Germany and the UAE have had no double taxation agreement since 1 January 2022. The 2010 treaty was written with a built-in ten-year expiry that required both states to agree affirmatively to extend it, and that extension never happened. Germans in Dubai are therefore relieved by German domestic law alone, and German domestic law relieves by crediting foreign tax paid, of which the UAE charges none.

That absence changes the arithmetic on three separate charges: the exit tax on company shareholdings under Section 6 of the Foreign Tax Act, the extended limited income tax liability under Section 2 of the same Act that follows German nationals into low-tax countries for ten years, and German inheritance and gift tax, which keeps German nationals inside its worldwide charge for five years after they leave. This guide sets out each with the statutory thresholds.

The Treaty Did Not Get Canceled, It Expired by Design

Article 30(1) of the agreement signed in Berlin on 1 July 2010 states that the treaty remains in force for a period of ten calendar years beginning on 1 January of the year following its entry into force. It then remains in force for a further ten calendar years only if both contracting states have agreed to an extension and have notified each other in writing through diplomatic channels, six months before expiry, that the domestic requirements for extension are met.

That structure is unusual. Most double taxation agreements run indefinitely and end only if one state gives notice, and Article 30(2) of this one does also give each state a right to terminate on or before 30 June of any calendar year once five years have passed. The provision that actually ended it was the sunset in paragraph 1, not a termination notice, which is why describing the treaty as canceled by Germany misstates what happened.

Article 30(3) governs the tail. The agreement applied for the last time to taxes levied for the assessment period ending in the year in which it was last in force, to withholding taxes on dividends, interest and royalties paid up to 31 December of that year, and to exchange of information under Article 25 up to the same date.

What does no treaty actually change?

Three things at once. There is no tie-breaker article, so if both countries consider you resident under their own rules there is no mechanism to resolve it. There is no exemption article for employment income, so a Dubai salary earned by someone still unbeschränkt steuerpflichtig in Germany is taxed in Germany in full. And there is no reduced withholding on German-source dividends, interest and royalties paid to a UAE resident. What did not stop when the treaty lapsed is the flow of information: the Common Reporting Standard operates under a separate multilateral framework, so your UAE bank still reports account balances and income to Germany. Nigeria is in the same position for a different reason, its UAE agreement having been signed in 2016 and never ratified: see Nigerian tax residency under the Nigeria Tax Act 2025.

Unilateral relief under Section 34c of the Income Tax Act allows a credit or deduction for foreign income tax actually paid. In a jurisdiction with no personal income tax there is nothing to credit, so unilateral relief delivers nothing. This is the same structural problem that a tax-free UAE salary creates in every credit-based home tax system, made worse by the absence of any treaty override.

It also means a UAE tax residency certificate has no treaty to be used for. It is still worth obtaining as evidence of where you live, but there is no Article 4 for it to feed into.

Breaking German Tax Residence Is About Housing, Not Days

Section 1(1) of the Income Tax Act makes natural persons with a Wohnsitz or a gewöhnlicher Aufenthalt in Germany subject to unlimited income tax liability on worldwide income. Both terms are defined in the Fiscal Code, and neither is a day count.

Section 8 of the Fiscal Code says a person has a Wohnsitz where they hold a dwelling in circumstances indicating that they will keep and use it. The statutory test contains no minimum size, no minimum number of nights and no requirement that the dwelling be your main home. What it asks is whether the circumstances indicate you will keep it and use it, which is a question of fact about availability rather than about how often you actually sleep there.

Section 9 defines the gewöhnlicher Aufenthalt as the place where someone stays in circumstances showing that the stay is not merely temporary, and it deems a continuous stay of more than six months to be a gewöhnlicher Aufenthalt from the outset, ignoring short interruptions. Stays taken exclusively for visits, recreation, cure or similar private purposes and lasting no longer than a year are excluded.

The practical consequence for someone moving to Dubai is that the Abmeldung at the Einwohnermeldeamt is a registration formality and not the tax event. If the apartment in Munich stays available to you, the Wohnsitz survives the deregistration and you remain taxable in Germany on the Dubai salary, with nothing to credit against it.

The Exit Tax on Company Shares: Section 6 AStG

Section 6(1)(1) of the Foreign Tax Act treats the end of unlimited tax liability, caused by giving up a Wohnsitz or gewöhnlicher Aufenthalt, as equivalent to a sale at market value of shares within the meaning of Section 17(1) of the Income Tax Act. Nothing is sold and no cash arrives, but a taxable gain is realized on the day residence ends.

