Moving from Germany to Monaco can take an effective combined tax burden of roughly 47.5% on top-bracket income, 26.375% on capital gains and dividends, and up to 50% on inheritance to a clean 0% across all three — but the German exit is one of Europe’s most legally hostile, and Monaco’s filter is sharp: it excludes French nationals, demands a Monaco-bank deposit of typically €500,000–€1,000,000+, and offers far less treaty cover than Switzerland or Cyprus. Two specific German rules dominate the planning: §6 AStG Wegzugsteuer (deemed disposal on substantial corporate shareholdings) and the fact that Germany has no double tax treaty with Monaco — and never has — so since the day the carte de séjour replaced your German tax registration, every Berlin–Monte-Carlo dispute is resolved on each side’s domestic rules with no Article 4 tie-breaker. Layered on top is §2 AStG erweiterte beschränkte Steuerpflicht, which classifies Monaco as a Niedrigsteuerland and creates a 10-year trailing nexus on German-source income for German-national exiters.
The Tax Delta at a Glance
| Germany (current) | Monaco (after move) | |
|---|---|---|
| Personal income tax | 14% to 42% progressive; 45% Reichensteuer above €277,826 | 0% for non-French residents |
| Solidarity surcharge | 5.5% on income tax above ~€96,820 single | 0% |
| Church tax | 8–9% of income tax (if church member) | 0% |
| Capital gains / dividends | 25% Abgeltungsteuer + Soli = 26.375% flat | 0% on private investment gains |
| Wealth tax | 0% (suspended since 1997) | 0% — no annual net-worth tax |
| Inheritance / gift tax | 7%–50% by class and value (€400K spouse exemption) | 0% between spouses and direct lineal descendants; 8–16% otherwise |
| Worldwide vs territorial | Worldwide on unbeschränkt Steuerpflichtige | Resident individuals not taxed on worldwide personal income |
| Effective rate (typical entrepreneur) | ~47.5% top marginal incl. Soli + church | ~0% personal; 25% Monégasque BIC if >25% turnover non-Monaco |
The right-hand column applies in full only after both legs are in place: cessation of unbeschränkte Steuerpflicht under §1 EStG and issuance of the carte de séjour temporaire by the Section des Résidents (Sûreté Publique), backed by 183+ days of physical presence in Monaco. Until both are documented, the Bundeszentralamt für Steuern can — and will — continue to treat you as fully taxable on worldwide income, and without a treaty it can do so without Article 4 protection.
Step-by-Step Move
Step 1: Confirm you can legally cease German tax residency under §1 EStG
German tax residency is decided by the Einkommensteuergesetz (EStG), primarily §1 EStG read together with §§ 8 and 9 of the Abgabenordnung (AO). You are unbeschränkt steuerpflichtig (subject to unlimited tax liability on worldwide income) if you have either:
- A Wohnsitz (domicile) in Germany under §8 AO — defined as a dwelling that you “keep and use under circumstances that indicate you will retain and use it.” Mere ownership is not enough; signed lease agreements, family in occupation, personal effects in storage, or a key on a garage that you visit periodically can all be construed as a Wohnsitz.
- A gewöhnlicher Aufenthalt (habitual abode) under §9 AO — generally presumed after six months (183 days) of continuous physical presence, with short interruptions counted toward the same period.
Unlike the UK SRT, there is no neat day-count formula. The German Finanzamt applies a Gesamtbild der tatsächlichen Verhältnisse — the overall picture of actual circumstances. Keeping any German Wohnsitz available is the most common reason exits unravel: a Munich pied-à-terre retained “for board meetings,” a Tegernsee weekend home that the family uses, a furnished room at the parents’ house — each can re-establish unbeschränkte Steuerpflicht. The Bundesfinanzhof has been consistent: the test is availability and intent to use, not actual usage.
For Monaco-bound movers, the practical sequence is to abmelden at the local Bürgeramt by filing an Abmeldebescheinigung citing the Monaco address, terminate every German lease (or convert ownership to an arm’s-length tenancy to a third party), close or downgrade German bank and brokerage accounts, and physically move the family into a registered Monaco lease or owned apartment. Without a clean Wohnsitz break, the §6 AStG planning below is moot — Germany never lost taxing rights to begin with.
