Returning to France from Germany: Abmeldung (registration), German exit tax, French declaration and exit tax

Returning from Germany involves three steps. First, you must notify the German town hall within two weeks of your departure. Second, the German tax authorities, whose law treats your departure as a transfer of your shareholdings if you have been taxed without limitation for at least seven years in total during the last twelve years. Third, the French tax authorities, who will need to file a tax return split in two for the year of your return, complete form 3916, and, if you had an exit tax liability, file a tax relief claim.

Step 1: The Abmeldung, within two weeks

The Federal Registration Act (BMG, § 17) requires anyone leaving their residence without taking up new accommodation in Germany to deregister "innerhalb von zwei Wochen nach dem Auszug," meaning within two weeks of moving out. This can be done no earlier than one week before departure.

Step 2: German exit tax, § 6 AStG

Section 6 of the German Act on International Tax Relations (Außensteuergesetz) is entitled "Taxation of Assets." It applies to individuals who have been taxed without limitation for a total of at least seven years, "innerhalb der letzten zwölf Jahre" (during the last twelve years preceding the events covered by the text), and their shareholdings as defined in Section 17 of the German Tax Code (EStG). The termination of unlimited tax liability, i.e., your departure, is treated as a sale at market value. This page does not detail the shareholding threshold or the terms of the security interest; please have these confirmed by a German tax advisor.

Three payment rules are visible in the text.

• Seven annual installments, upon request. The tax may, at the taxpayer's request, be paid in seven equal annual installments, generally against security. The first installment is due within one month of notification of the tax assessment. Subsequent installments are due on July 31 of each subsequent year.
• Annual statement. The address and ownership of shares are confirmed each year before July 31st.
• Back to Germany. If you become taxable again without limitation "withinhalb von sieben Jahren" (within seven years), the tax credit becomes subject to conditions: no transfers in the meantime, limited distributions, and reinstated tax rights. The period can be extended, upon request, for up to five years if the intention to return to tax liability persists.

Step 3: Article 7 § 6 of the convention, as seen from France

The 1959 Convention, as amended by the March 31, 2015 amendment, contains a clause for a person resident in one State for five years or more who becomes resident in the other. Paragraph 5 does not prohibit the first State, in this case Germany, from taxing, according to its domestic law, the capital gain realized during the period of residence of that person in that State on shares in a company resident in that State. When the first State taxes this capital gain following the transfer of residence, and the shares are subsequently sold and the gains are taxed in the other State, in this case France, the latter uses the value of the shares at the time of the transfer of residence as the acquisition value. If the sale price is lower than this value, the sale price is taken into account by the first State for determining the capital gain. This clause is described on our page about the Convention.

Step 4: The French declaration of the year of return

The administration distinguishes between two situations.

Also update your address in the Public Finances section. Your tax residence in France is determined according to the BOFiP criteria: main home or residence, main activity, and center of economic interests. Only one of these criteria is required, and more than six months of residence is not an absolute requirement.

German accounts and contracts: form 3916

As soon as you are domiciled in France, you must declare, along with your income, any accounts, assurance-vie policies, and digital asset accounts you have held, opened, used, or closed abroad: form 3916 or 3916-bis. The penalty is €1,500 per undeclared account. The French tax authorities' website states that this penalty is €10,000 in countries without an anti-fraud agreement with France; it does not specify which category Germany falls into. Check this before filing.

Exit tax on hold: the effect of the return

If you left France with a deferred exit tax liability, form 2074-ETD classifies "re-establishing your tax residence in France" among the events that qualify for a tax refund or reimbursement, provided you still hold the relevant securities or receivables on the date of your return. The tax refund is subject to two time limits: two years if the value of the securities is less than €2.57 million, and five years if it exceeds that amount. Selling the securities during this interim period will result in the loss of the benefit of the extended time limit.

Expatriates: a system for taking up a new position

The expatriate tax regime applies to individuals not tax residents of France for the five calendar years preceding their employment with a French company. It runs until December 31st of the eighth calendar year following their employment and ceases upon their departure from the host company, unless there is a change of position or employer within the same group. It includes an exemption from the expatriation bonus or a flat-rate allowance of 30% of the taxable income, and an exemption of 50% of certain foreign-source income. The French wealth tax (IFI) is limited to assets located in France until December 31st of the fifth year. The tax ceilings are 50% of total remuneration or 20% of the portion related to work abroad. Individuals who came to work in France of their own volition are excluded.

Clearance certificate, customs, health

The authorities of the country of origin may request a tax clearance certificate, obtained from the tax authorities of the country of residence. Any money transfer of at least €10,000 must be declared online to customs. Registration with France Travail requires a French address. For health insurance, those who remain affiliated with their local CPAM (French health insurance fund) and are unemployed retain their French social security coverage after a three-month waiting period; others must apply to have their rights activated. A French citizen arriving from the European Economic Area has no entry requirements other than a valid identity document.

Keeping a job in Germany: the case of the cross-border worker

The official information sheet describes a cross-border worker in Germany: a resident of Alsace (Bas-Rhin or Haut-Rhin) or Moselle, employed by a German private company located 30 km (as the crow flies) from the border, returning home daily with a tolerance of 45 days of work away from home. This income is taxed in France, but the German employer withholds tax at source until an exemption is granted: form 5011, in triplicate. Our page on the tax treaty details this system.

Returning on March 16, 2027 with €280,000 in German exit tax: a numerical example (fictitious profile)

Situation. A hypothetical executive lived in Germany from 2018 to 2027, more than seven years out of the last twelve. He holds shares in German companies. His German exit tax is estimated at €280,000 (hypothetical). He returns to France on March 16, 2027, receives rental income from French sources, and has a bank account in Germany.

Issue. He wants the payment schedule for German taxes and the breakdown of his French tax return.

Strategy. He requests payment in seven equal annual installments. Assumption: the tax assessment notice is sent to him in 2027, and he pays the first installment in 2027, within the month following the notification (its actual date is unknown here). He divides the year 2027 into seven installments based on the date of the return.

Result. Each annual payment is €40,000. The first payment is due in 2027, based on the above assumption, and the following six payments are due on July 31st of each year from 2028 to 2033. For French rental income, the period from January 1st to March 15th comprises 74 days: form 2042-NR. The period from March 16th to December 31st comprises 291 days: form 2042. He attaches form 3916 for his German accounts. Profile and amounts are fictitious.

What changes depending on your situation

• The duration of your residence in Germany and the nature of your investments.
• The exact date of your return and your French-source income before that date.
• The existence of a suspended French exit tax and the holding of securities.
• Whether or not to keep a job in Germany.
• The list of your German accounts and contracts.

The rule depends on your situation. No results are guaranteed.