In Short
This "structuring" is relatively simple, but most people are unaware of it:
- You move away from Germany with the intention to return, have the exit tax deferred, and thus only pay deferral interest.
- Then, after 6 years, you move back to Germany "briefly", the deferred exit tax is refunded to you (so you only pay remaining interest).
- You move away from Germany again a little later (e.g. 1-2 months, unclear, see below). Since at this point in time you have been subject to unlimited tax liability for less than 7 years in the last 12 years, you are no longer subject to the exit tax.
In Detail: Second Move Away after 6 Years
First of all, the exit tax is defined as follows:
[...] a natural person who has been subject to unlimited tax liability in Germany for at least seven years during the last 12 years, (i) transfers their residence or habitual abode abroad, [...]
Put simply, you are covered by the exit tax if you have been taxable in Germany for at least 7 years within the last 12 years. So, can you "mathematically" structure the exit tax by simply ensuring that at a certain point in time you were not taxable in Germany for 7 years within the last 12 years?
The answer is: Yes.
And here is how it works:
First of all, the fact is that you can have the exit tax refunded if you return to Germany within 7 years. These 7 years can even be extended by 5 years to a total of 12 years. And if you manage to get the tax office to defer the exit tax, you don't have to pay it at all, but only pay the annual deferral interest (which can still be quite high). So: You can move away for up to 12 years.
Assuming you move away for 11 years, have the exit tax deferred, and the deferred exit tax is refunded upon your return - now you have only paid the deferral interest so far. Now you move away again immediately. The big question is now: Do you even fulfill the criteria for the exit tax at this point in time, i.e., upon your second departure? I.e., were you subject to unlimited tax liability in Germany for at least 7 years within the last 12 years?
And the answer to that is obviously "no", since you were only subject to unlimited tax liability in Germany for 1 year in the last 12 years! So you do not fall under the exit tax at all.
The whole thing can of course be optimized if one knows that one would have to be subject to unlimited tax liability for less than 7 years in 12 "rolling" years in order not to fall under the exit tax. 12 minus 7 would be 5, so one would have to move away for at least 5 (probably better 6) years, then return, then move away again.
So:
- Year 1: You move away from Germany, have the exit tax deferred, and have an intention to return.
- Year 6: After 6 full years abroad, you move back to Germany. The exit tax is refunded to you. Since it was deferred the whole time, you only pay the deferral interest.
- Year 6: You move away from Germany again. At this point, you have only been subject to unlimited tax liability in Germany for 6 years in the last 12 years. Thus less than 7 years, so no exit tax.
An open question would still be exactly how the return and the second departure in the 6th year would have to take place. More precisely, the question would be whether you would, for example, have to live in Germany again for at least half a year in order to actually become tax resident there, or whether it is "only" sufficient to deregister abroad and register again in Germany (registration at the citizens' office, renting an apartment, etc.), which could realistically be done with a stay of 1-2 months. It could also depend on the double taxation agreement between your "departure country" and Germany.
Summary: No Exit Tax upon Second Departure after 6 Years
As always, it depends quite a bit on your individual circumstances:
- If your deferred exit tax is very high (e.g. given a high valuation of your company shares), then the deferral interest over the 6 years could turn out to be high and other models (e.g. KG-Holding) could be more favorable.
- Can you really manage to move back after 6 to a maximum of 12 years? If not, the deferred exit tax becomes due for you after the 12th year. So you have the risk of having to pay the deferred exit tax after all if you do not return.
- You are speculating that the legal framework conditions will not change. If the criteria for the exit tax are changed (e.g. taxable for less than 7 of 12 years), you suddenly fall under the exit tax again. How sure can you be that nothing will change in the next 6 years? The historical trend of the exit tax shows that it has been regularly tightened.