Moving U.S. → Germany With Investments
Do I automatically receive a German step-up in cost basis when I move to Germany?
Can Germany tax appreciation that arose before I moved?
Do I have to close my U.S. brokerage account after moving?
What happens to my U.S. ETFs?
Should I sell stocks before moving?
What changes if I am a U.S. citizen?
Germany–U.S. Tax Advice
Moving to Germany With a U.S. Brokerage Portfolio?
We analyze cost basis, unrealized gains, dividends, interest, ETFs and planned sales before the move and prepare the portfolio for German and, where relevant, U.S. taxation.
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