Avoid German exit tax with proper advance planning
If you're a German entrepreneur weighing up §6 AStG exit tax and Germany's ever-tightening CFC rules, Cyprus offers a legal, EU-approved route out.German founders increasingly choose Cyprus for its 15% CIT, 0% CGT on shares, non-dom status, and EU treaty network — without the structural complexity of offshore.
— Your Situation
When a German tax resident moves abroad, Germany triggers a deemed disposal on shareholdings exceeding 1% (Wegzugsteuer). The gain is calculated on departure and can be deferred if you move within the EU/EEA — meaning Cyprus as an EU member qualifies for instalment treatment.
Germany's CFC rules (Außensteuergesetz) can attribute income of a foreign company back to German shareholders if the company is in a low-tax jurisdiction and the shareholder holds more than 50%. Careful substance requirements in Cyprus can break CFC exposure.
German trade tax adds 14–17% on top of corporate income tax, bringing the effective rate to ~30%. Cyprus has no trade tax equivalent. The 15% flat CIT rate is final for most structures.
While the Soli has been largely phased out for most taxpayers, high earners still face it. More pressing is Germany's inheritance and gift tax with rates up to 50%. Cyprus has zero inheritance tax and zero wealth tax.
— What Cyprus Offers You
— Relocation Timeline
Model §6 AStG deemed disposal, confirm EU deferral eligibility, file German notification.
Incorporate Cyprus LTD, appoint local director, establish genuine office presence to rebut CFC arguments.
De-register from German municipality, terminate or restructure German company if applicable.
60-day or 183-day rule satisfied, TIC and non-dom status issued, Cyprus becomes sole tax residence.
— Frequently Asked Questions
Yes. Because Cyprus is an EU member state, the European Court of Justice case law (confirmed in §6 AStG) allows you to defer the exit tax in annual instalments rather than paying it as a lump sum on departure. You must notify German authorities and meet the reporting requirements annually.
Germany's CFC rules apply when a German-resident shareholder owns more than 50% of a foreign company that earns passive income at a rate below 25%. You can break the CFC nexus by establishing real substance in Cyprus: an office, local employees, active management in Cyprus, and genuine decision-making on the island — not just a registered address.
Yes. The Germany-Cyprus double tax treaty is in force and provides reduced withholding tax on dividends (5–15%), interest (0–10%), and royalties (0%). This is a key benefit for structuring German-source income flows through a Cyprus entity.
You can qualify via the 60-day rule: at least 60 days in Cyprus, a Cyprus home, and a Cyprus directorship or employment. This is compatible with running a business across Germany and Cyprus — provided your centre of vital interests genuinely shifts to Cyprus.
— Relevant Guide
Concise summary of the 2026 Cyprus tax reform (15% CIT, IP Box changes, stamp duty abolition) and what it means for founders relocating from Germany.
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Legal Disclaimer: This page is for general informational purposes only and does not constitute legal or tax advice. Tax laws change frequently. Always seek independent professional advice tailored to your specific circumstances before making relocation or tax planning decisions.