Scope of this article: This article deals exclusively with the question of which substantive matrimonial property law applies to the financial settlement between spouses with a foreign connection, and how the accrued gain is concretely calculated and equalised in that case. The international jurisdiction of the courts and the law applicable to the divorce itself are separate matters and are addressed only in outline below.
Anyone who holds a foreign nationality, married abroad, moved abroad during the marriage or holds assets there can encounter an unpleasant surprise on divorce, or only on death: German law does not automatically apply merely because one spouse is German or because the divorce proceedings are conducted before a German court. Which matrimonial property law actually applies often decides sums running into six figures. This article explains the relevant legal bases, shows with worked examples how the equalisation of accrued gains (Zugewinnausgleich) functions in an international context, and places recent case law in context.
Two Separate Questions: Competent Court and Applicable Matrimonial Property Law
In practice, two legally independent questions are often mixed up: which court has jurisdiction for the proceedings, and which substantive law does that court apply? A German court may well have jurisdiction for proceedings even though it has to apply foreign matrimonial property law to the merits, and vice versa. International jurisdiction for the divorce proceedings themselves is governed by the Brussels IIb Regulation and the law applicable to the divorce by the Rome III Regulation. Both questions are set out in detail in the article Divorce When Living Abroad. For the settlement of matrimonial property, that is, the question of how the spouses’ assets are divided, separate rules apply, and these are the focus below.
The EU Matrimonial Property Regulation (Regulation (EU) 2016/1103) at a Glance
Since 29 January 2019, Council Regulation (EU) 2016/1103 has uniformly governed which law is to be applied to the matrimonial property regime of spouses with an international connection, which court has jurisdiction for disputes over matrimonial property, and how decisions of other Member States are recognised and enforced. It was adopted by way of enhanced cooperation and therefore does not apply in all 27 EU states but currently in 18 participating Member States: Belgium, Bulgaria, Germany, Finland, France, Greece, Italy, Croatia, Luxembourg, Malta, the Netherlands, Austria, Portugal, Sweden, Slovenia, Spain, the Czech Republic and Cyprus. For registered partnerships, the sister Regulation (EU) 2016/1104, identical in content, applies.
Two basic principles of the Regulation are central to understanding it:
- Universal application (Article 20 of the Regulation, EuGüVO): The law determined under the Regulation is to be applied even if it is not the law of a Member State. A German court may therefore be required by the Regulation to apply Russian, Thai or US matrimonial property law.
- Unity of the applicable law (Article 21 EuGüVO): There is no splitting by individual assets. Once determined, the matrimonial property law applies uniformly to all of the spouses’ assets, regardless of the state in which individual assets, such as a property, are located.
Important for timing: the Regulation in principle covers only marriages contracted from 29 January 2019, or cases in which the spouses made a choice of law only after that date (Article 69 EuGüVO). For older marriages, the former German conflict-of-laws rule continues to apply, as discussed further below.
Choice of Law: Spouses Can Determine Their Matrimonial Property Law Themselves
Under Article 22 EuGüVO, spouses can, contrary to what is often assumed from the position on the law applicable to divorce, choose the law applicable to their matrimonial property regime themselves by express agreement. The following are available:
- the law of the state in which one or both spouses have their habitual residence at the time of the choice of law,
- the law of a state whose nationality one of the spouses holds at that time.
The choice-of-law agreement is subject to its own formal requirements (Article 23 EuGüVO): it must be in writing, dated and signed by both spouses. If the chosen law, or the law in force at the habitual residence of both spouses, prescribes additional formal requirements for marital agreements, these must also be observed. For choice-of-law agreements concluded in Germany, this generally means notarial authentication (Section 1410 BGB, German Civil Code), since the formal validity of the marital agreement itself (Article 25 EuGüVO) is also governed by the law at the spouses’ habitual residence.
Example: A German-Austrian couple lives in Munich. Without a choice of law, German law would apply in any case, since both had their first common habitual residence after the marriage in Germany. If the spouses instead wish to apply Austrian law (for example because of the way succession law is structured there), they can achieve this through a notarially authenticated choice of law under Article 22 EuGüVO, because one spouse’s Austrian nationality suffices as a connecting factor.
Without a Choice of Law: The Statutory Connecting Ladder (Article 26 EuGüVO)
If the spouses make no choice of law, Article 26 EuGüVO determines the applicable law through a three-step connecting ladder, to be examined in sequence:
- First common habitual residence after the marriage: What matters is where the spouses habitually lived together immediately after marrying, not the place of the marriage itself and not nationality.
