Germany

Personal and business taxation in Germany

Documentary position as at 5 October 2026. Federal Acts are cited in the consolidated versions on gesetze-im-internet.de, checked for recent amendments against the Bundesgesetzblatt (Federal Law Gazette). Amounts in euros; the tax year (Veranlagungszeitraum) is the calendar year.

1. Tax year, taxpayers and structure of the taxes

1. Income tax (Einkommensteuer) is an annual tax whose bases are determined by calendar year (§ 2(7) of the Einkommensteuergesetz, “EStG”). Where a single year comprises a period of limited tax liability and a period of unlimited tax liability, the German income of the former is included in the assessment made for the latter. S01

2. Individuals fall under the EStG, corporations and other bodies under the Corporate Income Tax Act (Körperschaftsteuergesetz, “KStG”), and commercial enterprises additionally bear the municipal trade tax (Gewerbesteuer). S02S03S04S33

3. The solidarity surcharge (Solidaritätszuschlag) and church tax (Kirchensteuer) are surcharges on income tax (Zuschlagsteuern, § 51a of the EStG). Property tax and real estate transfer tax combine a federal basis with powers of the Länder or of the municipalities. S05S06S07S08

2. Residence of individuals: unlimited and limited tax liability

4. Under § 1(1) of the EStG, individuals who have their domicile (Wohnsitz) or habitual abode (gewöhnlicher Aufenthalt) in Germany are subject to unlimited tax liability (unbeschränkt einkommensteuerpflichtig). This liability is not confined, as limited liability is, to the German-source income listed in § 49; its effects may be restricted by a treaty, such as the exemption under the Franco-German treaty (section 12). S02S09S10

5. Domicile is defined by § 8 of the Fiscal Code (Abgabenordnung, “AO”): a person has his or her domicile where he or she has a dwelling in circumstances suggesting that he or she will keep and use it. A dwelling kept in Germany may thus maintain the unlimited tax liability of a person established abroad. S11

6. Habitual abode is defined by § 9 of the AO as the place where a person stays in circumstances showing that the stay is not merely temporary. A continuous stay of more than six months in Germany always constitutes a habitual abode, from its beginning, short interruptions being disregarded. This presumption does not apply to a stay made exclusively for visiting, recreation, a health cure or similar private purposes, where it does not last more than one year. S12

7. § 1(4) of the EStG makes subject to limited tax liability (beschränkte Steuerpflicht) individuals who have neither a domicile nor a habitual abode in Germany, where they receive German-source income within the meaning of § 49. S02S09

8. § 1(2) extends unlimited tax liability to certain German nationals paid from a German public fund and taxed in their State of residence only to an extent comparable to limited tax liability; subsection (3) opens an option for non-residents, described in section 4. S02

9. On arrival or departure during the year, foreign income of the period without unlimited tax liability is not taxed but is taken into account in computing the rate (progression proviso, Progressionsvorbehalt). § 32b(1) of the EStG in principle also applies this rule to income exempted by a treaty, except, under its sentence 2, in particular for rents from immovable property and certain profits of permanent establishments situated in a Member State of the European Union or, subject to conditions, of the EEA (§ 2a(2a)). S13S61

10. Dual residence under French and German law is resolved by Article 2(1), point 4, of the Franco-German treaty of 21 July 1959. The criteria are successive: permanent home, centre of vital interests, habitual abode, nationality, then agreement between the competent authorities. S10

3. Income tax for residents: 2025 and 2026 scales, solidarity surcharge and church tax

11. The scale in § 32a of the EStG is expressed as formulas applied to taxable income rounded down to the euro: an exempt band (Grundfreibetrag), two zones of linear progression of the marginal rate, then zones at 42% and 45%. S14

12. The 2025 scale was set by Article 1 of the Act of 23 December 2024 on the further development of tax law and the adjustment of the scale (BGBl. 2024 I No. 449), and the 2026 scale by its Article 2, which entered into force on 1 January 2026 and is reproduced in the current consolidated version of § 32a. S15S14

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13. In these formulas, “y” is one ten-thousandth of the portion of taxable income exceeding the exempt band, “z” one ten-thousandth of the portion exceeding the upper limit of the first zone (EUR 17,799 in 2026, EUR 17,443 in 2025) and “x” the rounded taxable income. For 2025, the coefficients were 932.30 and 176.64, the constant 1,015.13 and the amounts deducted EUR 10,911.92 and EUR 19,246.67. S15S14

14. For spouses and partners assessed jointly, the tax is equal to twice the tax computed on half of their joint income (Splitting-Verfahren, § 32a(5)). Subsection (6) extends it, subject to conditions, to the surviving spouse for the year following the death. S14

