A guide for Americans who are considering a move to Germany, and for those who have already made it.

Summary

(1) German inheritance and gift tax attaches on residence, not on a visa or a registration. A dwelling kept available to you in Germany makes you an Inländer under § 2(1) No. 1 ErbStG from the day it is available.

(2) Article 4(3) of the Germany-United States estate and gift tax treaty deems you domiciled in the United States rather than Germany if you are a US citizen and not also a citizen of Germany, and have been domiciled in Germany for not more than ten years.

(3) While the period runs, Germany may tax your estate and your gifts only on German real property, German business property, and partnership interests in such property. Everything else is allocated to the United States by Article 9.

(4) The rule is for citizens of one country only, and this is where most people who count on it are wrong. If you hold German citizenship as well as American, Article 4(3) never applied to you, and Germany taxes your worldwide estate from your first day of German residence. If you naturalise, you lose the rule on the day you take the certificate, because the condition is tested at your death or at the making of the gift.

(5) Since June 27, 2024 you can become a German citizen without surrendering your American passport, and the ordinary residence requirement is five years. The naturalisation decision now falls in the middle of the treaty period.

(6) A permanent resident who is a citizen of neither the United States or Germany is not protected by this paragraph. Neither are German citizens who are permanent residents (green card holders) of the United States.

(7) The rule protects you and the members of your household who meet the same conditions. It does not protect a beneficiary who lives in Germany in a household of her own (Article 11(1)(b); Bundesfinanzhof, September 20, 2022).

(8) The rule does not apply to income tax. Germany taxes your worldwide income from the day you have a residence there.

(9) Where both countries tax, the relief is a credit, not an exemption. Article 11 decides which country credits the other, and § 21 ErbStG fills the gaps. A credit is worth the tax actually paid and no more, which for an estate below the United States exclusion is nothing.

(10) Starting with the eleventh year Germany taxes your worldwide transfers under its own law while the United States goes on taxing you as a citizen.

Part I. German taxation, and how it is altered by the ten-year-rule of the tax treaty

German inheritance and gift tax does not ask about your visa. It asks whether you are an Inländer. Unlimited liability, which reaches the worldwide transfer, arises under § 2(1) No. 1 ErbStG if the decedent, the donor, or the acquirer has a residence (Wohnsitz) or a habitual abode (gewöhnlicher Aufenthalt) in Germany. A Wohnsitz under § 8 of the Fiscal Code is a dwelling you keep and use in circumstances indicating that you will retain and use it, so a furnished apartment held available for you in Munich is a Wohnsitz from the day it is available, whether or not you have registered with the Einwohnermeldeamt. A habitual abode under § 9 arises after roughly six months of continuous presence. German law has no tie-breaker of its own: you can be resident in Germany and in California at once, and for German purposes you simply are.

The tie-breaker comes from the treaty, and for an American it comes with something more. Article 4(1) gives you a domicile in the United States if you are a resident or a citizen of it, and a domicile in Germany if you have a Wohnsitz or habitual abode there. Article 4(2) resolves a double domicile through the cascade of permanent home, centre of vital interests, habitual abode, and citizenship, with what the cascade cannot settle going to the competent authorities. Article 4(3) then displaces the cascade in one situation. Where an individual, at his death or at the making of a gift, was a citizen of one Contracting State and not also a citizen of the other, was domiciled in both, and had been domiciled in the other State for not more than ten years, his domicile, and that of the members of his family forming part of his household and fulfilling the same requirements, is deemed to be in the State of which they were citizens.

What follows is Article 9: property of a decedent or donor domiciled in one country is taxable only there, apart from the real property and business property that Articles 5, 6 and 8 assign to the country where it lies. So while the period runs you are a United States domiciliary for treaty purposes and Germany reaches your transfers only on what is physically German. The brokerage account, the retirement accounts, the company stock, and the house you kept at home are outside the German charge, however large they are and whatever your German bank knows about them.

Part II. The three conditions.

You must be a citizen of one Contracting State and not also a citizen of the other. This is the condition that disqualifies most of the people who believe the rule is theirs, and Part III is devoted to it.

