Leaving Germany in the first half of the year

[SpaceOne]

Hello

Let's say you leave Germany at the end of January 2026 and move to another EU country where you get a regular job and start paying tax income and social things there. For January you are still getting salary from regular employment in Germany, but after January and to end of the year you are living, working and have address in another country.

How are you treated from the Finanzamt in that case? As being tax resident in Germany for the whole year, e.g. must you send tax income statement at the end of 2026 with all German and foreign income?
Or is it from german tax perspective better, to leave at the end of the 2025?

I don't have any other deductibles, besides Arbeitszimmer, however I could expect a severance package paid out at the end. Can the Fünftelregelung be used in case you would leave Germany after January?

Thank you

[PandaMunich]

Let's say you leave Germany at the end of January 2026 and move to another EU country where you get a regular job and start paying tax income and social things there. For January you are still getting salary from regular employment in Germany, but after January and to end of the year you are living, working and have address in another country.

How are you treated from the Finanzamt in that case? As being tax resident in Germany for the whole year, e.g. must you send tax income statement at the end of 2026 with all German and foreign income?

Yes.
Your post-move income from your new country of residence will not be taxed again, but it will raise your income tax rate on your German income, this is called Progressionsvorbehalt.
Please scroll down to the section "Progressionsvorbehalt" for an example with numbers: https://expertise.tax/en/faq-german-tax ... /#resident

• Progressionsvorbehalt is also applied if you moved to/away from Germany mid-year. So the German tax rate that you will have to pay on the income you had during the rump year that you were actually resident in Germany will depend not on the income you had during that rump year, but on the entire income that you had that calendar year.

Or is it from german tax perspective better, to leave at the end of the 2025?

I don't have any other deductibles, besides Arbeitszimmer, however I could expect a severance package paid out at the end.

The severance package (Abfindung will be taxed by Germany, even if you have moved away in the meantime.
Germany likes doing treaty overrides and this is one of the cases when they do.

Please see here for the exceptions when Germany doesn't get to tax the Abfindung (please scroll up to the start of the page): https://www-juhn-com.translate.goog/fac ... r_pto=wapp

However, it really would be simplest if you moved away on 31. December, to avoid having to do another German tax return.

Can the Fünftelregelung be used in case you would leave Germany after January?

Yes.
Because differently from what you seem to think, the Fünftelregelung does not mean that you tax one fifth of the Abfindung in each of the next five years.

Please see here for what the Fünftelregelung is, with an example: https://www-sparkasse-de.translate.goog ... r_pto=wapp

[SpaceOne]

Hello.

Thanks, I appreciate your reply.

However, it really would be simplest if you moved away on 31. December, to avoid having to do another German tax return.

Wouldn't I pay less tax income, if I would receive severance package next year in January including 1 salary, and then leave Germany and would have limited tax liablity in Germany in 2026 ? Comparing to leaving at the end 2025, after receving full yearly salary including severance, because this would put me into higher tax bracket.

Just asking.

PS: but I guess if I opt for limited tax liability I loose General allowance, I can't include Werbungkosten and cannot use Fünftelregelung, right?

PS1: Is there possibility to be "Partial-Year Resident" in this case? To fill tax income statement for unlimited tax liability but only for January? Or is this the same as limited tax liability ?

[PandaMunich]

Wouldn't I pay less tax income, if I would receive severance package next year in January including 1 salary, and then leave Germany and would have limited tax liablity in Germany in 2026 ? Comparing to leaving at the end 2025, after receving full yearly salary including severance, because this would put me into higher tax bracket.

You would have to calculate it through with your specific numbers.
For example, if you will go on to have a much higher salary in your new country of residence, then it would be worse for you, because of Progressionsvorbehalt.

If you only move on 31. January 2026 then you would have unlimited tax liability up to 31.01.2026 and limited tax liability afterwards.
You would still get the tax-free allowance and the Fünftelregelung (the benefit of which gets less and less the higher your income is, for high earners there is no tax saving through the Fünftelregelung).
You would have to declare your post-move gross salary for 2026 in Anlage AUS and it would raise your German income tax rate on your pre-move income.

[SpaceOne]

If you only move on 31. January 2026 then you would have unlimited tax liability up to 31.01.2026 and limited tax liability afterwards.
You would still get the tax-free allowance and the Fünftelregelung (the benefit of which gets less and less the higher your income is, for high earners there is no tax saving through the Fünftelregelung).
You would have to declare your post-move gross salary for 2026 in Anlage AUS and it would raise your German income tax rate on your pre-move income.

Hmm, I thought that the purpose of the imited liability is to declare only income in Germany and not the wordwide income.

And I assumed, because I would still be tax resident with unlimited tax liability in January with income only from Germany, I would be taxed only for that. And for the rest of the year I would then have limited liability without any German income and consequently no tax income in Germany. But if I correctly understand your reply (which I'm very grateful for), I would need to report income outside of Germany between Feb-Dec 2026 even though I would have limited tax liability?

What is then the point of limited tax liability?

More I go into this, less I know....

[SpaceOne]

Does this calculator correctly calculates Fünftel-Regelung ?

https://www.online-tools.biz/abfindung/ ... OlYSjyHhKK

And the "Weitere Einkünfte" should be gross salary or ( gross salary - social contributions ) ?

[PandaMunich]

What is then the point of limited tax liability?

People with limited tax liability do not get the Grundfreibetrag (personal tax-free allowance, 12,348€ in 2026).
Only people with unlimited tax liability get it.

You, however, will get it, because of § 2 (7) sentence 3 EStG: https://dejure.org/gesetze/EStG/2.html

• 3If there is both unlimited and limited income tax liability during a calendar year, the domestic income earned during the period of limited income tax liability must be included in an assessment for unlimited income tax liability.

In the year you move away, you are a special case.
You get the Grundfreibetrag, but this means that for taxation to be "fair" compared to someone who worked in Germany the whole year, that your tax rate has to be based on the income that you had that whole year.
The income from your new country of residence will not be taxed again, all it does is raise your German income tax rate on your German income.

[PandaMunich]

Does this calculator correctly calculates Fünftel-Regelung ?

https://www.online-tools.biz/abfindung/ ... OlYSjyHhKK

And the "Weitere Einkünfte" should be gross salary or ( gross salary - social contributions ) ?

Yes, it's correct.

You have to use both for the Abfindung and for the January salary:

• gross Abfindung/salary - health insurance on it - Pflegeversicherung on it - public pension insurance on it

[SpaceOne]

The income from your new country of residence will not be taxed again, all it does is raise your German income tax rate on your German income.

I have always seen this Progressionsvorbehalt for foreign income as some form of (hidden) double taxation and that's why I had in my subconscious it doesn't come into play in case of limited tax liability. But I guess for Finanzamt this is not even taxation at all...

You have to use both for the Abfindung and for the January salary:

• gross Abfindung/salary - health insurance on it - Pflegeversicherung on it - public pension insurance on it

Again something new. I thought there is no social contributions in Germany for normal Abfindung, which you get at the end of the work-contract.

[Nixon]

You can call it what you want.
It is a tax if I have to send more money to the Government due to something being applied in the calculation.