Anyone who moves abroad and no longer wants to be taxed in Germany on their worldwide income must above all clarify one thing: has the German home actually been given up, and can this be proven to the tax office? Deregistering at the residents’ registration office is not enough for this. What matters is the tax concept of residence (Wohnsitz) in Section 8 of the German Fiscal Code (Abgabenordnung, AO), and that concept is based on actual circumstances, not on forms. This article explains when a home is regarded for tax purposes as having been retained, how a sale, a letting or making the home available to relatives are assessed, which documents the tax office expects in practice and what happens if the proof fails.
Why Residence Determines Unlimited Tax Liability
Under Section 1 (1) of the Income Tax Act (Einkommensteuergesetz, EStG), anyone who has a residence or their habitual abode in Germany is subject to unlimited income tax liability. If there is no residence, tax liability may also arise from a habitual abode under Section 9 AO; on this, see the article on habitual abode in tax law (in German). Nationality plays no role for Section 1 (1) EStG. Anyone who, after moving away, only earns German-source income within the meaning of Section 49 EStG, for example rent from a German property, is subject to limited tax liability (Section 1 (4) EStG).
The Concept of Residence in Section 8 AO
Section 8 AO reads: “A person has a residence where they have a dwelling under circumstances which indicate that they will retain and use the dwelling.” The tax authorities have explained the criteria in more detail in the Application Decree on the Fiscal Code (Anwendungserlass zur Abgabenordnung, AEAO) on Section 8. This results in three steps of examination.
Dwelling
This means stationary premises that are suitable for living in on a permanent basis, at least in the sense of a modest place to stay (AEAO on Section 8 no. 2). A self-contained flat with its own kitchen is not required; the simplest furnishings are sufficient. By contrast, merely makeshift or short-term accommodation does not meet the definition. A single room in the parents’ house can therefore also be a dwelling for tax purposes.
Having the Dwelling at One’s Disposal
The dwelling must objectively be available to the taxpayer as a place to stay at any time they wish (AEAO on Section 8 no. 3). Ownership or a tenancy agreement is not a requirement; what counts is actual control, for which having one’s own key, for example, is an indication. The dwelling is not at one’s disposal if agreements restrict its use in such a way that it cannot be lived in at any time (AEAO loc. cit., referring to the Federal Fiscal Court (Bundesfinanzhof, BFH), judgment of 13.11.2013, I R 38/13).
Retaining and Using
The use must be for residential purposes. It need be neither regular nor long, but it must go beyond mere visits, short holiday stays or short stays for recreational or administrative purposes (AEAO on Section 8 no. 4.1, referring to BFH, judgment of 10.4.2013, I R 50/12). There is no minimum number of days per year (BFH, judgment of 19.3.1997, I R 69/96). According to the AEAO, a dwelling may, particularly in the case of employees temporarily posted abroad, in individual cases even establish a residence if it is not used at all in a calendar year. In addition, the overall picture must make it likely that the use will continue; furnishings and fittings are indications of this (AEAO on Section 8 no. 4.2).
The relevant period of examination is important: each assessment period is assessed on its own. Later developments may only be taken into account to the extent that they allow conclusions to be drawn about the circumstances at the time (AEAO on Section 8 no. 1.1, BFH, judgment of 23.6.2015, III R 38/14). A quick return to the old home can therefore be treated retrospectively as an indication that it was never meant to be given up.
A Residence Abroad Does Not Protect against a Residence in Germany
A widespread misconception is that German tax liability ends when the centre of one’s life moves abroad. In its judgment of 23.10.2018, I R 74/16, the Federal Fiscal Court made clear that a residence in Germany establishes unlimited tax liability even if the centre of vital interests is abroad. According to the AEAO, neither the centre of one’s life nor daily work in Germany is required for a residence in Germany (AEAO on Section 8 no. 1.3). Which state has the primary right to tax in the case of dual residence is governed, where applicable, by a double taxation agreement (see below).
When Is the German Home Regarded as Retained? Typical Situations
The following overview summarises how the tax authorities classify typical cases in principle. It does not replace the assessment of the individual case.