- Failing that: common nationality at the time of the marriage, provided the spouses did not establish a common habitual residence. If the spouses have more than one common nationality, this step drops out.
- Failing that: closest connection to a state, taking all circumstances at the time of the marriage into account, where there is also no common nationality.
A habitual residence exists where a person stays in a place in circumstances indicating that they are not staying there merely temporarily. In practice, a stay of more than six months is regularly no longer regarded as merely temporary.
The exception clause of Article 26 (3) EuGüVO must be noted: exceptionally, at the request of one spouse, the law of a later, much longer-lasting state of common residence may be applied if both spouses relied on that law. This provision gains practical significance in particular for couples who have lived abroad for many years.
Example: A German couple marries in Germany and moves directly afterwards to Spain, where they live together for twelve years. Since Spain is the place of the first common habitual residence after the marriage, Spanish and not German matrimonial property law applies, absent a different choice of law, even though both spouses are German nationals and the marriage was contracted in Germany. This very widespread misconception, “German nationality means German matrimonial property law”, regularly leads to nasty surprises in advisory practice.
Marriages Before 29 January 2019: The Former Position under Article 15 EGBGB (Old Version)
For marriages contracted before 29 January 2019 for which no later choice of law under the EU Matrimonial Property Regulation was made either, the former German conflict-of-laws rule continues to apply under the transitional provision of Article 229 Section 47 EGBGB (Introductory Act to the German Civil Code): Article 15 EGBGB in the version in force until 29 January 2019 (old version). For determining the matrimonial property statute, this in principle referred to the law that was decisive for the general effects of marriage at the time of the marriage, regularly the law of the common habitual residence and, failing that, of the spouses’ common nationality.
Caution is called for regarding sources here. Article 15 EGBGB as in force today has a completely different subject matter (the spouses’ mutual power of representation in everyday matters). The former matrimonial property provision was repealed when the rules were adapted to the EU Matrimonial Property Regulation, and the numbering of the EGBGB articles was reorganised. For older marriages, the decisive provision therefore always remains “Article 15 EGBGB in the version in force until 29 January 2019”. This is a circumstance that often leads to confusion in older as well as current accounts and must be checked carefully in handling a case.
This transitional issue was recently the subject of a widely noted decision of the Berlin Court of Appeal (Kammergericht Berlin) of 19 July 2024 (case no. 16 UF 39/22). The proceedings concerned a German-Thai couple with a notarially authenticated marital agreement containing a choice of German law. The court confirmed that for marriages contracted before the cut-off date the former EGBGB rule continues to apply, but that a notarial choice of German law remains effective. At the same time, the Kammergericht clarified that German courts have jurisdiction under Article 5 (1) EuGüVO for ancillary matrimonial property matters where the divorce proceedings themselves are conducted in Germany, even if the equalisation of accrued gains is claimed in separate proceedings. On the merits, the court also affirmed the validity of the modified equalisation of accrued gains, including the exclusion of pension rights equalisation and post-marital maintenance, even though the wife had only limited German at the time of the notarial authentication. What was decisive was that a sworn interpreter was engaged and that there were no other indications of unconscionable exploitation.
How Is the Accrued Gain Calculated under German Law?
Where German matrimonial property law applies, whether by choice of law, by objective connection or by virtue of Article 15 EGBGB (old version), Sections 1363 et seq. BGB apply. Absent a marital agreement, the statutory regime is the community of accrued gains (Zugewinngemeinschaft, Section 1363 BGB): the spouses’ assets remain legally separate during the marriage, and only when the regime ends, through divorce, death or contractual termination, is the increase in assets achieved during the marriage equalised.
The calculation proceeds in several steps:
- Initial assets (Section 1374 BGB): Each spouse’s assets when the regime begins, that is, regularly on marriage. Inheritances, gifts and endowments that a spouse receives during the marriage are added to the initial assets (privileged initial assets) and are thus excluded from the accrued gain. Their increase in value during the marriage is, however, in principle accrued gain.
- Final assets (Section 1375 BGB): Each spouse’s assets on the relevant reference date.
- Reference date (Section 1384 BGB): On divorce, this is in principle the date on which the divorce petition is served, not the date on which the divorce becomes final.
- Accrued gain: The difference between each spouse’s final and initial assets (Section 1373 BGB), starting from zero where initial assets are negative.
- Equalisation claim (Section 1378 BGB): The spouse with the lower accrued gain receives half of the amount by which the other’s accrued gain exceeds their own.
