German Exit Tax: What To Do Before Your First Funding Round - Oliver Eidel<br>1% rule and 2022 changes.">
Oliver Eidel ·<br>July 08, 2026
German Exit Tax: What To Do Before Your First Funding Round
Germany's Exit Tax
I recently moved from Germany to Thailand. In the years leading up to the move, I had the questionable pleasure of researching solutions to Germany's exit tax.
I proceeded to read a few books and talk to 10+ tax advisors specialized in this topic. Paid calls, of course - everyone in this area seems to be happy to take your money, as we will see further below.
I ended up solving my exit tax situation. I also went ahead and mapped out all available solutions and published them here for free to democratize this whole thing a bit. You know, um, freedom of movement and so on? I thought it'd be good to help help other founders leave Germany, too, after our politicians seem to have re-created a new "Berlin Wall of Exit Tax" here.
And no, not everyone leaving Germany is an evil tax evader. Life is not about optimizing taxes! Many people move due to their partners, family, better weather, or simply in search of a new adventure in another country.
All my written-up exit tax solutions are here if you're interested.
But what I'd like to write about here is the #1 question which people have asked me in the meantime:<br>How to set up a company in Germany without getting locked into the country?
So, pausing here for a short moment, it's completely insane that even asking this sort of question has become normal nowadays. But, then again, German politics are working hard on recreating a real-life version of "Atlas Shrugged" in the country, so here we are.
A quick collection of facts and observations:
The German exit tax applies to you if you've been a German resident for a certain number of years and you own >1% in a limited-liability company (foreign companies included!).
Historically, the German exit tax has been made more restrictive with every change, most recently in 2022. Until then, there was a small "escape hatch" of moving to another EU country and only paying the exit tax when you actually sold your company, which was somewhat reasonable. This is no longer possible, so the exit tax always applies as soon as you leave Germany.
The company valuation and therefore exit tax calculation can be very high, especially for VC-funded startups. This leads to the real problem that founders, who might not even be paying themselves a salary, are faced with an insurmountable exit tax sum which effectively forces them to stay in the country.
Okay. So you're about to raise funding for your startup, you're in Germany, and you're thinking about the exit tax. Let's think this through.
An example situation first!
Example #1: VC Founder Dude Who Can't Leave
A Founder Dude has founded a company in Germany (a GmbH). No real revenue yet as he's just prototyping things. But now he gets VC investment at, let's say, a post-money valuation of €2M.
One year later, the Founder Dude wants to move to the US to work on the US expansion of his startup. It turns out that the exit tax is ~€600k (30% of €2M). The Founder Dude hasn't paid himself any salary so far, so he doesn't have the cash to pay for this.
The Founder Dude is forced to stay in Germany.
As an adjacent side note, this shows that the German exit tax was actually targeted towards "wealthy German owners of stable profitable family businesses who move to Switzerland for one year to sell their business without paying capital gains tax". For these people, arguably, the current exit tax is a somewhat workable solution (albeit with a flavor of craziness).
Still, for these people, paying 30% tax on their business valuation is possible because the business is usually profitable and stable, and the founders are often wealthy (as in liquid wealth).
For startups with VC investment, this is absolutely not the case:
Founders are usually not wealthy : Most of their net worth is tied up in their startup and therefore illiquid; their actual liquid wealth might be low or negative (no salary etc.).
Investment-driven startups are usually not profitable : Founders usually are not paying themselves a salary in the beginning, so there's no realistic way they can pay the tax.
Investment-driven startups are usually not stable : After raising millions in year 1, the startup might be worth €0 in year 5.
The last point is worth highlighting. The German exit tax is based on your company's valuation at the time of your departure from Germany. This by itself presents an opportunity for crazy things to happen.
Example #2: VC Founder Dude Who Goes Bankrupt
This is a variation of Example #1:
A Founder Dude has founded a company in Germany (a GmbH), gotten VC investment at €2M post-money valuation, and decides to move to the US while agreeing to pay the €600k German exit tax.
One year later, the company fails and goes bankrupt, it is now worth €0.
The Founder Dude still owes...