You must be domiciled in both countries under Article 4(1). For an American this takes care of itself. Article 4(1)(a) gives you a United States domicile if you are a resident or a citizen, so your citizenship alone supplies the American side for as long as you hold it, whatever you have done with the house at home. The German side arrives with your Wohnsitz, and the double domicile the rule exists to resolve therefore comes into being on the day the German dwelling becomes available to you. No enquiry into your intentions is needed. If you have read about the French estate tax treaty, note that it asks in addition for a clear intention to retain the American domicile; the German treaty does not.

Your German domicile must not have lasted more than ten years. Note the wording: not more than ten, rather than less than ten. The paragraph measures the period of your German domicile and does not provide that an interruption restarts the count, so a client who spent four years in Frankfurt in his thirties should not assume he has a fresh ten. Establish the whole residence history before relying on the rule, and do not date it from the current lease.

Part III. Who the rule does not reach.

The commonest and most expensive mistake in this area is made by German-American families, who hear about a ten-year rule for Americans in Germany and assume it covers them. It does not. Article 4(3) requires that the individual be a citizen of one Contracting State and not also a citizen of the other. Dual nationality removes the rule entirely, and it does so from the first day rather than in the eleventh year.

Your status	Does Article 4(3) apply	What that means while you live in Germany
United States citizen, not a German citizen	Yes, while your German domicile has lasted not more than ten years	You are deemed domiciled in the United States. Germany reaches only German real property, German business property, and Article 8 partnership interests
Citizen of both the United States and Germany	No. The paragraph excludes a citizen who is also a citizen of the other State	You fall back on the Article 4(2) cascade. With your permanent home in Germany your domicile is German from the first day, and Germany taxes your worldwide estate and gifts. Where the cascade reaches the citizenship step and you hold both passports, the case goes to the competent authorities, which is not a planning position
United States citizen who naturalises in Germany	Only until the certificate. The condition is tested at the death or at the making of the gift	The period closes on the day you become German, in whatever year of the ten you happen to be. A gift made the week before is within the rule; a gift made the week after is not
German citizen holding a United States green card, not a United States citizen	The paragraph applies, but it points the other way	It deems you domiciled in Germany, your State of citizenship. That is the opposite of shelter, and § 2(1) No. 1 sentence 2(b) ErbStG adds a German tail of five years, ten in relation to the United States, after you give up German residence
Permanent resident of the United States who is a citizen of neither country, for example a British or Indian national on a green card	No. You are not a citizen of a Contracting State	There is no treaty period at all. Germany reaches your worldwide estate from the first year of your German residence
Your spouse or child in your household, a United States citizen and not a German citizen	Yes. The deemed domicile extends to family members forming part of your household who fulfil the same requirements	They are treated as you are. A household member who also holds German citizenship, or who is not an American citizen, does not qualify even though you do

Two consequences follow. A family can contain people on both sides of this line at once, so that one spouse is within the rule and the other outside it and their estate plans are not symmetrical. And naturalisation is a tax event in this narrow but expensive sense. Germany removed the requirement to renounce a previous citizenship with effect from June 27, 2024, and the ordinary residence requirement under § 10 StAG is five years, the three-year route for exceptional integration having been withdrawn in October 2025. Many Americans who arrived recently will become eligible at the point where half the treaty period is still unused. Whatever you decide, decide it with the estate plan open, and complete the gifts and the trust changes that depend on the rule before the ceremony rather than after it.

Part IV. What each country may tax, before and after the eleventh year.

What you hold or transfer	While the ten years run	From the eleventh year
German real property (Article 5)	Germany taxes. The United States taxes you as a citizen and credits the German tax (Article 11(2)(a))	Unchanged
German business property and permanent-establishment assets (Article 6), and partnership interests in such property (Article 8)	Germany taxes. The United States credits	Unchanged
United States real property	The United States taxes. Germany does not	Both tax. Germany credits the United States tax (Article 11(3)(a))
United States securities, bank and retirement accounts, closely held stock, and everything else within Article 9	The United States taxes. Germany does not	Germany taxes first. The United States credits the German tax (Article 11(2)(b))
A lifetime gift of any of the above	Allocated the same way, by Articles 5 to 9	Allocated the same way
Anything received by a beneficiary who lives in Germany in a household of her own	Germany taxes her acquisition in full (Article 11(1)(b)), with the credit of Article 11(3)(b)	Unchanged
Your worldwide income	Germany taxes from the first day. There is no window	Unchanged

Part V. The two things the rule does not do.