Calculation example: Spouse A achieves an accrued gain of EUR 260,000 during the marriage, spouse B of EUR 90,000. The difference is EUR 170,000. A owes B half of it, that is, an equalisation claim of EUR 85,000.
Example with an inheritance: If spouse B inherits an owner-occupied flat worth EUR 250,000 during the marriage, that amount is added to their initial assets and does not enter the accrued gain to that extent. If the flat is worth EUR 340,000 when the divorce petition is served, the increase in value of EUR 90,000 is in principle accrued gain and raises the equalisation claim accordingly.
An international connection changes nothing about this calculation method once it is established that German law applies. It does, however, regularly make the actual determination of initial and final assets more difficult, in particular where assets are located abroad, are held in a foreign currency or are subject to foreign company law.
Special Case: Equalisation of Accrued Gains on Death with an International Connection (Section 1371 BGB)
If a spouse dies without a prior divorce, the equalisation of accrued gains is not calculated individually but carried out as a flat-rate adjustment: the statutory share of the surviving spouse in the estate increases by one quarter of the inheritance (Section 1371 (1) BGB), irrespective of whether and in what amount an accrued gain actually arose.
In international marriages, a particular fork in the road arises here. Succession law and matrimonial property law are connected separately under conflict-of-laws rules. Within the EU, the law governing the succession is regularly determined by the EU Succession Regulation (Regulation (EU) No 650/2012) and therefore often by the deceased’s last habitual residence, whereas the matrimonial property statute follows the separate rules set out above. Since Section 1371 (1) BGB is, according to the prevailing view, to be characterised as a provision of matrimonial property law and not of succession law, the flat-rate increase of the share can apply even where foreign law otherwise governs the succession, provided the matrimonial property statute is German law.
This fork was the subject of a much-cited decision of the Higher Regional Court (Oberlandesgericht) Frankfurt am Main (order of 12 November 2013, case no. 21 W 17/13). In a case with a German-Greek connection, Greek succession law was applicable under the nationality connection, whereas the matrimonial property statute was governed by German law, absent a different connection. The court affirmed the additional application of Section 1371 (1) BGB alongside the foreign law governing the succession, because that provision is of a matrimonial property nature and Greek succession law provided no comparable matrimonial property adjustment. The surviving wife’s share thereby increased from a quarter to half of the estate. A surviving spouse with a foreign connection who inherits should therefore always have this possibility of a flat-rate increase of the share examined independently. Conversely, heirs from a testator’s earlier relationship should critically question the applicability of this provision. Further notes on enforcing compulsory share and inheritance claims where assets are located abroad can be found in the article Compulsory Share Law and Foreign Assets.
Foreign Matrimonial Property Regimes Compared with the German Community of Accrued Gains
Anyone who is married to a foreign partner or lives abroad should know the fundamental differences between the matrimonial property systems:
- Germany, community of accrued gains (Zugewinngemeinschaft): Separate assets during the marriage, with a claim under the law of obligations to equalisation only when the regime ends (see above).
- France, communauté réduite aux acquêts: The statutory regime in France is, unlike in Germany, a genuine community of acquisitions. Assets acquired during the marriage become the joint property of both spouses (biens communs) on acquisition, not only through a later equalisation claim. Assets brought into the marriage and assets acquired gratuitously during the marriage (inheritances, gifts) by contrast remain separate property (biens propres). French spouses can alternatively opt for contractual separation of property (séparation de biens).
- USA, community property: In the so-called community property states (including California, Texas, Arizona, Nevada, Washington), a principle similar to the French community of acquisitions applies. Income and assets acquired during the marriage in principle belong to both spouses in equal shares. In the other US states (common-law states), by contrast, a separation principle applies, with a court division of assets on equitable principles (equitable distribution) on divorce.
- German-French elective regime: On the basis of the intergovernmental agreement of 4 February 2010, which entered into force on 1 May 2013, spouses can agree the “elective community of accrued gains” (Wahl-Zugewinngemeinschaft). This is open not only to German-French couples, and in principle other EU states can also accede to it. It resembles the German community of accrued gains but contains features of French inspiration, for example the exclusion of claims for pain and suffering and of unplanned increases in value of certain assets from the equalisation.
These differences make clear why determining the applicable law is not an academic preliminary question but directly decisive for the amount of the equalisation claim. While in Germany only the increase in value is to be equalised, in a community of acquisitions the entire assets acquired during the marriage may already have to be treated as joint property.