Section 17(1) sets the participation threshold at 1 percent. If you held, directly or indirectly, at least 1 percent of the capital of a corporation at any time in the five years before the event, the shares are inside the charge. That covers a GmbH stake in the family business as readily as it covers a founder’s holding.

Who does the exit tax apply to?

Section 6(2) restricts it to individuals who were subject to unlimited tax liability under Section 1(1) of the Income Tax Act for at least seven years within the twelve years before the event. That seven-of-twelve test replaced the older ten-year rule, and where shares were acquired without consideration the predecessor’s period of unlimited liability counts toward it.

A German who left within seven years of arriving, or someone who has been outside Germany for enough of the last twelve years, falls outside the section entirely.

Can the exit tax be paid in installments?

Yes. Section 6(4) allows the assessed tax attributable to the deemed gain to be paid in seven equal annual installments on application, and the installments carry no interest. The application will as a rule only be granted against the provision of security, which is the condition most people discover late. The Dutch equivalent is the conserverende aanslag, and a move outside the EU strips it of its automatic payment deferral: see the Dutch protective assessment explained.

The first installment falls due within one month of notification of the tax assessment, and the remaining installments on 31 July of each following year. The unpaid balance becomes due within a month if an installment is missed, if you fail the reporting duties in Section 6(5), if you file for insolvency, if the shares are sold or transferred, or if distributions or repayments of capital exceed one quarter of the value used for the deemed disposal.

Does the exit tax go away if I move back?

Section 6(3) says it can. Where the end of unlimited tax liability rests on a merely temporary absence and you become unlimited taxpayer again within seven years, the tax claim lapses, provided three conditions hold: the shares were not sold, transferred or contributed to business assets in the meantime; distributions or capital repayments did not exceed one quarter of the deemed disposal value; and Germany’s right to tax a future gain is restored to at least the extent it had before.

The competent tax office may extend that seven-year window by up to a further five years on application, where the intention to return still exists. That gives a maximum of twelve years, and it is the provision that makes a documented, stated intention to return worth having on file from the outset.

Provision What triggers it Qualifying period How long it follows you
Section 6 AStG, exit tax Ending unlimited liability while holding 1 percent or more of a corporation Unlimited taxpayer 7 of the last 12 years Charged once, on departure; lapses on return within 7 years, extendable to 12
Section 2 AStG, extended limited liability German national moving to a low-tax territory while keeping substantial economic interests in Germany Unlimited taxpayer as a German for at least 5 of the last 10 years 10 years after the end of the year unlimited liability ended
Section 2(1)(1)(b) ErbStG, inheritance and gift tax Death or gift while still counted as an Inländer German nationality, no German dwelling 5 years of continuous absence, then Section 4 AStG can extend the reach further

Section 2 AStG: Ten Years of Extended Limited Liability

This is the provision most Germans in Dubai have never heard of, and the UAE is exactly the kind of destination it was written for. Section 2(1) applies to a natural person who, in the ten years before unlimited tax liability ended, was subject to unlimited income tax as a German for at least five years in total, and who then meets two further conditions.

The first is that the person is resident in a foreign territory where their income is subject only to low taxation, or is resident in no foreign territory at all. The second is that the person has substantial economic interests in Germany.

Where both hold, the person remains subject to extended limited income tax liability until the end of ten years following the end of the year in which unlimited liability ended, on all income that would not be foreign income within the meaning of Section 34d of the Income Tax Act.

Does the UAE count as a low-tax territory?

Section 2(2) sets the test with a specific figure. Low taxation exists where the income tax burden in the foreign territory, on an unmarried resident individual with taxable income of 77,000 euros, is more than one third lower than the German burden on comparable facts, unless the person proves that total taxes on their income amount to at least two thirds of what German unlimited liability would produce.

A jurisdiction with no personal income tax produces a burden of zero on that hypothetical taxpayer, so the first limb is met with room to spare and the escape clause is unavailable. Section 2(2)(2) adds a second route for preferential regimes granted against the general system, which is not needed here.

What counts as substantial economic interests in Germany?

Section 2(3) gives three alternatives and any one of them is enough.

  • Business interests. You are an entrepreneur or co-entrepreneur of a German trade or business at the start of the assessment period; or as a limited partner more than 25 percent of the partnership’s income is attributable to you; or you hold a participation within the meaning of Section 17(1) of the Income Tax Act in a German corporation, meaning 1 percent or more.
  • Income test. Your income that would not be foreign income under Section 34d exceeds 30 percent of your total income, or exceeds 62,000 euros in the assessment period.
  • Asset test. At the start of the assessment period, assets whose returns would not be foreign income under Section 34d exceed 30 percent of your total assets, or exceed 154,000 euros.