It does not shelter your beneficiaries in Germany. German inheritance tax is a tax on the acquirer, and the acquirer’s own residence is an independent ground of unlimited liability. Article 11(1)(b) preserves that charge expressly: Germany may tax an acquisition by a beneficiary domiciled in Germany at your death even though you are treaty-domiciled in the United States, subject to the credit of Article 11(3)(b). A beneficiary tried the obvious argument, that the ten-year rule made her a United States domiciliary too, and lost. On September 20, 2022 the Bundesfinanzhof held that Article 4(3) is framed around the decedent and extends only to family members who belonged to the decedent’s household, not to an acquirer living in a household of her own, and that this holds even where Germany bases its taxing right on the acquirer’s residence. The case concerned an American who had moved to Germany in 2011 and inherited from an American aunt in 2015.

So your daughter who took a job in Berlin is a German taxpayer on the whole of what she receives from you, and on the whole of what she receives from American relatives who never set foot in Germany. She takes class I, a €400,000 allowance, and rates from 7 to 30 percent, and she must notify the German tax office within three months of learning of the acquisition under § 30 ErbStG. That duty is hers personally, nothing the American executor files discharges it, and since no United States broker reports to Germany her notice is usually the tax office’s only source. A spouse who moved with you is in a different position, because a spouse in your household is within the deemed domicile. A child who has set up on her own is not.

It does nothing for income tax. The income tax treaty has no counterpart to Article 4(3), and once your permanent home and centre of vital interests are in Germany you are a German resident from the first year. The saving clause lets the United States go on taxing you as a citizen, and Article 23(5) reconciles two countries taxing the same person on everything. What bites in year one is therefore the ordinary income tax. Your American mutual funds and exchange-traded funds fall under the Investmentsteuergesetz, which charges an annual notional return, the Vorabpauschale, whether or not the fund distributes. Interest on municipal bonds, exempt at home, is fully taxable German capital income. Investment income is charged at 25 percent plus the solidarity surcharge, on gains measured in euros, so an exchange-rate movement can produce a German gain where you made a dollar loss. Whether Germany will respect the tax-free character of a qualified Roth distribution is unsettled, the treaty having been written before Roth accounts existed. And § 15 AStG attributes the income of a foreign family foundation, a category the courts read to cover trusts, to a German-resident settlor from his first year, whether or not anything is paid to him; a Ministry of Finance draft of November 18, 2025 would rewrite the provision and name trusts expressly, and as this is written it remains a draft.

The treaty period and the trust rules meet in one place worth knowing before you move. A revocable living trust is transparent to German law while you live: the assets are yours, the income is your income, and funding or revoking it is not a gift. At your death the transparency ends, and under § 3(2) No. 1 sentence 2 ErbStG a trust that continues after your death is itself the acquirer, in tax class III, with a €20,000 allowance and rates from 30 to 50 percent. That charge cannot reach you while you are treaty-domiciled in the United States. It can from the eleventh year, and from the first year if you are a dual national. A clause terminating the trust at death, or vesting each share then, is the ordinary answer, and it has to be in the instrument before the death.

Part VI. Relief from the double charge: Article 11 and § 21 ErbStG.

Where both countries tax the same transfer, the treaty does not exempt. It gives a credit and decides who must give it. Article 11(1) preserves each country’s own claim: subparagraph (a) lets the United States tax the estate of its citizen as though the treaty did not exist, and subparagraph (b) lets Germany tax an acquisition by a beneficiary domiciled in Germany. Paragraphs 2 and 3 then assign the credit.

The United States credits under paragraph 2. Subparagraph (a) requires it to credit the German tax on property Germany may tax under Articles 5, 6 and 8. Subparagraph (b) goes further where the decedent was a United States citizen domiciled in Germany: the United States then credits the German tax on all other property as well, other than property it may itself tax under Articles 5, 6 or 8. That is the provision that matters from your eleventh year, when Germany collects first on your securities and your accounts and the credit is claimed on Schedule P of Form 706.