15. The solidarity surcharge is equal to 5.5% of its base, in principle income tax (§ 4 of the Solidarity Surcharge Act, “SolzG 1995”). For individuals, it is due only if that base, excluding the flat-rate tax on investment income, exceeds a threshold (Freigrenze), a phase-in zone then limiting it to 11.9% of the excess. On the flat-rate tax on investment income, it is always due at 5.5%. The 2025 and 2026 thresholds result from Articles 3 and 4 of the Act of 23 December 2024. S16S06S15

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16. Church tax is levied for the benefit of certain religious communities under the law of the Länder, to which § 51a(6) of the EStG refers; its rates and membership rules are not detailed. On investment income, it is in principle collected with the withholding tax (except where that income arises from a business activity or from letting), and the flat-rate tax is reduced by 25% of the related church tax (§ 32d(1)). S05S17S18

4. Special regimes and announced reforms

17. Under § 1(3) of the EStG, a non-resident may apply to be treated as subject to unlimited tax liability for his or her German income. The option requires that at least 90% of his or her income for the year be subject to German tax, or that his or her other income not exceed the exempt band, possibly reduced according to the State of residence; that other income must be certified by the foreign tax administration. S02

18. No special tax regime for inbound expatriates has been identified in the provisions consulted; the numerous specific exemptions in § 3 of the EStG have not been listed exhaustively. S02S19

19. For sole proprietors and partners in partnerships, § 34a of the EStG allows retained profits to be subjected, on application, to a special rate. The Act of 14 July 2025 on an investment programme (BGBl. 2025 I No. 161) set this rate at 28.25% up to the year 2027, 27% for 2028 and 2029, 26% for 2030 and 2031, then 25% from 2032. S20

20. The Federal Government adopted on 2 September 2026 an income tax reform bill (Einkommensteuerreformgesetz 2027). According to the press release of the Federal Ministry of Finance (BMF), the exempt band would be raised to EUR 12,564 in 2027 and EUR 12,900 in 2028, the second progression zone would be flattened up to EUR 70,600, the 45% rate would apply from EUR 250,000 and a new 47% rate would charge taxable income from EUR 280,000. This bill has not been passed by Parliament at the date of the factsheet and is not incorporated into the scale in section 3. S21

5. Non-residents and withholding taxes

21. § 49 of the EStG lists the German-source income taxable in the hands of a non-resident, in particular the profits of a permanent establishment or of a permanent representative in Germany, gains on the disposal of shareholdings of at least 1% within the meaning of § 17 in a company having its registered office or management in Germany, salaries from an activity carried on or exploited in Germany, certain investment income whose debtor is established in Germany, rents from immovable property situated in Germany and gains on such property where they fall within the private disposal transactions of § 23 (section 6). S09

22. § 49 also covers gains realised under the conditions of § 17 (shareholding of at least 1%) on shares in a corporation, including one without a registered office or management in Germany, whose value was derived, directly or indirectly, at any time during the 365 days preceding the disposal, as to more than 50% from immovable property situated in Germany, the shares then having to be attributable to the transferor. Article 7(4) of the Franco-German treaty uses the same threshold and the same period. S09S10

23. § 50(1) of the EStG limits a non-resident’s deductible expenses to those economically connected with his or her German income. For the computation of the tax, taxable income is increased by the amount of the exempt band, which in practice deprives the non-resident of that band; for employees, the increase applies only to the portion of the exempt band exceeding those salaries less certain deductible expenses. S22

24. Under § 50(2), the tax on income subject to wage withholding tax, to withholding tax on investment income or to the withholding tax of § 50a is deemed to be discharged by that withholding (final withholding effect). This effect does not apply in particular to the income of a German establishment. S22

25. § 50a provides for a withholding tax on non-residents’ income from artistic, sporting or entertainment performances given in Germany, from their exploitation, from the grant of rights (royalties) and from the remuneration of members of supervisory boards. The rate is 15% of gross receipts, and 30% for supervisory board remuneration; no tax is withheld on performances whose receipts do not exceed EUR 250 per performance. S23

26. Investment income in principle bears a withholding tax (Kapitalertragsteuer) of 25% under § 43a of the EStG. The Federal Central Tax Office (Bundeszentralamt für Steuern, “BZSt”) states that this 25% withholding, increased by the solidarity surcharge of 5.5% of its amount, is made whatever the beneficiary’s place of residence; foreign beneficiaries may obtain an exemption or a refund under an application procedure, now electronic. S18S24

27. The Franco-German treaty limits German tax on dividends paid to a resident of France to 15% of the gross amount, and to 5% where the beneficiary is a French corporation holding at least 10% of the capital for 365 days including the payment date. Interest and royalties are in principle taxable only in the State of residence of the beneficiary. Article 25 b allows Germany to levy the withholding tax at the domestic rate, provided that it refunds it on an application submitted before the end of the fourth calendar year following the payment. S10