The asset test is the one that catches ordinary people. A German apartment worth more than 154,000 euros, kept and rented out after moving to Dubai, satisfies it on its own. So does a German brokerage account of that size holding German shares. Selling the German property and reinvesting the proceeds into a Dubai property purchase removes the asset from the test, but the disposal itself is a German taxable event that needs its own advice first.

How much does Section 2 AStG actually cost?

Two limits keep it proportionate. Section 2(1) applies only in assessment periods where the income caught by it exceeds 16,500 euros, so small German income streams fall outside it. And Section 2(6) caps the outcome: if you show that the additional tax under paragraphs 1 and 5 produces a higher total German tax than you would have paid as an unlimited taxpayer resident only in Germany, the excess is not levied.

What it does within those limits is remove the concessions that ordinary limited tax liability gives non-residents. Section 2(5) applies the tax rate derived from all your income, not just the German part, and disapplies the settlement effect of Section 50(2) of the Income Tax Act for income subject to withholding under Section 50a.

German Inheritance Tax Follows You for Five Years

Section 2(1)(1) of the Inheritance and Gift Tax Act imposes unlimited liability on the entire acquisition where the deceased at the time of death, the donor at the time of the gift, or the recipient at the time the tax arises, is an Inländer. Letter (a) covers natural persons with a German Wohnsitz or gewöhnlicher Aufenthalt. Letter (b) is the one that matters after you have left.

Letter (b) treats as Inländer German nationals who have not been permanently abroad for more than five years without having a Wohnsitz in Germany. A German who moved to Dubai three years ago and dies there is still an Inländer, and the worldwide estate, including the Dubai apartment and the UAE bank accounts, is inside German inheritance tax.

Note that the status attaches to the deceased, the donor or the recipient. A German parent in Dubai who has been away for eight years still triggers unlimited liability if the child receiving the gift is inside the five-year window or lives in Germany.

What happens after the five years?

Section 4 of the Foreign Tax Act extends the reach. Where Section 2(1)(1) of the Foreign Tax Act applied to the deceased or donor at the time the tax arose, inheritance tax liability under Section 2(1)(3) of the Inheritance and Gift Tax Act extends beyond German-situs assets to all parts of the acquisition whose returns would not be foreign income under Section 34d of the Income Tax Act.

Section 4(2) provides the only escape: it does not apply where you show that a foreign tax corresponding to German inheritance tax is payable on those parts, amounting to at least 30 percent of the German tax that would fall on them. The UAE levies no inheritance tax, so that proof cannot be made and Section 4 applies in full.

None of this is displaced by a UAE will. A DIFC or Abu Dhabi will determines who inherits UAE assets and avoids the default application of Sharia succession rules here. It has no effect on which country charges tax on the transfer.

The Order to Do This In

  1. Deal with the Wohnsitz before the departure date, not after. Give up or genuinely let the German dwelling, and keep evidence. Deregistration alone does not end unlimited liability.
  2. Establish whether Section 6 applies before you move, by checking the 1 percent participation threshold and the seven-of-twelve years test. The valuation date is the day residence ends, so a departure at a low-valuation point costs less than one at a high point.
  3. If Section 6 applies, apply for the seven-year installment arrangement and arrange the security it normally requires in advance.
  4. If a return within seven years is realistic, document the intention at the time of departure. Section 6(3) turns on temporary absence and an unchanged intention to return, and evidence created years later is weaker.
  5. Run the Section 2(3) tests on German assets and German income. Where a German property or portfolio pushes you over 154,000 euros or 30 percent, budget for extended limited liability for ten years, subject to the 16,500 euro floor.
  6. Plan gifts around the five-year inheritance tax window in Section 2(1)(1)(b) of the Inheritance and Gift Tax Act, remembering that the recipient’s status counts too.
  7. Sequence the German and UAE sides together. Our checklist for leaving the UAE permanently covers the mirror image of this if you later move back, and the German return date is what Section 6(3) measures.
  8. Comply with Section 6(5). It requires electronic notification of triggering events within one month and an annual confirmation of your current address and continued ownership by 31 July. Missing it accelerates the whole unpaid balance.

What We Could Not Verify

The Federal Ministry of Finance website refuses all automated access, so the ministry’s own statement that Germany notified the UAE on 14 June 2021 that it did not intend to extend the agreement could not be read at source. The structural fact underlying it is verified: Article 30(1) of the 2010 agreement, as reproduced in Bundestag printed paper 17/4806, made continuation conditional on an affirmative extension by both states, and no extension took effect. The absence of a Germany-UAE treaty from 1 January 2022 is not in dispute.