Step 2: Plan around §6 AStG Wegzugsteuer (the deemed disposal)
Germany’s exit tax — the Wegzugsbesteuerung under §6 of the Außensteuergesetz (AStG) — is the single most expensive obstacle on the Germany-to-Monaco corridor. It is targeted, not general: it does not touch your listed share portfolio, your real estate, your crypto, or your private business interests organised as a partnership. It hits one specific asset class — substantial shareholdings in corporations.
The trigger conditions are precise:
– You hold at least 1% of the share capital of any corporation (German GmbH/AG, foreign Ltd, US Inc., Luxembourg SARL — the legal form does not matter), and
– You have been subject to unlimited German tax liability for at least 7 of the last 12 years preceding departure (this threshold was tightened from 10 of 11 by the ATAD-Umsetzungsgesetz, in force from 1 January 2022).
If both conditions are met, the day you cease unbeschränkte Steuerpflicht the Finanzamt deems your shares sold at fair market value. The unrealised gain — fair market value minus historical acquisition cost — is taxed under the Teileinkünfteverfahren (60% of the gain is taxable at your marginal rate), producing an effective rate of roughly 28–28.5% for top-bracket exiters once Soli is included.
The 2022 reform also dismantled the prior interest-free EU/EEA deferral. Under the current regime, the Wegzugsteuer is payable in seven equal annual instalments, available regardless of destination but typically requiring a Sicherheitsleistung (security deposit) for non-EU/EEA moves. Monaco is non-EU/EEA: it is a sovereign Principality outside the European Union and outside the European Economic Area, so the Sicherheitsleistung will normally be required — usually a bank guarantee equal to the deferred tax. The narrowed §6 Abs. 3 AStG Rückkehrerregelung (return-within-7-years forgiveness) is available in principle but conditional on demonstrable intent to return at the time of departure, which is incompatible with most genuine Monaco moves.
Practical mitigation strategies that work, in order of effectiveness:
- Restructure before the seven-year clock starts. Convert a GmbH holding to a partnership (KG, GmbH & Co. KG); partnerships are outside §6 AStG.
- Roll qualifying shares into a German Familienstiftung or treaty-protected EU holding before departure — shifting the taxpayer of record off the natural person.
- Time the move to a low-valuation window. Wegzugsteuer is calculated on FMV at departure date; moving in a depressed valuation cycle materially reduces the bill.
- Stay below 1%. Diluting through a pre-departure capital raise can drop a borderline founder under the threshold entirely.
Step 3: Establish Monaco tax residency
Monaco has no investor visa with a fixed ticket price. The standard route is the carte de séjour issued by the Section des Résidents (Sûreté Publique). Eligibility: non-French nationality (or French nationals settled in Monaco before 13 October 1962), age 16+, clean criminal-record extracts from every country of residence over the last five years, evidence of housing in Monaco (owned or registered lease ≥12 months), and proof of sufficient means — in practice a bank deposit of €500,000+ at a Monaco-licensed bank, with most established banks asking €1,000,000+ for HNW applicants.
The mechanical sequence: pre-screen Monaco banking and housing options; submit KYC and source-of-funds documentation to a Monégasque bank and lodge the deposit; obtain the bank’s attestation of funds; sign and register a Monaco lease (≥12 months) or close on a property purchase; file the residence-permit application with the Section des Résidents; attend the police interview a few weeks later; receive the carte de séjour temporaire typically within 3–6 months of a complete file. Years 1–3 are temporaire, then ordinaire (3-year), then privilégié (10-year) after roughly nine years of continuous residency. Full mechanics are in Tax-Free Residency in Monaco.
To be a Monégasque tax resident — not merely a permit holder — practitioners and tax authorities expect 183+ days/year of physical presence, a principal Monaco home, and documented centre-of-vital-interests in the Principality. The Finanzamt routinely challenges Monaco residencies on physical-presence and centre-of-life grounds, so keep utility usage, bank-card geolocation, club memberships, and (if applicable) school enrolments contemporaneously documented.