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| Situation | Tendency | What matters |
|---|---|---|
| Rented flat terminated, vacated, keys returned | Residence given up | Date of return, handover record |
| Own flat empty, furnished, owner keeps the key | Residence generally continues | Availability for use at any time, furnishings |
| Own flat let to third parties on a long-term basis | Generally no residence | Genuine tenancy agreement, no access of one’s own |
| Letting only for the duration of the absence, up to six months | Residence may continue | Intention to return soon |
| Flat offered for sale, sale completed within the foreseeable future | Residence ends on departure | Documented sales efforts |
| Holiday letting with free periods for own use | Considerable risk | Owner controls the bookings |
| Spouse or minor children remain in the flat | Residence generally continues | Family residence, separate examination for each person |
| Occasional overnight stays with parents or friends as a guest | Generally no residence | No room of one’s own, no control of one’s own |
Sale and Long-Term Letting
AEAO on Section 8 no. 6 contains the statement that is central for emigrants: if the German dwelling is left behind solely for the purpose of managing assets, the residence ends on departure. According to the AEAO, mere asset management exists, for example, if the taxpayer intends to sell the dwelling or let it on a long-term basis and actually does so within the foreseeable future. The intention alone is therefore not sufficient; it must be reflected in actions. Anyone who only markets the dwelling after departure should be able to document these efforts without gaps.
Short-term solutions are risky. If the dwelling is only let temporarily, for up to six months, so that it can be used by the owner again after their return, having the dwelling at one’s disposal may continue according to the AEAO. The same applies to holiday letting via booking platforms where the owner can block periods for themselves and keeps a key. Letting to third parties on a permanent basis, without keys retained and without a room of one’s own, provides a clear separation.
In the case of a sale, the income tax consequences must also be examined; see the article on selling German property before emigrating.
Rented Flat
For a rented flat, the clean solution is termination with the flat vacated and the keys returned. If the notice period runs beyond the date of departure, what matters is whether the flat is still available as a place to stay in the meantime. A vacated flat with keys handed over speaks against a residence; a furnished flat to which the tenant can return on visits speaks in favour of one. A sublet that is only intended to bridge the period of absence is not a safe way out.
Making the Home Available to Relatives
Making the home available to children, parents or siblings is possible, but requires care. If the owner keeps a key and a room of their own with personal belongings in which they stay during visits, they may continue to have the dwelling at their disposal. By contrast, anyone who stays with relatives or acquaintances as a guest, even at regular intervals, does not establish a residence there as long as it is not also their own dwelling (AEAO on Section 8 no. 5.3). After the family has moved away on a permanent basis, a dwelling used only briefly for holiday or visiting purposes does not in itself lead to a residence either; the same applies to a dwelling made available free of charge by third parties, such as the parents (AEAO on Section 8 no. 6.1.4, referring to BFH, judgments of 26.1.2001, VI R 89/00, and of 12.1.2001, VI R 64/98). The line between guest and co-occupant is fluid.
The arrangement and the way it is actually lived should therefore match: a written agreement, use by the relative as their own main residence, no belongings of the emigrant permanently left there, visits as a guest. Letting to relatives against payment additionally raises questions of whether the terms are at arm’s length (Fremdüblichkeit).
Spouse and Children Remain in Germany
The question of residence must be examined separately for each person (AEAO on Section 8 no. 5.1). However, a spouse who is not permanently separated generally has their residence where their family lives, regardless of the distance (AEAO on Section 8 no. 5.2). If the spouse or minor children remain in the previous home and the emigrant stays there occasionally, it will as a rule be difficult to prove that the residence has been given up. Minor children generally share the residence of their parents (AEAO on Section 8 no. 5.4); this can also play a role for child benefit (Kindergeld).
Storing Household Effects
Household effects in a storage unit or cellar do not turn that place into a dwelling. It becomes critical if the storage room is at the same time furnished so as to be habitable and is used during visits.
Registration Law: An Indication, but Not Proof
Deregistering at the residents’ registration office has no direct tax effect in itself. However, the tax authorities generally regard registration and deregistration as an indication that a residence has been established or given up (AEAO on Section 8 no. 1.2). Under Section 17 (2) of the Federal Registration Act (Bundesmeldegesetz), deregistration must be made within two weeks after moving out and is possible at the earliest one week beforehand; the deregistration certificate belongs in every file of evidence. The risks of keeping a registered address are covered in the article on a registered address in Germany after emigrating.
Providing Proof: Duty to Cooperate and Burden of Proof
Increased Duty to Cooperate in Cases with a Foreign Element
Under Section 90 (1) AO, taxpayers must disclose the facts relevant for taxation completely and truthfully. For matters with a foreign element, Section 90 (2) AO tightens this duty: the taxpayer must clarify the facts themselves, obtain the necessary evidence and exhaust all legal and factual possibilities in doing so. They cannot claim to be unable to obtain evidence if they could have secured the possibility of doing so when arranging their affairs.