6. Investment income and capital gains of individuals

28. Investment income (Einkünfte aus Kapitalvermögen) is defined by § 20 of the EStG; it includes dividends, interest and, under subsection (2), gains on the disposal of shares and other securities. A flat-rate saver’s allowance (Sparer-Pauschbetrag) of EUR 1,000, or EUR 2,000 for spouses assessed jointly, replaces the deduction of actual expenses, which is excluded. S25

29. This income is subject to a flat rate of 25% (Abgeltungsteuer) under § 32d(1) of the EStG, to which the solidarity surcharge is added. Foreign tax is creditable up to 25% of the income concerned and up to the corresponding German tax. On application, all investment income for the year may be subjected to the progressive scale where this reduces the tax (Günstigerprüfung). S17S16

30. The flat rate is disapplied in several cases, in particular for certain interest between related persons or paid to a shareholder holding at least 10%. On election, it is also disapplied for dividends from a company in which the taxpayer holds at least 25%, or at least 1% if he or she carries on a professional activity there giving him or her a decisive influence; the election applies for the year of the application and the following four years. The dividends then fall under the scale with the partial exemption described below. S17S19

31. The disposal of shares in corporations is governed by § 17 of the EStG where the transferor held, directly or indirectly, at least 1% of the capital at any time during the last five years. The gain then falls within business income and the progressive scale, and not the 25% flat rate. § 3 no. 40 of the EStG exempts 40% of the disposal price (partial-income method, Teileinkünfteverfahren); the corresponding treatment of the acquisition cost and expenses is not detailed here. S26S19

32. § 17(3) provides for an allowance of EUR 9,060, calculated pro rata to the fraction of the capital disposed of, which is reduced by the amount by which the gain exceeds EUR 36,100, likewise apportioned. A person who has moved to Germany may use as acquisition cost the value adopted by the State of departure for a comparable exit tax, up to the fair market value (subsection (2)). The disposal by a resident of France of such shareholdings in a German company in principle remains taxable only in France under Article 7(5) of the treaty, subject to paragraphs 4 and 6. S26S10

33. Disposals of private assets other than securities fall under § 23 of the EStG (private Veräußerungsgeschäfte). Immovable property is covered where not more than ten years separate acquisition and disposal, except in the case of use exclusively for own residential purposes or during the year of disposal and the two preceding years. For other assets, the period is not more than one year, extended to ten years for assets whose use as a source of income produced income in at least one calendar year, everyday objects being excluded. Gains are exempt where the total gain for the year is less than EUR 1,000. S27

7. Departure from Germany: exit taxation and extended limited tax liability

34. The German exit tax (Wegzugsbesteuerung) is provided for by § 6 of the Foreign Tax Act (Außensteuergesetz, “AStG”). It treats as a disposal, at fair market value (gemeiner Wert), of shareholdings of at least 1% within the meaning of § 17 of the EStG three events: the end of unlimited tax liability through the giving up of the domicile or habitual abode, a gratuitous transfer to a person not subject to unlimited tax liability, and the exclusion or restriction of Germany’s right to tax the gain on disposal. S28

35. The rule covers only persons who were subject to unlimited tax liability for at least seven years in total during the twelve years preceding the event. Under § 21 of the AStG, the current version applies from the year 2022, earlier situations remaining governed, with adjustments, by the version in force on 30 June 2021. S28S29

36. The tax may, on application, be paid in seven equal annual instalments, without interest, the application as a rule being granted only against the provision of security. The first instalment is due within one month of the notice, the following ones on 31 July of each year. The balance becomes payable in particular in the event of an unpaid instalment, a disposal of the shares or distributions exceeding one quarter of the value adopted. S28

37. In the case of a merely temporary absence, the tax is cancelled if the taxpayer again becomes subject to unlimited tax liability within seven years, provided that the shares have not been disposed of, transferred or contributed to business assets, that distributions have not exceeded one quarter of the value and that Germany’s right to tax is restored at least to its initial extent. On application, the period may be extended by not more than five years if the intention to return persists. The taxpayer must in addition notify each year, not later than 31 July, his or her address and confirmation that the shares are still held. S28

38. The Franco-German treaty contains a specific rule: its Article 7(6) allows the State of departure to tax, under its domestic law, the gain accrued during residence on shareholdings in a company resident in that State, where the person resided there for at least five years. The State of arrival then uses as acquisition value the value at the time of the transfer of residence. A departure to France therefore does not rule out § 6 of the AStG for shareholdings in German companies. S10S28