Cross-Border Assets: Foreign Property in the Accrued Gain Balance
Where real estate is located abroad, it is, because of the unity of the applicable law already mentioned (Article 21 EuGüVO), in principle included in the German accrued gain balance if German matrimonial property law applies. There is no splitting by place of location. In practice, this regularly causes difficulties:
- The market value must be determined as at the respective reference date (marriage, or service of the divorce petition), usually by the comparative, cost or income capitalisation approach, depending on whether it is a let property, a single-family house or a special-purpose property.
- Since German experts often cannot reliably assess local market particularities, it is regularly advisable to obtain a report from a locally qualified and, if possible, bilingual expert.
- Value developments must, where relevant, be converted into the respective foreign currency, using the exchange rates at the respective reference date.
- Encumbrances on the property under foreign property law (for example differing land charges) must be taken into account in the net valuation.
Anyone who hastily agrees to a valuation without having the actual value development of a foreign property checked risks considerable financial disadvantage, particularly in market phases with strong regional price fluctuations.
International Jurisdiction for Matrimonial Property Proceedings
Alongside the applicable law, the EU Matrimonial Property Regulation also governs international jurisdiction for disputes over matrimonial property:
- On death (Article 4 EuGüVO): If a court of a Member State has jurisdiction under the EU Succession Regulation for the estate of a deceased spouse, the same court also has jurisdiction for the related matrimonial property questions (ancillary jurisdiction).
- On divorce, legal separation or annulment of the marriage (Article 5 (1) EuGüVO): If a court of a Member State has jurisdiction for the divorce proceedings under the Brussels IIb Regulation, that court may, subject to the spouses’ agreement in certain situations, also decide on the matrimonial property consequences of the divorce.
For questions of jurisdiction and applicable law in the divorce proceedings themselves, reference is made to the article on divorce when living abroad mentioned at the outset.
Common Misconceptions about International Equalisation of Accrued Gains
- “I am German, so German matrimonial property law applies.” Wrong. What matters primarily is the first common habitual residence after the marriage, not nationality.
- “Our matrimonial property regime changes automatically after we move abroad.” Wrong. Once determined, the matrimonial property statute in principle remains decisive for the entire duration of the marriage (principle of immutability), unless a valid subsequent choice of law is made or, exceptionally, the special rule of Article 26 (3) EuGüVO applies.
- “Equalisation of accrued gains means we split all our assets in half.” Wrong, at least under German law. Only the difference between the increases in assets achieved during the marriage is equalised, not all existing assets.
- “Because the divorce proceedings are running in Germany, the court automatically applies German matrimonial property law.” Wrong. International jurisdiction and applicable law are, as set out at the outset, to be strictly separated.
- “An informal email agreement on the applicable law is enough.” Wrong. The choice of law necessarily requires written form with the date and signature of both spouses, in Germany regularly notarial authentication.
Practical Recommendations for International Couples
- Before or early after the marriage, check which matrimonial property law would apply without a choice of law, in particular where a move abroad is planned.
- Where there are doubts about the advantages of the objectively applicable law, consider a notarially authenticated choice of law under Article 22 EuGüVO. Notes on the content of a marital agreement under German law are offered by the article Design Tips for Prenuptial Agreements.
- Document initial assets at the time of the marriage carefully, in particular for assets abroad. In a dispute, the burden of proof regularly lies with the person who relies on higher initial assets.
- Have foreign properties and other cross-border assets valued by qualified experts familiar with the locality, not by a flat-rate estimate.
- For every cross-border move during an existing marriage, have it checked early whether it may, exceptionally via Article 26 (3) EuGüVO, affect the applicable matrimonial property law.
- Always have succession law and matrimonial property law questions assessed separately where there is an international connection, in particular with a view to a possible flat-rate increase of the share under Section 1371 BGB.
When Is Legal Advice Worthwhile?
Determining the applicable matrimonial property law in an international marriage is multi-stage and error-prone. It requires examination of the temporal scope of the EU Matrimonial Property Regulation, where relevant recourse to the former German conflict-of-laws rule, careful determination of the first common habitual residence and, on death, separate assessment of the law governing the succession and the matrimonial property statute. Given the often considerable financial differences between national matrimonial property systems, legal review is advisable in particular before a planned emigration, where the marriage already has a foreign connection, where there are substantial cross-border assets, and before concluding or amending a marital agreement with an international connection.
Dr. Johannes Fiala has for many years advised on international tax law, asset protection and succession law with a foreign connection, including the matrimonial property decisions that are regularly overlooked in international marriages. Please contact us if you need clarity about the matrimonial property law applicable to your marriage or are considering a choice of law.
