I'm German, working in US tech — what taxes apply when I move back to Germany?
Short answer: Germany taxes residents on worldwide income. Your US brokerage account will be subject to German capital gains tax (Abgeltungsteuer) and the complex 'Vorabpauschale' tax on unrealized gains for non-distributing funds. The US–Germany treaty generally lets your 401(k) grow untaxed until you withdraw. How Germany treats a Roth IRA is less settled.
Written and reviewed by Anthony Walsh, Selanis. Last reviewed 2026-10-06.
Why it works this way
Germany's taxation of investment funds (Investmentsteuergesetz) is a major hurdle for those with US portfolios. If you hold US ETFs that do not distribute all their income, Germany may charge a 'pre-payment' tax (Vorabpauschale) on the deemed increase in value. This requires complex calculations that many German tax advisors find difficult without specialized software.
The US–Germany treaty, as amended by the 2006 protocol, generally defers tax on income earned inside US pension plans (including 401(k)s and IRAs) until it is paid out. Germany then taxes distributions as other income (sonstige Einkünfte) at your normal rates. Roth IRAs are less clear-cut: there is no settled German position that withdrawals are tax-free, so take advice before relying on them.
German 'Church Tax' (Kirchensteuer) is another unique consideration. If you are registered as a member of the Catholic or Protestant church in Germany, your income and capital gains tax will be increased by 8% or 9%. If you do not wish to pay this, you must formally leave the church (Kirchenaustritt).
The expensive mistake: Holding US-domiciled ETFs without understanding the German Investment Tax Act
Since Germany's 2018 fund tax reform, US ETFs are no longer hit by the old punitive regime. They are taxed like other funds: the Vorabpauschale on accumulating funds, Abgeltungsteuer (25% plus solidarity surcharge) on distributions and sales, and a 30% partial exemption (Teilfreistellung) for equity funds. The real mistake is not planning the sequence. Gains you built up while US-resident can become taxable in Germany when you sell after moving, so where you sell and when you buy matters.
What to do
- Evaluate your US ETFs for 'Vorabpauschale' — Check if your US holdings will trigger German tax on unrealized gains and whether you should sell them before becoming a German resident.
- Check your church registration status — Decide whether you intend to pay church tax and ensure your registration with the local Meldebehörde reflects your choice.
- Review the tax status of your Roth IRA — Germany may not treat Roth withdrawals as tax-free. Weigh the Roth's role before you become German-resident.