39. § 2 of the AStG establishes an extended limited tax liability (erweiterte beschränkte Steuerpflicht). It concerns a person who, as a German national, was subject to unlimited tax liability for at least five years during the ten years preceding the end of that liability, who resides in a low-tax territory or in no territory, and who retains substantial economic interests in Germany. That person is then taxable, until the expiry of the tenth year following that of departure, on all his or her income that is not foreign income within the meaning of § 34d of the EStG, beyond ordinary limited tax liability, for the years in which that income exceeds EUR 16,500. S30

40. Taxation is low where the foreign tax on income of EUR 77,000 of an unmarried person is more than one third lower than the German tax, or where a preferential regime may substantially reduce the burden, unless a total tax of at least two thirds of the German tax is proven. Substantial economic interests result in particular from being the operator of a German enterprise, from a shareholding within the meaning of § 17 in a German company, from non-foreign income exceeding 30% of the total or EUR 62,000, or from assets whose income would not be foreign exceeding 30% of the total or EUR 154,000. S30

8. Companies: corporate income tax, trade tax, shareholdings and Pillar Two

41. Under § 1 of the KStG, corporations (in particular AG, GmbH, SE, KGaA), cooperatives and various other legal persons and entities that have their place of management (Geschäftsleitung) or registered office (Sitz) in Germany are subject to unlimited corporate income tax liability. Unlimited liability extends to all income. Partnerships that have opted under § 1a are included. S03

42. The corporate income tax rate is 15% of taxable income up to the year 2027. The Act of 14 July 2025 (BGBl. 2025 I No. 161), published in the Bundesgesetzblatt of 18 July 2025 and in force from the day after its publication as regards this provision, enacted a gradual reduction of one point per year, set out in the current version of § 23 of the KStG. S31S20

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43. The 5.5% solidarity surcharge also applies to corporate income tax, its base being the corporate income tax assessed. The threshold in § 3(3) of the SolzG covers only persons subject to income tax; at a rate of 15%, the federal burden therefore reaches 15.825% of taxable income, before trade tax. S06S16S31

44. Trade tax (Gewerbesteuer) is levied by the municipalities. Its base, the trade income (Gewerbeertrag) adjusted by statutory add-backs and deductions, is multiplied by a federal base rate (Steuermesszahl) of 3.5% to obtain a base amount (Steuermessbetrag), to which the municipal multiplier (Hebesatz) applies. Individuals and partnerships benefit from an allowance of EUR 24,500 on trade income, compared with EUR 5,000 for certain entities and the enterprises of legal persons under public law; corporations are not among the beneficiaries of these allowances. S04S32S33

45. The multiplier, uniform for the enterprises of a given municipality, is in principle resolved not later than 30 June, with effect from 1 January of the year. It may not be lower than the statutory minimum in § 16(4) of the GewStG. The Act of 29 June 2026 (BGBl. 2026 I No. 197) raised this minimum from 200% to 280%; under the new § 36(5b), this version applies for the first time to the year 2027. S33S34

46. Shareholdings of one corporation in another benefit from the regime of § 8b of the KStG. Dividends are excluded from taxable income, but 5% of their amount is deemed to constitute non-deductible expenses, so that 95% is effectively exempt. The exclusion requires that the dividends have not reduced the income of the distributing company; nor does it apply, in particular, where the direct shareholding was less than 10% of the capital at the beginning of the calendar year (portfolio holdings, Streubesitz), or to certain shares held by financial institutions (subsection (7)). S35

47. Gains on the disposal of shares are also excluded, without any holding threshold, 5% of the gain being deemed non-deductible. Correspondingly, losses and write-downs relating to those shares are not deductible. S35

48. For trade tax, § 9 no. 2a of the GewStG deducts dividends from shareholdings in a non-exempt German corporation where the shareholding amounts to at least 15% of the capital at the beginning of the assessment period. The trade tax threshold (15%) therefore differs from the corporate income tax threshold (10%); the trade tax treatment of dividends from shareholdings of between 10% and 15% and of foreign shareholdings is not detailed here. S32S35

49. Pillar Two has been transposed by the Minimum Tax Act (Mindeststeuergesetz, “MinStG”). It applies to entities located in Germany of groups whose consolidated revenue reached at least EUR 750 million in two of the four preceding financial years, notwithstanding tax treaties. The minimum rate is 15% (§ 54). The Act applies to financial years beginning after 30 December 2023, and its § 11 to those beginning after 30 December 2024, subject to an exception; the computation of the effective tax rate is not reconstructed here. S36S37S38