Germany credits under paragraph 3. Where Germany taxes on the basis of domicile, including a beneficiary’s domicile under Article 11(1)(b), subparagraph (a) requires it to credit the United States tax on property the United States may tax under Articles 5, 6 and 8. Where the decedent was domiciled in the United States, which is your position while the ten years run, subparagraph (b) requires Germany to credit the United States tax on all other property as well, except property lying in Germany. For your daughter in Berlin the credit therefore covers the whole of her share apart from German real property or business property, capped at the German tax on the same property.

Two mechanical points decide whether the credit is worth anything. The first is apportionment: what Germany credits is the portion of the federal estate tax attributable to that beneficiary’s share, so someone must apportion the estate’s tax among the beneficiaries on the Form 706 values and prove payment. Without both, Germany credits nothing, and the duty belongs in the will or the trust rather than in a scramble when the German assessment arrives. The second is timing: the two assessments rarely arrive together, and a German beneficiary who has already been assessed needs the American figures before her file can close.

Where the treaty does not apply, § 21 ErbStG supplies the domestic credit. A fully liable acquirer may credit a foreign tax that corresponds to the German inheritance tax, was assessed on the acquirer and paid, and arose within five years before the German tax, against the German tax on the foreign property, which for a decedent who was not an Inländer means everything other than German situs property. The credit is proportional and capped. Two gaps keep § 21 alive even though the treaty prevails. State taxes are the first: the treaty covers the federal estate tax, so a state tax is creditable, if at all, only under § 21 and only if it corresponds to the German tax. A Maryland inheritance tax, levied on the acquirer at 10 percent with exemptions for spouses, descendants, parents and siblings, is the kind of tax § 21 contemplates; the Maryland and District of Columbia estate taxes, levied on the estate, are more doubtful; Virginia and California levy neither. The five-year limit in § 21 is the second, and it can bite where an American estate is assessed late.

The transfer	Who collects first	Who credits
German real property, German business property, Article 8 partnership interests	Germany	The United States (Article 11(2)(a))
United States real property and business property, in any year	The United States	Germany, where Germany is also taxing (Article 11(3)(a))
Your other property, while the ten years run	The United States alone	No German charge on you, so nothing to credit
Your other property, from the eleventh year, or from the first year if you are a dual national	Germany	The United States (Article 11(2)(b)), on Schedule P of Form 706
An acquisition by your beneficiary living in Germany, in any year	Germany (Article 11(1)(b))	Germany credits the United States tax on all but German situs property (Article 11(3)(b))
A United States state estate or inheritance tax	The state	Only § 21 ErbStG, and only if the state tax corresponds to the German tax

The arithmetic deserves a candid sentence. A credit is worth the tax actually paid and no more. An estate below the federal exclusion, $15 million in 2026 and indexed after that, pays no federal estate tax, so a German-resident beneficiary credits nothing and the German inheritance tax on her share is the only transfer tax on the inheritance. It is not reduced by the American exclusion, marital deduction, or charitable deduction, none of which Germany recognises. Where the estate does pay at 40 percent above the exclusion, the American tax on her share will usually exceed the German tax at 7 to 30 percent and the credit will remove the German tax. Double taxation is a problem of the large estate; for the ordinary estate the problem is German taxation with no relief at all, in a family that assumed the American exclusion had covered everything.

Part VII. What to do.

Before you move, or now, if you have already gone.

1. Establish the citizenship of every member of the household, on paper. Confirm whether you, your spouse, and each child hold German citizenship as well as American, including citizenship acquired at birth through a parent or restored under the restitution provisions. That single fact decides whether Article 4(3) is available to each of you, and it decides it from your first German day.
2. Date your German domicile and count backwards. Establish the day the German dwelling became available to you, add any earlier German period, and put the expiry of the ten years in the file. Every decision below is measured against that date.
3. Have the trust read by someone who knows German law, before you land. Decide whether a revocable trust terminates at your death or continues, and put the answer in the instrument. Decide whether to release powers over an irrevocable trust or to accept attribution under § 15 AStG. Keep the trustee a United States person. If you are a dual national, the class III charge is live immediately and this cannot wait.
4. Do the income tax work now, not in year ten. Review American funds and exchange-traded funds against the Investmentsteuergesetz, municipal bonds that lose their exemption on arrival, Roth accounts and their documentation, and the classification of any LLC or S corporation you own. Weigh the date of the move itself against bonus, vesting and gain-realisation timing.
5. Take the naturalisation question with the estate plan in front of you. Naturalising at year five ends the treaty period at year five, and the condition is tested at the transfer, so anything that depends on the rule must be completed first.