Current income tax rates, the Solidaritätszuschlag and inheritance tax allowances and rate bands change annually and are deliberately not quoted here. The provisions cited are the structural ones, taken from the consolidated texts published by the Federal Ministry of Justice at gesetze-im-internet.de.

Whether the German tax office accepts that a given departure ended the Wohnsitz is a question of fact decided case by case, and there is no threshold that settles it. Any German with a company shareholding, a German property or a German portfolio should take advice from a Steuerberater before the departure date rather than after it. The position contrasts sharply with countries that do have a live UAE treaty: a French national in Dubai has an Article 4 tie-breaker and a succession article to work with, and a German has neither.

Frequently Asked Questions

Is there a double taxation agreement between Germany and the UAE?

No. The agreement signed on 1 July 2010 contained a ten-year duration clause in Article 30(1) requiring both states to agree affirmatively to extend it, that extension did not take effect, and the treaty ceased to apply from 1 January 2022. No replacement has been concluded, so German residents with UAE income and UAE residents with German income rely on German domestic law alone.

Do Germans in Dubai pay German tax on a Dubai salary?

Only if they are still unbeschränkt steuerpflichtig, which turns on whether a Wohnsitz or gewöhnlicher Aufenthalt in Germany survives the move. If it does, the Dubai salary is taxed in Germany in full, and because there is no treaty and the UAE withholds no tax, unilateral relief under Section 34c of the Income Tax Act gives nothing to credit.

Does deregistering at the Einwohnermeldeamt end my German tax residence?

No. Section 8 of the Fiscal Code looks at whether you hold a dwelling in circumstances indicating you will keep and use it, not at your registration status. A flat or even a furnished room that remains available to you can preserve the Wohnsitz after the Abmeldung, which is the most common reason a departure fails to work as intended.

Who has to pay German exit tax when moving to Dubai?

Individuals who hold at least 1 percent of a corporation, directly or indirectly, at any time in the preceding five years, and who were subject to unlimited German tax liability for at least seven of the twelve years before departure. Section 6 of the Foreign Tax Act then treats the end of unlimited liability as a sale of those shares at market value on that day.

Can German exit tax be paid in installments?

Yes. Section 6(4) allows payment in seven equal annual installments on application, without interest, with the first due within a month of the assessment and the rest on 31 July each year. The application is as a rule granted only against security, and the balance accelerates on a missed installment, insolvency, a sale or transfer of the shares, or distributions exceeding a quarter of the deemed disposal value.

What is the extended limited tax liability under Section 2 AStG?

It keeps German nationals inside a wider German tax charge for ten years after the year unlimited liability ended, where they move to a low-tax territory and retain substantial economic interests in Germany. It requires five years of unlimited liability as a German within the previous ten, and it only applies in years where the income caught exceeds 16,500 euros.

Does the UAE count as a low-tax country for Section 2 AStG?

Yes. Section 2(2) compares the tax on an unmarried resident with taxable income of 77,000 euros and treats a burden more than one third below the German burden as low taxation, with an escape only if total taxes reach two thirds of the German figure. A jurisdiction with no personal income tax cannot meet that escape.

What counts as substantial economic interests in Germany?

Any one of three tests in Section 2(3). A German business, a limited partnership share carrying more than 25 percent of its income, or a 1 percent corporate shareholding; or German-taxable income above 30 percent of total income or above 62,000 euros; or assets producing such income above 30 percent of total assets or above 154,000 euros. A rented German apartment above that value satisfies the third test alone.

How long does German inheritance tax follow me to Dubai?

Section 2(1)(1)(b) of the Inheritance and Gift Tax Act treats German nationals as Inländer until they have been permanently abroad for more than five years without a German dwelling, so the worldwide estate stays inside German inheritance tax for that period. After it, Section 4 of the Foreign Tax Act can extend the charge further where Section 2 of that Act applies, and the 30 percent foreign tax escape in Section 4(2) is unavailable in a country with no inheritance tax.

Does a DIFC will change my German inheritance tax position?

No. A DIFC or Abu Dhabi will settles who inherits your UAE assets and displaces the default application of Sharia succession rules to them. Which country taxes the transfer is decided by German nationality and residence rules, and no UAE document changes that.

Official Sources

Information current as of September 2026. German tax rates, allowances and thresholds change annually and the provisions described here interact in ways that depend heavily on individual facts. Take advice from a German Steuerberater before fixing a departure date, and do so before you leave rather than after.