9. VAT (Umsatzsteuer)

50. The Turnover Tax Act (Umsatzsteuergesetz, “UStG”) sets the standard rate at 19% of the taxable amount (§ 12(1)). The reduced rate of 7% applies to the transactions listed in § 12(2), in particular supplies of the goods listed in Annex 2 to the Act, certain cultural services such as admission to theatres, concerts and museums, and various other categories. S39

51. Since 1 January 2026, restaurant and catering services, with the exception of beverages, have fallen under the reduced rate of 7% pursuant to § 12(2) no. 15, as worded by Article 4 of the Tax Amendment Act 2025 of 22 December 2025 (BGBl. 2025 I No. 363). S40S39

52. The small business scheme (Kleinunternehmer) in § 19 of the UStG exempts the transactions of an entrepreneur established in Germany whose total turnover did not exceed EUR 25,000 in the preceding year and does not exceed EUR 100,000 in the current year. A waiver is possible, which binds the entrepreneur for at least five calendar years. A similar scheme exists for entrepreneurs from other Member States whose turnover in the Union does not exceed EUR 100,000. S41

10. Real estate: real estate transfer tax (Grunderwerbsteuer) and reformed property tax (Grundsteuer)

53. Real estate transfer tax (Grunderwerbsteuer) in principle charges the acquisition of immovable property situated in Germany. § 11 of the federal Act (Grunderwerbsteuergesetz, “GrEStG”) sets a rate of 3.5%, but Article 105(2a) of the Basic Law confers on the Länder the power to set the rate. The applicable rate therefore depends on the Land in which the property is situated. S42S43S07

54. No consolidated federal publication of the rates of the sixteen Länder could be consulted for this factsheet. The following table reproduces the list in the note of the Bremen Senator for Finance prepared for the Senate meeting of 3 December 2024, corrected for Bremen by the Act published in the Bremen official gazette on 5 February 2025. Changes made since then in the other Länder have not been verified and each rate must be confirmed against the law of the Land concerned at the date of acquisition. S44S45

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55. § 3 of the GrEStG exempts in particular acquisitions by inheritance or gift falling within inheritance and gift tax, acquisition by the spouse or partner of the transferor and acquisition by relatives in the direct line; gifts subject to charges remain taxable to the extent of the charges deductible for gift tax. S46

56. Indirect transfers are also taxable. For a partnership or a corporation holding German immovable property, the transfer of at least 90% of the shares to new shareholders within ten years is treated as a transfer of the property (§ 1(2a) and (2b)). Subsection (3), rewritten by the Act of 29 June 2026 for transactions carried out after 2 July 2026, additionally covers the direct or indirect unification or transfer of at least 90% of the shares. S42S34

57. The annual property tax (Grundsteuer) has been reformed: under § 37 of the federal Act (Grundsteuergesetz, “GrStG”), the new version applies for the first time to the tax for the calendar year 2025, the former Act remaining applicable up to 2024. The tax results from applying the municipal multiplier (Hebesatz) to a base amount (Steuermessbetrag) determined by means of a base rate (Steuermesszahl). S47S48S49

58. In the federal model, the base rate is 0.34 per mille for undeveloped land, 0.31 per mille for developed property referred to in § 249(1) nos. 1 to 4 of the Valuation Act (Bewertungsgesetz), and 0.34 per mille for property under nos. 5 to 8. Reductions exist for certain subsidised housing and historic monuments. S48

59. The municipalities set the multiplier, uniform within their territory for each category, by a resolution adopted in principle not later than 30 June, with effect from 1 January. Since the reform, they may set a separate and higher multiplier for undeveloped building land, for town-planning reasons and under a procedure governed by § 25(5). S49

60. Article 72(3), point 7, of the Basic Law allows the Länder to derogate by statute from the federal provisions on property tax. Any regional laws adopted on that basis have not been analysed in this factsheet, so that the federal model described above may not apply in a given Land. S08S47

11. Wealth, inheritances and gifts

61. The Wealth Tax Act (Vermögensteuergesetz) is formally still in force, but it has not been applied since 1997. According to a note of the Bundestag Research Services of July 2019, the Federal Constitutional Court held, by a decision of 22 June 1995, that § 10 no. 1 of that Act was incompatible with the principle of equality and set the legislature a time limit expiring on 31 December 1996, the former law remaining applicable only until that date. No annual wealth tax is therefore levied, on the basis of the documents consulted. S50

62. Inheritance and gift tax (Erbschaft- und Schenkungsteuer) is governed by the Act of the same name (“ErbStG”). Under its § 2, liability is unlimited, for all the property transferred, where the deceased on the day of death, the donor on the day of the gift or the beneficiary on the day of the taxable event is an “Inländer”. Inländer include in particular individuals having their domicile or habitual abode in Germany, as well as German nationals who have been established abroad for not more than five years without a domicile in Germany. S51