Records should therefore be collected at the time of departure; anyone who only responds to an enquiry years later often encounters gaps that can be held against them.
Who Bears the Burden of Proof?
In principle, the tax office bears the burden of proof (Feststellungslast) for facts giving rise to tax, and therefore also for a residence in Germany. In practice, however, the weight shifts. In addition to the increased duty to cooperate, the authorities work with presumptions based on experience: under AEAO on Section 8 no. 6.1.2, experience suggests that a residence has been retained if the previously only permanently used dwelling remains unchanged and ready for use during the stay abroad. This presumption is rebuttable; according to the BFH judgment of 17.5.1995, I R 8/94, cited there, the burden of proof for rebutting it lies with the taxpayer. The statement is worded for employees transferred abroad; whether and to what extent it can be applied to permanent emigrants depends on the individual case.
If the taxpayer breaches their duties to cooperate, the tax office may make an estimate under Section 162 (2) AO, in the worst case on the basis of a continuing residence.
Typical Documents for the Proof
Which records are required in an individual case depends on the tax office and the facts. The following overview lists documents that have proven useful in practice.
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| Area | Documents |
|---|---|
| Rented flat in Germany | Letter of termination and landlord’s confirmation, dated handover record, receipt for the return of the keys |
| Owner-occupied flat, sale | Estate agent mandate, advertisements, notarial purchase agreement, proof of transfer of possession |
| Owner-occupied flat, letting | Tenancy agreement with third parties for an indefinite or long term, handover record, bank statements showing rent received, declaration that no key was retained |
| Making the home available to relatives | Written agreement on use or tenancy, registration certificate of the relative, proof that one’s own belongings have been removed |
| Move | Removal company invoice, inventory of goods moved, storage agreement for stored household effects |
| Deregistrations | Deregistration certificate, cancellation of electricity, internet, broadcasting fee, vehicle deregistration where applicable |
| Home abroad | Tenancy or purchase agreement, registration certificate or residence permit, utility bills |
| Tax residence abroad | Certificate of tax residence from the foreign tax authority, tax assessments there |
| Stays in Germany | Travel calendar, plane and train tickets, hotel bills for visits |
Documenting stays is important because, once the residence has been given up, a habitual abode may still come into consideration; the assumption that one is always safe below 183 days falls short (see 183-day rule and habitual abode, in German).
There is no formal “deregistration” with the tax office. The move is usually notified at the latest with the income tax return for the year of departure; where a business is discontinued, there are VAT obligations or GmbH shareholdings, earlier notification may be advisable.
The Year of Departure
Income tax is an annual tax (Section 2 (7) EStG). In the year of departure, unlimited tax liability only exists until the residence is given up, provided no habitual abode continues either. German-source income earned afterwards in the same calendar year during limited tax liability must be included in the assessment for unlimited tax liability under Section 2 (7) sentence 3 EStG. Foreign income that was not subject to German income tax during this time may be taken into account in determining the tax rate under Section 32b (1) sentence 1 no. 2 EStG (progression proviso, Progressionsvorbehalt).
The exact date on which the residence was given up should therefore be evident from the documents, for example from the handover record. If the dwelling remains at one’s disposal beyond the turn of the year, unlimited tax liability extends into the following year. The exit tax under Section 6 of the Foreign Tax Act (Außensteuergesetz) is also linked to the end of unlimited tax liability, which must be examined separately for holders of shares in corporations.
Consequences If the Proof Fails
Unlimited Tax Liability on Worldwide Income
If the tax office does not accept that the home has been given up, the taxpayer remains subject to unlimited tax liability on their worldwide income. They must then, in principle, file returns in Germany, including on income in the new state of residence. Whether Germany is actually entitled to tax this income is a second question.
Double Taxation Agreements and the Tie-Breaker Rule
If there is a double taxation agreement and the person has residences in both states, its residence rule determines which state of residence takes priority. Agreements based on Article 4 (2) of the OECD Model Tax Convention examine, one after the other, the permanent home, the centre of vital interests, the habitual abode and nationality. Residence within the meaning of the agreement leaves German unlimited tax liability unaffected; it only allocates taxing rights, and exempt income can increase the tax rate (Section 32b (1) sentence 1 no. 3 EStG). For more details, see the articles on the basics of double taxation agreements (in German) and on the certificate of tax residence. Without an agreement, worldwide income remains taxable; double taxation is then only mitigated under Section 34c EStG, usually by crediting the foreign tax or, on application, by deducting it.