While the ten years run.

6. Use the period for gifts of non-German property, and check the donee first. A gift of American securities while you are treaty-domiciled in the United States is outside German gift tax. It is not, if the donee lives in Germany, because Article 11(1)(b) reaches gifts as well as inheritances. And § 14 ErbStG aggregates acquisitions from the same person over ten years, so a German-resident child’s €400,000 allowance refreshes only once a decade. Space the gifts accordingly.
7. Keep German assets out of the trust, and write a German will. German real property and German bank accounts cannot be held in a trust. A German will appointing an executor able to act in Germany is what releases them.
8. Choose a succession law expressly. If you are habitually resident in Germany, the EU Succession Regulation applies German succession law to your whole estate, wherever it lies, unless your will chooses the law of your American state under Article 22. Make the choice in terms, and know its limit: the Bundesgerichtshof held on June 29, 2022 that a chosen law with no need-independent compulsory share can offend German public policy where the child and the estate are in Germany.
9. Map every beneficiary by residence. The German exposure of your estate is one number for each acquirer, driven by that person’s own residence and relationship to you. A single child in Germany can carry the entire German charge on a family whose other members are all in the United States.
10. Write the apportionment duty into the documents. Direct your executor to apportion the federal estate tax among the beneficiaries on the Form 706 values and to furnish proof of payment. That instruction is what makes the German credit under Article 11(3)(b) or § 21 ErbStG claimable at all.
11. Calendar the German notices. An acquirer in Germany has three months under § 30 ErbStG from learning of an acquisition, on estimated figures if necessary, with the return corrected later. Waiting for the American estate to close usually means the three months are gone.

Before the eleventh year.

12. Run the computation for the year after the period ends. From the eleventh year Germany taxes your worldwide estate under its own law, the United States taxes you as a citizen, and Article 11(2)(b) puts the credit on the American side. A plan that was right in year five can be badly wrong in year eleven.
13. Revisit the trust’s termination clause. The § 3(2) No. 1 sentence 2 ErbStG charge on a continuing trust arrives with the eleventh year, at 30 to 50 percent above a €20,000 allowance.
14. Decide, deliberately, whether to stay. The eleventh year, the naturalisation decision, a return to the United States, and a move to a third country are one decision rather than four. If you hold 1 percent or more of a corporation, add § 6 AStG to the list before you plan any departure.

Part VIII. Other ten-year periods, and why none of them is this one.

Provision	What it says	Why it is not the treaty rule
§ 2(1) No. 1 sentence 2(b) ErbStG	A German citizen who gives up German residence remains an Inländer for five years, and for ten years in relation to the United States under the act approving the 1998 Protocol	The mirror image: a tail on Germans leaving, not a shelter for Americans arriving. It catches the dual national and the German-citizen relative who moved to the United States
§ 14 ErbStG	Acquisitions from the same person within ten years are aggregated for the allowance and the rate scale	A gift-planning clock, not a residence clock. It runs against a German-resident donee whatever your own treaty domicile
§ 2325(3) BGB	A gift made within ten years of death is added back to the estate for the compulsory-share supplement, on a sliding scale reduced by one tenth for each completed year	Succession law rather than tax. It bites where German succession law governs your estate, which it does by default once you are habitually resident there
§ 23 EStG	A gain on a private sale of real property is taxable if the property is sold within ten years of purchase, measured from the notarial contracts, and free of German tax after that. Property used for your own residential purposes in the year of sale and the two preceding calendar years is exempt whenever it is sold	Income tax, and the most commonly confused of them all. It says nothing about inheritance tax, and the United States taxes the same gain as yours with only the section 121 exclusion, plus a possible currency gain on repaying a euro mortgage
The SECURE Act ten-year rule	Most non-spouse beneficiaries must empty an inherited individual retirement account by the end of the tenth year after the death	A United States rule about the account, unconnected to German domicile. It matters because those distributions are also German income for a beneficiary in Germany
§ 6 AStG (seven years of twelve)	Not ten years, but the clock that starts when you arrive. Once you have been subject to unlimited German tax for at least seven years within the last twelve and hold 1 percent or more of a corporation, leaving Germany triggers a deemed disposal of the shares	The exit charge on the way out. An American who moves to Germany with a stake in a company acquires a German exit tax problem simply by staying