63. Otherwise, liability is limited to property situated in Germany within the meaning of § 121 of the Valuation Act (Inlandsvermögen), which includes in particular certain shareholdings in German corporations. § 4 of the AStG extends that limited liability where the deceased or donor was, at the time of the taxable event, subject to the extended limited tax liability of § 2 of the AStG, unless a comparable foreign tax amounting to at least 30% of the German tax is due. S51S52

64. The rates depend on the tax class (Steuerklasse) determined by § 15. Class I comprises the spouse and the partner, children and stepchildren, their descendants and, for inheritances, parents and ascendants; class II comprises in particular parents and ascendants for gifts, brothers and sisters, nephews and nieces, parents-in-law and the divorced spouse; class III covers all other beneficiaries. S53

65. § 16 provides for personal allowances in the case of unlimited liability. In the case of limited liability, the allowance is reduced in proportion to the value of the property not subject to German tax received from the same person over ten years. S54

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66. Acquisitions from the same person over ten years are aggregated, under § 14, the tax relating to the earlier acquisitions being deducted. S55

67. The rates in § 19 apply to the whole of the taxable value, according to the band in which it falls, and not by successive bands. A smoothing mechanism (subsection (3)) limits the effect of exceeding a threshold, and subsection (2) provides, in the case of unlimited liability, for a progression proviso where property is exempt under a treaty. S56

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12. France–Germany treaties and exchange of information

68. The treaty on taxes on income and on capital was signed in Paris on 21 July 1959 and entered into force on 4 November 1961 according to French administrative doctrine (BOI-INT-CVB-DEU-10, version of 12 March 2015). It was amended by the amending agreements (avenants) of 9 June 1969, 28 September 1989, 20 December 2001 and 31 March 2015, the last of which entered into force on 24 December 2015, then by the multilateral convention (MLI), which entered into force for Germany on 1 April 2021; according to the consolidated version, its provisions take effect with respect to the treaty only from 1 January 2025 (withholding taxes whose taxable event occurs on or after that date and taxable periods beginning on or after that date). The BOFiP sheet consulted does not mention the 2015 amending agreement; the DGFiP consolidated version, which is not authentic, has been used for the text. S57S10

69. The structure of the treaty differs from the OECD model: business profits fall under Article 4, dividends under Article 9, interest under Article 10, independent professions under Article 12, salaries and pensions under Article 13. The MLI adds a clause denying the treaty benefit where obtaining it was one of the principal purposes of an arrangement. S10

70. Salaries are in principle taxable in the State where the activity is carried on, subject to specific rules in particular for flight and ship crews, students in training and temporary agency work (Article 13(2), (3) and (6)), and except where the stay does not exceed 183 days in total in the fiscal year, the remuneration is paid by an employer not resident in the State where the activity is carried on and no charge is borne by a permanent establishment in that State. Frontier workers who work in the frontier zone of one State (municipalities situated not more than 20 km from the border) and have their home in the frontier zone of the other State, to which they normally return each day, are taxable only in their State of residence; the German zone is extended to 30 km for persons whose home is in a bordering French département. S10

71. Pensions and annuities, including benefits under statutory social insurance schemes, are taxable only in the State of residence of the beneficiary (Article 13(8)), subject to compensation between the States. Public remuneration and pensions fall under Article 14, which in principle allocates them to the paying State, except for persons having the nationality of the other State without having that of the former. S10

72. Income and gains from immovable property are taxable in the State where the property is situated. Gains on shares in property-rich companies (more than 50% of the value at any time during the 365 days preceding the disposal, disregarding immovable property used in the entity’s own business) are taxable in the State where the immovable property is situated, other gains on shares in the State of residence of the transferor, subject to the exit taxation rule in Article 7(6). S10

73. For residents of Germany, Article 20(1) in principle provides for the exemption of French-source income taxable in France, the treaty allowing it to be taken into account for the rate; German law, however, disapplies this progression proviso for certain income from European sources, such as rents from immovable property situated in France (section 2). Dividends are exempt only where they are paid to a German corporation holding at least 10%; other dividends and certain income (in particular that referred to in Articles 7(4), 11, 13(6) and 13 b) give entitlement to a credit for French tax. A German diplomatic notification may extend the credit to income falling under Articles 4 and 12. S10S13

74. For residents of France, Article 20(2) provides for taxation in France with a tax credit. For dividends, certain capital gains, directors’ fees (jetons de présence), salaries from temporary agency work and the income of artistes and sportspersons, the credit is equal to the German tax up to the amount of the French tax; for other income taxable in Germany, in particular income from immovable property, permanent establishment profits and salaries, it is equal to the corresponding French tax, which amounts to an exemption subject to liability to tax in Germany. S10