Back Payments, Interest and Criminal Law Risks
If the continuing residence only comes to light years later, the tax office may assess taxes for past years together with interest under Section 233a AO. The regular assessment period is four years (Section 169 (2) sentence 1 no. 2 AO); where there is an obligation to file a return, however, it only begins when the return is filed, at the latest at the end of the third calendar year after the tax arose (Section 170 (2) sentence 1 no. 1 AO). In the case of reckless understatement of tax, five years apply, and in the case of tax evasion, ten years (Section 169 (2) sentence 2 AO). Anyone who deliberately fails to file returns despite continuing tax liability risks an accusation of tax evasion under Section 370 AO.
If there is no residence in Germany, the EU or the EEA, the tax office may also require an authorised recipient in Germany to be named (Section 123 AO); if this is not done, documents are generally deemed to have been received one month after posting. More on this in the article on tax representation after moving abroad.
Precautions before Departure and Clarification in the Event of a Dispute
For unclear arrangements, for example a planned provision of the home to relatives or mixed use, a binding ruling (verbindliche Auskunft) from the tax office under Section 89 (2) AO may be considered before implementation. It is only possible for facts that have not yet been realised, must therefore be applied for before departure, and is subject to a fee from a value in dispute of EUR 10,000. Where there is a foreign element, it may make sense to also obtain a ruling on residence in the destination state; a local adviser should be consulted for this.
If, despite the residence having been given up, an assessment is issued on the basis of unlimited tax liability, an objection (Einspruch) must be filed within one month (Section 355 (1) AO). The quality of the records from the time of departure is then decisive.
Example
Max moves abroad in September. From August, he offers his owner-occupied flat for rent through an estate agent; in November, a tenant moves in under an open-ended agreement and all keys are handed over. Max keeps the estate agent mandate, advertisements, the tenancy agreement and the handover record. Here, there is much to suggest that the flat now only serves the purpose of asset management and that the residence ended on departure. Had Max left the flat furnished and empty and kept the key so that he could stay there during visits, it would more likely have to be assumed that the residence continued, however rarely he comes.
Conclusion
Giving up the German home is a factual process that must be proven. What matters is whether the dwelling is still available as a place to stay at any time after departure. A sale or long-term letting generally ends the residence if it is implemented promptly; flats that are left empty and furnished, or made available to relatives with the option of staying there, carry considerable risks. Because of the increased duty to cooperate, records should already be collected at the time of departure. Where the situation is unclear, a binding ruling from the tax office is advisable before implementation.
Frequently Asked Questions
Is deregistration at the residents’ registration office sufficient proof for the tax office?
No. Deregistration is only an indication. Under Section 8 AO, what matters is whether you still have a dwelling in Germany at your disposal that you will retain and use. The deregistration certificate should nevertheless be part of your records.
Can I keep my owner-occupied flat without remaining subject to unlimited tax liability in Germany?
Yes, if the flat is no longer available to you for your own residential purposes, for example because it is let to third parties on a long-term basis and you do not keep a key. The rental income remains subject to limited tax liability in Germany.
How many days may I still use the German flat?
There is no fixed limit on days for residence. Even occasional use of a dwelling that is available at any time may be sufficient. The frequently cited six-month limit concerns the habitual abode under Section 9 AO, not residence.
May I stay overnight with my parents when visiting?
In principle, yes. Anyone who stays overnight with relatives as a guest does not, as a rule, establish a residence there. It becomes critical if a room of your own, furnished with your belongings, is permanently available to you and you have your own key.
What happens if the tax office does not accept that I have given up my residence?
You remain subject to unlimited tax liability on your worldwide income, unless a double taxation agreement allocates the right to tax to the other state. An objection against a corresponding assessment can be filed within one month; in the proceedings, your records are what counts.
Attorney Dr. Johannes Fiala and the Munich-based firm, which focuses on international succession law, tax law and asset protection, advise emigrants on ending their German residence for tax purposes, from structuring how the home is given up and providing proof to the tax office through to objection proceedings. Dr. Fiala has published extensively on questions of emigration and asset protection. Please get in touch with the firm without obligation to discuss your individual situation in an initial consultation.
