Last revised 13 October 2026. Figures and rules stated are those in force on 15 September 2026. For the reader whose life has moved to Germany while the accounts, the retirement plan and the estate plan stayed in the United States. The German system reaches further than most arrivals expect, and it starts on the first day rather than after a grace period.
When does German tax start?
For income tax, on the day there is a residence or a habitual abode in Germany. A dwelling kept and used in circumstances indicating it will be retained is a residence from the day it is available, whether or not anyone has registered with the Einwohnermeldeamt. There is no window. United States citizenship keeps the American return running at the same time, so the first year abroad is the year both systems apply.
Is there not a ten-year rule?
There is, and it is narrower than its reputation. Article 4(3) of the estate and gift tax treaty deems a person domiciled in the United States rather than Germany, for inheritance and gift tax only, where that person is a citizen of one country and not also of the other and has been domiciled in Germany for not more than ten years. Dual nationality removes it from the first day rather than in the eleventh year, naturalising ends it on the day the certificate is taken, and it does nothing at all for income tax or for a beneficiary living in Germany in a household of her own. See Ten-year rules.
What happens to the IRA and the 401(k)?
Under Article 18(1) of the income tax treaty a pension is taxable in the country of residence, so Germany taxes the distribution and the United States relies on the saving clause and a foreign tax credit. Germany charges it as other income at the ordinary progressive rate rather than at the flat investment rate. How much is taxed changed in 2025, and the practical difficulty is proof: establishing decades of contribution history to the satisfaction of a German tax office. See IRA and 401(k) distributions.
Is a Roth account tax free in Germany?
Not automatically, and the American label has no effect on the German answer. The mainstream view is that only the earnings element is taxed, because the contributions were made from taxed income, but there is no decision of the Federal Fiscal Court on the point and practitioners report German tax offices treating Roth withdrawals like traditional ones. Anyone relying on a Roth as the tax-free part of a retirement plan should settle the German position before moving rather than after. See Roth IRA and Roth 401(k).
What about the brokerage account?
Two mismatches do most of the damage. German fund taxation under the Investment Tax Act charges an annual deemed minimum return, the Vorabpauschale, on American funds and exchange-traded funds whether or not anything was sold or distributed, which produces German tax in years with no American tax to credit it against. In the other direction the American PFIC regime makes almost every European fund punitive to hold. The two rules together leave a narrow path, and it is worth mapping before the move rather than after.
Does the American will still work?
It governs less than it used to. Once there is habitual residence in Germany, the European Succession Regulation applies German succession law to the whole estate, wherever it lies, unless the will expressly chooses the law of the American state. German law brings with it the Pflichtteil, a compulsory share for children and spouse that cannot be disinherited away, and the choice of law has a limit of its own where the child and the estate are both in Germany.
And the revocable living trust?
It is transparent to German law during life: the assets are treated as the settlor’s, the income as the settlor’s income, and funding or revoking it is not a gift. At death the transparency ends, and a trust that continues after the death is itself treated as the acquirer, in the least favourable tax class with a 20,000 euro allowance and rates from 30 to 50 per cent. 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. See Trusts.
What is owed in reporting terms?
Both directions. The American side continues: FBAR for the German accounts, FATCA reporting on Form 8938, and the ordinary return. The German side begins: the German return itself, the Anlage KAP for investment income on which no German bank withheld, and the three-month notification under section 30 ErbStG for any gift or inheritance received.
What happens on leaving again?
Leaving is its own event. Holding 1 per cent or more of a corporation after seven years of unlimited German tax liability within the last twelve triggers a deemed disposal of the shares under section 6 AStG. Giving up United States citizenship is a separate and larger question with its own tests and its own timing traps. See Wegzugsbesteuerung.
What to have ready for a first conversation
- The date the German dwelling first became available, which dates the German residence.
- The citizenships held by every member of the household, including any acquired at birth through a parent.
- A schedule of the American accounts, with the fund holdings identified separately.
- The retirement accounts, with whatever contribution history can still be obtained.
- The current will and any trust instrument, with the governing law clause.
Nothing on this page is legal or tax advice, and no page can settle a case. Where a matter is live, the questions above are the ones a first conversation works through.
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