75. The treaty of 12 October 2006 on taxes on estates, inheritances and gifts entered into force on 3 April 2009 and applies to estates of persons dying and to gifts made on or after that date. Domicile is determined under successive criteria comparable to those of the income tax treaty; a person having the nationality of one State only, domiciled in both States, who has been domiciled in the other State for less than five years during the preceding seven years and clearly intended not to retain his or her domicile there indefinitely is deemed to be domiciled in the State of his or her nationality. S58S59

76. Immovable property, including shares in property-rich companies, is taxable in the State where it is situated, as are the assets of a permanent establishment and tangible movable property situated in the other State; other property is taxable only in the State of domicile of the deceased or donor. Each State nevertheless retains the right to tax all the property received by an heir or donee domiciled there, crediting the tax paid in the other State on property other than that allocated to it by the treaty. S59

77. Administrative assistance is provided for by Article 22 of the income tax treaty (exchange of information) and by its Article 23 (assistance in the collection of tax claims). In Germany, the automatic exchange of financial account information is based on the Act on the automatic exchange of financial account information (FKAustG), which covers in particular the Member States under Directive 2011/16/EU and third States that are parties to the multilateral agreement of 29 October 2014. S10S60

13. Illustrative cases and limits of application

78. Case 1 — a French executive moves to Munich on 1 March 2026 with a local contract and rents an apartment there. He has a domicile in Germany within the meaning of § 8 of the AO and becomes subject to unlimited tax liability; for 2026, his foreign income for January and February, not taxed in Germany, is taken into account in computing the rate. If France also regards him as resident, Article 2(1), point 4, of the treaty settles the matter according to the permanent home and then the centre of vital interests. His salary is taxed under the 2026 scale, the solidarity surcharge being due, if he is assessed alone, only above the threshold of EUR 20,350 of tax. S11S13S14S06S10

79. Case 2 — a businesswoman resident in Germany for fifteen years, holding 30% of a GmbH, moves to Dubai in 2026, giving up her domicile and habitual abode in Germany. The departure, which ends her unlimited tax liability, triggers the exit tax under § 6 of the AStG on the unrealised gain on her shareholding, payable on application in seven annual instalments, as a rule against security. If she is a German national, the extended limited tax liability under § 2 of the AStG must also be examined for the ten years following that of departure, in the light of the low-taxation criterion and of her economic interests in Germany. The existence of a Germany–UAE treaty has not been verified. S28S30S29

80. Case 3 — a French SAS that has held 100% of a GmbH for several years receives a dividend; the shareholding is not attributable to a permanent establishment of the SAS in Germany (otherwise, Article 4 of the treaty would apply, under its Article 9(8)). The German withholding tax, of 25% plus the solidarity surcharge under domestic law, is limited to 5% by Article 9(5) of the treaty, the excess being refundable on application to the BZSt within the time limit in Article 25 b; the application of an exemption at source, the domestic-law exemptions specific to European parent companies, the anti-abuse conditions of German law and the MLI clause on the principal purpose of an arrangement have not been analysed. S18S24S10

81. Case 4 — a resident of France, of French nationality, inherits in 2026 a let apartment in Berlin and a securities portfolio deposited in Germany from his father, a resident of France of French nationality; neither of them has a domicile or habitual abode in Germany, so that neither is an Inländer within the meaning of § 2 of the ErbStG. The apartment is taxable in Germany under Article 5 of the inheritance treaty, under the limited liability of § 2 of the ErbStG (subject to its classification as property situated in Germany within the meaning of § 121 of the Valuation Act, not consulted), with an allowance of EUR 400,000 reduced pro rata; if either of them were an Inländer, liability would be unlimited and the allowance would not be reduced; the treaty would not necessarily limit German taxation to the apartment, the allocation then depending on the domicile of each within the meaning of its Article 4: a deceased person domiciled in Germany would also have the portfolio taxed there (Article 9), and an heir domiciled in Germany could be taxed there on all the property received (Article 11(2)(b), and paragraph 76). France taxes the whole and credits the German tax up to the corresponding share of French tax. The portfolio is taxable only in France (Article 9). The acquisition by inheritance is exempt from real estate transfer tax. S59S51S54S46S11S12

82. Limits of application: the factsheet does not cover social security contributions, wage withholding tax, investment funds, controlled foreign companies, transfer pricing, international VAT, the laws of the Länder on property tax or the inheritance tax exemptions for businesses. The consolidated versions on gesetze-im-internet.de do not replace the Acts published in the Bundesgesetzblatt, and the rates of the Länder must be checked at the date of the transaction. The income tax reform bill for 2027 could amend the scale after the date of this factsheet; its possible effects on other provisions, in particular the solidarity surcharge, have not been verified. S14S08S44S21