Step 4: Document the break — and accept that there is no DE-MC treaty
Germany has never signed a comprehensive double tax convention with Monaco. This is not a lapse like the DE-UAE treaty; it is a long-standing German policy stance toward jurisdictions with no general personal income tax. There is, since 2010, a Tax Information Exchange Agreement (TIEA) in force between Germany and Monaco for administrative exchange of information on request, and Monaco has been a participant in the OECD Common Reporting Standard (CRS) since 2018 — meaning your Monaco bank-account balances are reported automatically to Germany — but no DTT covers tie-breakers, withholding caps, or override of §2 AStG.
The three concrete consequences for the move are the same as with the UAE:
- No treaty tie-breaker. If both countries claim residency under their respective domestic laws, there is no Article 4 mechanism to allocate. The dispute resolves only through Germany’s domestic non-residence test — meaning the burden is entirely on you to prove that no Wohnsitz or gewöhnlicher Aufenthalt remains in Germany.
- No reduced withholding on residual German-source income. German dividends paid to a Monaco resident are subject to full domestic 26.375% withholding (25% Kapitalertragsteuer + 5.5% Soli), with no treaty cap. Royalties suffer the full 15.825%. Interest is generally exempt under domestic rules.
- No protection against §50d EStG anti-avoidance overrides — and §2 AStG erweiterte beschränkte Steuerpflicht operates without any treaty constraint.
Build a contemporaneous evidence file: Abmeldebescheinigung from the Bürgeramt, terminated lease or arm’s-length tenancy on the German Wohnsitz, cancelled utility contracts (Stadtwerke, Telekom), GEZ/Rundfunkbeitrag deregistration, schools deregistered, Krankenkasse deregistered (Anwartschaftsversicherung if retained). On the Monaco side: carte de séjour, registered lease or title deed, Monaco-bank attestation, Monaco utility bills and Monégasque health-insurance enrolment, plus a contemporaneous travel log if applicable. The Finanzamt routinely opens audits 2–3 years after departure of HNW exiters; the strength of this file determines the outcome.
Step 5: First-year compliance and the §2 AStG ten-year tail
In the German year of departure you file a final Einkommensteuererklärung marked as a Welteinkommens-/inländisches Einkommens-Splitting: worldwide income for the period of unlimited tax liability (1 January to departure date), German-source income only for the remainder. The Wegzugsteuer assessment under §6 AStG is filed on the same return, with the seven-year instalment election (§6 Abs. 4 AStG) requested explicitly and the Sicherheitsleistung documented.
Then comes the trap most Germany-to-Monaco exiters underestimate: §2 AStG erweiterte beschränkte Steuerpflicht (extended limited tax liability). This rule applies for 10 years after departure to any German national who:
- Was unlimited German tax resident for at least 5 of the 10 years before departure,
- Moves to a jurisdiction defined as a Niedrigsteuerland (low-tax country) under §2 Abs. 2 AStG — Monaco squarely qualifies, since its 0% personal rate falls more than one-third below comparable German taxation, and
- Retains wesentliche wirtschaftliche Inlandsinteressen (substantial economic interests in Germany) — broadly defined to include German real estate above €154,000, a 1%+ holding in a German corporation, or German business assets generating more than €62,000 of annual income (or making up >30% of total income).
For taxpayers within the §2 AStG net, German-source income that would otherwise escape limited tax liability under §49 EStG (interest from German banks, certain dividends, gains on portfolio shareholdings) is taxed at the higher of normal limited-liability rates or the rate that would have applied as a full resident, with Soli fully payable. The practical effect: for ten years the Monaco move does not fully shield you from German tax on residual German connections — liquidate German economic ties before departure to escape this regime.
Monaco-side compliance is light. Resident individuals file no personal tax return because there is no personal income tax to assess. Annual obligations are limited to maintaining the carte de séjour (police interview + housing/means evidence in years 1–3), a Monaco-licensed bank deposit, Monaco health-insurance cover, and 183+ days of presence. Companies trading from Monaco file the Impôt sur les Bénéfices (BIC) return at 25% if more than 25% of turnover is non-Monaco-sourced — relevant if you also relocate an operating business.
