Moving from Germany to UAE — Relocation Guide

Target keyword: Germany to UAE business relocation Category: Relocation Crossover TLDR: German entrepreneurs moving to Dubai can dramatically reduce their tax burden — but Germany has strict exit tax rules and extended tax liability for former residents. This guide explains what you need to know before leaving.

The German Tax Escape Calculation

• Germany's effective income tax rates for high earners:
• Personal income tax: up to 45% (Spitzensteuersatz) + 5.5% solidarity surcharge
• Trade tax (Gewerbesteuer): ~14% on business profits
• Total effective burden: 47–50%

UAE alternative: 0% personal + 0–9% corporate = 0–9% total.

For a German entrepreneur with €500,000 annual profit, the potential saving is €200,000–€250,000 per year. The motivation is clear.

Germany's Exit Rules — Much Stricter Than the UK

Germany has aggressive exit tax provisions designed to prevent wealthy residents from leaving:

Unbeschränkte Steuerpflicht (Extended Tax Liability) German citizens who leave Germany but maintain close ties to Germany (home, German spouse, German business) can remain subject to German income tax for up to **10 years** after departure.

§ 6 AStG (Exit Tax on Share Holdings) If you hold shares (GmbH, GmbH & Co. KG, or foreign equivalents) at the time of departure, Germany taxes you on the **unrealised gain** as if you had sold the shares at market value on the day you left.

This means: if your GmbH is worth €2M with a book value of €25,000, you face exit tax on €1,975,000 at your personal marginal rate — potentially €900,000+ due at departure.

Planning required: Consider spreading the departure over multiple years, or restructuring shareholdings before departure.

Wegzugsteuer (Departure Tax) Reform Since 2022, the "Wegzugsteuer" rules have been tightened. Deferrals are limited; instalment payment options exist but with interest.

Steps to Properly Leave Germany

1. Abmeldung (deregistration): Formally deregister at your local Einwohnermeldeamt (residents' registration office) 2. Steuerliche Abmeldung: Notify your Finanzamt (tax office) of departure and change of residency 3. Final German tax return: File for the year of departure (split year approach) 4. Resolve exit tax: Get a valuation of any shareholdings and calculate §6 AStG exposure 5. Cut German ties: Close or restructure German residential property ties where possible

Timeline: Start the process 12–18 months before planned departure. Get specialist advice (Steuerberater with international expertise).

Setting Up in the UAE

• After Germany, the UAE setup is straightforward:
• Choose a free zone (IFZA is popular for Germans; DMCC for trading)
• Form company in 5–7 days
• Get residency visa
• Open bank account (Germans are well-accepted by UAE banks)

German Tax Treaty with UAE

• Germany and UAE have a Double Tax Treaty (DBA Deutschland-VAE). Key provisions:
• Dividends from UAE company to German resident: 5–15% withholding + German tax (if still German resident)
• Business profits of UAE company: taxed in UAE if no PE in Germany
• Key risk: If you manage your UAE company from Germany (attending meetings, signing contracts), Germany could argue the company has a PE in Germany — attracting German CT

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