GERMANY Trends and Developments Contributed by: Christian von Oertzen and Philipp Windeknecht, Flick Gocke Schaumburg
Tax authorities on exit taxation Moreover, the German tax authorities published decrees in 2023 and 2025 on the application of the exit tax. In the case of temporary absence, the exit tax only lapses with retroactive effect if Germany’s right of taxation is directly re-established exactly as it was at the time of departure. Particularly in cases with double taxation conventions, it must be ensured that the double taxation convention (re)assigns the right of taxation to Germany directly upon re-establishment of German unlimited tax liability. Distributions made after 16 August 2023 by corporations whose shareholders are subject to exit taxation trigger immediate exit taxa - tion regarding the shares if the distributions exceed one quarter of the fair market value of the corporation.
according to the tax authorities. The BFH clarified that the taxable event occurs in the “last legal second” before the restriction takes effect. If a DTA applies from 1 January, any exit gain must therefore be recog - nised as of 31 December of the previous year. In this case, any exit gain would have had to be accounted for on 31 December 2012, not in 2013 as assumed by the tax authorities. Exit taxation relocation to Switzerland The BFH ruled in 2023 on a 2011 relocation case to Switzerland – applying the previous legislation which did not provide a permanent, interest-free tax defer - ral for relocations to non EU/EEA countries – that such a tax deferral is applicable. Hence, it might be expected that the BFH would rule in favour of a per - manent, interest-free tax deferral in current EU/EEA cases, even though the present legislation does not provide such a tax deferral. However, no adaption of the exit taxation in this case is in sight. The German tax authorities issued a decree in 2025 that the ruling will only be applied to relocation cases to Switzerland prior to 2022.
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