Cost & Timeline
| Phase | Cost (EUR) | Time |
|---|---|---|
| German tax planning + §6 AStG modelling (pre-move) | €8,000–€30,000 | 2–6 months |
| §6 AStG Wegzugsteuer assessment (one-off, founders only) | Up to ~28% × FMV gain | Filed with departure return |
| Sicherheitsleistung (bank guarantee for non-EU/EEA deferral) | ~1–2% / year of guaranteed amount | 7-year instalment period |
| Final Einkommensteuererklärung + Abmeldung | €1,500–€5,000 | Filed by 31 July of following year |
| Monaco bank deposit (locked) | €500,000–€1,000,000+ | At application |
| Monaco housing (lease ≥12 months OR property) | €5,000–€20,000+/month rent; €40K–€60K+/m² to buy | Pre-application |
| Monaco residency application + advisory | €10,000–€50,000 | 3–6 months from filing |
| Move + setup (banking, lease registration, health cover) | €5,000–€15,000 | 1–2 months |
| §2 AStG monitoring and structuring (10 years post-exit) | €2,000–€8,000 / year | Ongoing 10 years |
| Total upfront, year-1 (deposit + housing + advisory) | €1,000,000–€2,000,000+ | 6–12 months |
The dominant flexible cost line is the §6 AStG Wegzugsteuer for taxpayers within scope. For a founder with €5M of accrued gain on a 10% GmbH stake, the deemed-disposal bill at departure is roughly €5M × 60% × ~45% (top marginal incl. Soli) ≈ €1.35M, payable across seven instalments of ~€193K each — plus a Sicherheitsleistung for the deferred portion. The dominant committed cost is the Monaco bank deposit, which sits idle in a Monaco account for the duration of residency.
Treaty Considerations
There is no double tax convention between Germany and Monaco, and no signed text under negotiation as of April 2026. What does exist is a TIEA (Tax Information Exchange Agreement) in force since 2010, plus CRS automatic exchange since Monaco’s 2018 onboarding — both of which mean the Bundeszentralamt für Steuern receives full information on Monaco-held accounts of any person it considers a German taxpayer. The TIEA does not, however, allocate residency, cap withholding, or override §2 AStG.
For Germany-to-Monaco movers, this changes the rulebook in three concrete ways. First, there is no Article 4 tie-breaker under any treaty; dual residency must be resolved entirely under each country’s domestic rules. The Finanzamt’s posture is consistent: prove cessation of Wohnsitz and gewöhnlicher Aufenthalt under §§ 8–9 AO, or remain unbeschränkt steuerpflichtig — and CRS will tell them where your money is. Second, withholding on residual German-source flows is at full domestic rates: 26.375% on dividends, 15.825% on royalties, with no treaty cap. Third, §2 AStG operates without treaty constraint for the full 10-year tail — a treaty would normally cap or override Germany’s right to apply erweiterte beschränkte Steuerpflicht on certain income categories; without one, the full domestic regime applies.
A practical comparison: the Switzerland–Germany DTT does provide an Article 4 tie-breaker and capped withholding, which is one reason HNW Germans choosing Europe sometimes prefer Switzerland’s lump-sum regime over Monaco’s 0% — even though Monaco’s headline rate is lower. See Monaco vs Switzerland for the head-to-head.
Common Mistakes
- Keeping a German Wohnsitz “for visits.” A retained Munich apartment or Tegernsee weekend home re-establishes unbeschränkte Steuerpflicht. The Finanzamt’s test is available and used, not primary.
- Triggering §6 AStG by accident. Founders who structured around partnerships (KG, GmbH & Co. KG) but converted to a GmbH within seven years of departure walk straight into Wegzugsteuer.
- Assuming a German-Monaco treaty fills the gaps. There is none — only a TIEA and CRS. Planning must assume domestic rules on both sides.
- Ignoring the §2 AStG 10-year tail. German real estate above €154,000, a 1%+ German GmbH stake, or German business income above €62,000 / 30%-of-total all keep the exiter in erweiterte beschränkte Steuerpflicht for a full decade — frequently negating the Monaco planning entirely for the first ten years.
- Forgetting the Erbschaftsteuer trailing rule. Under §4 ErbStG, German nationals remain subject to German inheritance tax on worldwide estates for 5 years after departure, extended in effect to 10 years for moves to a low-tax jurisdiction. Monaco has 0% inheritance to spouses and direct lineal descendants, but the German Erbschaftsteuer follows the deceased’s nationality.
