Anyone holding shares in corporations and moving abroad can be hit by German exit taxation. What is behind it – and why forward-looking planning is decisive.
If a person with a significant holding in a corporation (generally from 1%) relocates their residence abroad, German tax law treats this under sec. 6 AStG as if they had fictitiously sold their shares. Tax becomes due on the assumed increase in value (the hidden reserves) – even though no real sale and no cash inflow take place.
This can be a considerable burden and particularly affects entrepreneurs with valuable GmbH shares. Since the reform, stricter rules apply, e.g. on deferral. This is exactly why exit taxation is one of the most important topics before a move to Cyprus.
The timing and order of steps can strongly influence the burden.
The starting structure (holding, size of holding, hidden reserves) determines the options.
A sound company valuation is the basis of any arrangement.
Exit taxation cannot be ignored – but it can often be structured. Depending on the case, different approaches come into play, from early structuring through deferral options to alternative forms of holding. The key is to think the topic through with tax experts before the move, not afterwards.
We coordinate this planning together with specialised tax advisers so your move to Cyprus does not fail because of an avoidable tax trap.
It is mainly relevant for people with a significant holding (usually from 1%) in corporations. Without such shares it is usually not an issue – but other tax points may be.
'Avoid' is too broad – but with forward-looking planning the burden can often be considerably structured or spread. The key is to plan early.
Note: not tax or legal advice. A tax saving requires a properly set up structure with genuine economic substance. Figures as of 2026.
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