Sources

• S01: EStG, § 2 (scope of taxation, annual tax)
• S02: EStG, § 1 (unlimited and limited tax liability)
• S03: KStG, § 1 (unlimited corporate income tax liability)
• S04: GewStG, § 11 (federal base rate and trade tax allowances)
• S05: EStG, § 51a (surcharge taxes, church tax)
• S06: SolzG 1995, § 3 (base and thresholds of the solidarity surcharge)
• S07: Basic Law, Article 105 (legislative powers in tax matters, real estate transfer tax rate)
• S08: Basic Law, Article 72 (concurrent legislation, derogations by the Länder in respect of property tax)
• S09: EStG, § 49 (German-source income of non-residents)
• S10: DGFiP, consolidated version of the France–Germany treaty of 21 July 1959 as amended, including by the MLI
• S11: AO, § 8 (domicile)
• S12: AO, § 9 (habitual abode)
• S13: EStG, § 32b (progression proviso)
• S14: EStG, § 32a (income tax scale, version applicable from 2026)
• S15: Act of 23 December 2024 on the further development of tax law and the adjustment of the scale (BGBl. 2024 I No. 449)
• S16: SolzG 1995, § 4 (rate of the solidarity surcharge)
• S17: EStG, § 32d (flat rate on investment income)
• S18: EStG, § 43a (rate of withholding tax on investment income)
• S19: EStG, § 3 (exempt income, in particular no. 40)
• S20: Act of 14 July 2025 on an immediate tax investment programme (BGBl. 2025 I No. 161)
• S21: BMF, press release No. 17/2026 of 2 September 2026 on the 2027 income tax reform bill
• S22: EStG, § 50 (special rules for non-residents)
• S23: EStG, § 50a (withholding tax on certain income of non-residents)
• S24: BZSt, Kapitalertragsteuerentlastung (exemption from and refund of withholding tax on investment income)
• S25: EStG, § 20 (investment income)
• S26: EStG, § 17 (disposal of shareholdings of at least 1%)
• S27: EStG, § 23 (private disposal transactions)
• S28: AStG, § 6 (taxation of the increase in value of assets on departure)
• S29: AStG, § 21 (application provisions)
• S30: AStG, § 2 (extended limited income tax liability)
• S31: KStG, § 23 (corporate income tax rate)
• S32: GewStG, § 9 (deductions, in particular no. 2a)
• S33: GewStG, § 16 (municipal multiplier)
• S34: Ninth Act of 29 June 2026 amending the law on tax advice and tax law (BGBl. 2026 I No. 197)
• S35: KStG, § 8b (shareholdings in other companies)
• S36: MinStG, § 1 (liability to minimum tax)
• S37: MinStG, § 54 (minimum rate)
• S38: MinStG, § 101 (application provisions)
• S39: UStG, § 12 (VAT rates)
• S40: Tax Amendment Act 2025 of 22 December 2025 (BGBl. 2025 I No. 363)
• S41: UStG, § 19 (small business scheme)
• S42: GrEStG, § 1 (taxable transactions)
• S43: GrEStG, § 11 (federal rate of real estate transfer tax)
• S44: Bremen Senator for Finance, note for the Senate meeting of 3 December 2024 on the real estate transfer tax rate
• S45: Second Act of 22 January 2025 amending the Bremen Act on the real estate transfer tax rate (Brem.GBl. 2025 No. 9)
• S46: GrEStG, § 3 (general exemptions)
• S47: GrStG, § 37 (application of the reformed Act)
• S48: GrStG, § 15 (property tax base rates)
• S49: GrStG, § 25 (setting of the municipal multiplier)
• S50: Bundestag, Research Services, WD 4 - 3000 - 029/19, Wiederbelebung der Vermögensteuer durch geplante Grundsteuerreform?
• S51: ErbStG, § 2 (personal liability)
• S52: AStG, § 4 (inheritance tax in the case of extended limited tax liability)
• S53: ErbStG, § 15 (tax classes)
• S54: ErbStG, § 16 (allowances)
• S55: ErbStG, § 14 (aggregation of earlier acquisitions)
• S56: ErbStG, § 19 (rates)
• S57: BOFiP, BOI-INT-CVB-DEU-10-20150312, tax treaty between France and Germany on taxes on income and on capital
• S58: BOFiP, BOI-INT-CVB-DEU-20-20120912, tax treaty between France and Germany on taxes on estates, inheritances and gifts
• S59: DGFiP, France–Germany treaty of 12 October 2006 on taxes on estates, inheritances and gifts
• S60: FKAustG, § 1 (scope of the automatic exchange of financial account information)
• S61: EStG, § 2a (definition of third States, subsection (2a))