- Underestimating the bank deposit lock-up. The Monaco-bank deposit (typically €500K–€1M+) is not investable through external custodians and yields whatever the Monaco private bank offers — model the opportunity cost over the 9–10 years to carte de séjour privilégié.
- Skipping the Abmeldung at the Bürgeramt. Without a formal Abmeldebescheinigung citing the Monaco address, the Meldebehörde keeps treating you as resident and Krankenkasse, GEZ and tax assessments continue accordingly.
FAQ
Will I still have to file a German tax return after moving to Monaco?
For the year of departure — yes, a final Einkommensteuererklärung covering worldwide income up to the departure date and German-source income only thereafter, plus the §6 AStG Wegzugsteuer assessment if applicable. After that, only if you have German-source income (German rental property, German director’s fees, German pension, German GmbH dividends) or fall within §2 AStG erweiterte beschränkte Steuerpflicht — which lasts ten years for moves to Monaco.
How much is the Wegzugsteuer in practice?
It applies only to corporate shareholdings of 1%+ held by individuals who were unlimited German tax residents for 7 of the last 12 years. The deemed gain is taxed under the Teileinkünfteverfahren (60% of FMV-minus-cost is taxable at marginal rate plus Soli) — typically about 28% of the unrealised gain for top-bracket exiters. Payable in seven annual instalments, with a Sicherheitsleistung normally required for the Monaco move (non-EU/EEA).
Is there really no double tax treaty between Germany and Monaco?
Correct. Germany and Monaco have a TIEA (information exchange) in force since 2010 and Monaco joined CRS automatic exchange in 2018, but there is no comprehensive DTT. This is a long-standing German policy stance toward jurisdictions with no general personal income tax. Plan as if every Berlin–Monaco dispute will be decided on each side’s domestic rules without an Article 4 tie-breaker.
Can I keep my German bank accounts, GmbH stake, and Hamburg apartment?
Bank accounts can be retained under non-resident profile, but most German private banks tighten conditions for Monaco-resident clients post-CRS. A retained Hamburg apartment that remains “available” can re-establish Wohnsitz — convert it to an arm’s-length tenancy (12+ months, not to family) before departure. A retained GmbH stake of 1%+ both triggers §6 AStG on departure and keeps you in the §2 AStG ten-year net afterwards.
How long does the full move take?
Realistic timeline 6–12 months from first planning meeting to issued carte de séjour temporaire — sometimes longer. The critical path is usually Monaco banking onboarding (KYC and source-of-funds review can run 2–4 months) and the §6 AStG planning (corporate restructuring, Sicherheitsleistung). Housing search in Monaco’s tight market often runs in parallel with banking.
What about inheritance tax — am I free of German Erbschaftsteuer once I leave?
Not for at least five years (German nationals) and effectively ten years for moves to a low-tax jurisdiction like Monaco, under §4 ErbStG read with §2 AStG. German nationality continues to attract Erbschaftsteuer on worldwide estates well after the income-tax exit. Monaco’s 0% inheritance tax to spouses and direct descendants does not displace the German rule; it only governs the Monaco side.
Next Step
For the full destination-side breakdown, see Tax-Free Residency in Monaco. For the broader exit framework across all major origin countries, see How to Legally Exit a High-Tax Country. For comparable European 0% alternatives with treaty cover, see Monaco vs Switzerland.
Book a free consultation — we specialize in Germany-to-Monaco relocations and §6 AStG / §2 AStG planning specifically.
Last updated: 2026-04-27
Sources:
– Bundesministerium der Finanzen — Außensteuergesetz §§ 2, 6 (https://www.gesetze-im-internet.de/astg/)
– BMF — Anwendungsschreiben zum Außensteuergesetz, Stand 2023 (https://www.bundesfinanzministerium.de)
– BZSt — Doppelbesteuerungsabkommen Status, Monaco (TIEA only, no DTT) (https://www.bzst.de)
– PwC Worldwide Tax Summaries — Germany — Individual taxes (https://taxsummaries.pwc.com/germany/individual)
– PwC Worldwide Tax Summaries — Monaco — Individual taxation (https://taxsummaries.pwc.com/monaco/individual)
– Monaco Sûreté Publique — Section des Résidents (https://www.gouv.mc/Action-Gouvernementale/Securite/Residents)