The treaty period governs one tax and one taxpayer: German inheritance and gift tax, on a person who is a citizen of one of the two countries and not of both. It does not govern your income, it does not govern your heirs who live in Germany, it does not govern the sale of your apartment, and it does not reach you at all if you carry both passports. Statuses of statutes, treaty provisions, decisions, and thresholds are stated as of this writing in September 2026, and confirming them for your own facts is part of any real engagement.

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Authorities.

Convention between the United States of America and the Federal Republic of Germany for the Avoidance of Double Taxation with Respect to Taxes on Estates, Inheritances, and Gifts of December 3, 1980, as amended by the Protocol of December 14, 1998: Article 4(1)(a) and (b); Article 4(2)(a) to (d) (permanent home, centre of vital interests, habitual abode, citizenship, and mutual agreement where the individual is a citizen of both States or of neither); Article 4(3)(a) to (c) (citizen of one State and not also of the other, domiciled in both, domiciled in the other for not more than ten years, the deemed domicile extending to members of the family forming part of the household and fulfilling the same requirements); Articles 5, 6, 7 and 8; Article 9; Article 10(6); Article 11(1)(a) and (b), 11(2)(a) and (b), and 11(3)(a) and (b).

§ 2(1) No. 1 sentences 1 and 2(b) ErbStG; §§ 8 and 9 of the Fiscal Code; § 3(2) No. 1 sentence 2 ErbStG; §§ 14, 15, 16, 19 and 30 ErbStG; § 21(1) and (2) No. 2 ErbStG; § 15 AStG in its current version and the Ministry of Finance draft of November 18, 2025, which is not enacted; § 6 AStG; § 23(1) No. 1 EStG; §§ 20 and 32d EStG; §§ 16 and 18 InvStG; § 2325(3) BGB; Article 3 of the Act of September 15, 2000 approving the 1998 Protocol (Bundesgesetzblatt 2000 II p. 1170); § 10 StAG and the Act on the Modernisation of Citizenship Law in force from June 27, 2024, as amended in October 2025.

Bundesfinanzhof of September 20, 2022, II B 2/22. Bundesgerichtshof of June 29, 2022, IV ZR 110/21. Regulation (EU) No. 650/2012, Articles 21 and 22. Internal Revenue Code sections 121, 988, 1014, 2001 and 2010; Form 706 and its Schedule P; the ten-year payout rule of the SECURE Act. Md. Code, Tax-Gen. § 7-201 et seq.

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If you are planning a move to Germany, or you are already there and the ten years are running, the questions to settle are which passports each member of the household holds, when your German domicile began, where each of your beneficiaries lives, what your trust does at your death, and how the credit will be documented when the time comes. Ashford International Law PC advises Americans in Germany and Germans in the United States across the whole of that map: the treaty analysis and the citizenship review, the German exposure of each beneficiary, the review of a revocable or irrevocable trust before the move, the German will alongside the American plan, and the coordination of United States estate tax with German inheritance tax, working with the client’s existing advisers on both sides.

The firm is led by Caroline Esche Ashford, PhD, JD. A graduate of Columbia University Law School, she is a dual-qualified attorney whose practice focuses on German-American estate planning and the cross-border taxation and administration of estates and trusts, including the planning of a move between the United States and Germany. Dr. Ashford is also licensed to practice law in Germany; she is a member of the Munich bar. She advises in German, English and French.

Ashford International Law PC. Washington, Los Angeles, Munich.
Email: info@internationalestatelaw.com
Web: germanyusalawtaxfinance.com and internationalestatelaw.com

This article is intended for general educational purposes and does not constitute legal or tax advice, nor does it create an attorney-client relationship. Reading it does not make anyone a client of the firm, and no action should be taken on it without advice on the particular facts. The statutes, treaty provisions, decisions, thresholds, and allowances described are stated as of September 2026 and are subject to change, and the draft revision of § 15 AStG referred to above has not been enacted.

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