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Tax Residency · Germany → UAE

Germany and the UAE: What the End of the Tax Treaty Means for Expats

The former double taxation agreement between Germany and the UAE expired at the end of 2021 and is no longer in force. This guide explains, in general educational terms, what that change may mean for German expats — and why living in the UAE does not by itself resolve questions about German tax residency.

Executive summary

The double taxation agreement that once governed tax matters between Germany and the United Arab Emirates expired at the end of 2021 and is no longer in force. For German founders, executives and self-employed professionals living in or moving to the UAE, this is a meaningful change of context — but it is often misunderstood.

The end of the treaty does not, by itself, change where a person is tax resident, what tax they owe, or whether their move has been recognised by any authority. German tax residency continues to be determined by German domestic law, and UAE tax residency by UAE domestic law. This article explains what the change may mean in general terms and highlights the points where individual professional review may be appropriate. It does not provide tax advice or any conclusion about your personal situation.

The key point: the former treaty is no longer in force

The central fact of this topic is straightforward: the former double taxation agreement between Germany and the UAE expired at the end of 2021 and is no longer in force. The agreement contained a renewal clause requiring both countries to mutually notify each other by 30 June 2021 if they wished to extend it for a further ten years. Germany informed the UAE on 14 June 2021 that it did not intend to extend, and the agreement lapsed effective 31 December 2021. Separate, narrower agreements on tax-information exchange between the two countries remain in force and are not affected by this.

This means questions that a treaty might previously have helped to allocate — such as which country may tax a particular type of income, or how a residency conflict between the two countries would be resolved — now fall to be considered under each country's domestic law on its own terms. That change of framework is the reason the topic deserves careful, individual attention rather than assumptions carried over from the treaty era.

What a double taxation treaty normally does

A double taxation agreement is a treaty between two countries designed to reduce the risk that the same income is taxed twice. In general terms, such agreements can allocate taxing rights between the two states, provide tie-breaker rules where a person might be considered resident in both countries, and set out mechanisms to relieve double taxation.

Importantly, a treaty operates on top of each country's domestic law. It does not usually decide, on its own, whether a person is resident under national rules; instead it can influence how competing residency claims or overlapping taxing rights are handled. Understanding this distinction helps explain why the absence of a treaty changes the framework without automatically changing any individual's underlying domestic status.

What the treaty ending does not mean

It is easy to read too much into the end of the treaty. The expiry does not, by itself, mean that a person has ceased to be tax resident in Germany, has become tax resident in the UAE, or no longer has any German tax obligations. None of those conclusions follow automatically from the treaty ending.

• It does not automatically end anyone's German tax residency — that continues to depend on German domestic law and the individual's facts.
• It does not automatically create UAE tax residency — that depends on UAE domestic law and the individual's circumstances.
• It does not, by itself, remove or create any specific tax liability for a given person.
• It does not change the underlying facts of where a person lives, works, and maintains their ties.

Why UAE residence does not automatically end German tax residency

Holding a UAE residence visa and spending time in Dubai does not by itself determine whether a person remains tax resident in Germany. Under German domestic law, tax residency generally turns on concepts such as having a residence (Wohnsitz) available in Germany or a habitual abode (gewöhnlicher Aufenthalt) there. These concepts look at the actual circumstances rather than at a single day count.

Because of this, a person can obtain UAE residence and still, depending on the facts, be treated as tax resident in Germany — for example if a home remains available to them there. Whether that is the case in any individual situation depends on the details and may require individual review by a qualified adviser. A common misunderstanding is that spending 183 days abroad automatically settles the question; day counts can be relevant, but they do not by themselves determine German tax residency.

The role of a German home or available accommodation

One factor that frequently matters under German domestic law is whether a home or accommodation remains available to the person in Germany. Keeping a property, a rented flat, or even continued practical access to accommodation can be relevant to whether a residence is considered to exist there. The question is generally about availability and use in fact, not merely about formal registration.

This is one reason why a move can be less clean-cut than it appears. Retaining a home in Germany does not automatically mean a person is still tax resident, but it can be a relevant factor and may indicate an elevated need for clarification. How much weight it carries depends on the overall picture and should be reviewed by a qualified adviser rather than assumed either way.

Family, personal and economic ties

Family location and personal ties may be relevant facts in a broader assessment, but they do not by themselves determine tax residency. Under German domestic law, the relevant question is not "where does the family live" in the abstract — it is whether the specific facts show a home in Germany is still actually kept available and used for residence purposes (the §8 AO test described above). Where a spouse or children continue living in a home the person could return to, German courts have treated that as one fact among several supporting the conclusion that the home is still "kept and used" — but this is a fact-based finding on the actual circumstances, not an automatic rule that a family remaining in Germany creates or continues a Wohnsitz.

• Family ties: where a partner or dependent children are based can be one relevant fact, but German courts have confirmed that a domestic home can still be given up — even while family continues living there — where the facts show the stay abroad was intended to last more than a year and any return visits are short.
• Personal ties: memberships and social connections are not a separate statutory test; they can, at most, support or undercut a conclusion already suggested by the accommodation and presence facts above.
• Economic ties: for founders, managing directors and shareholders, where a business is actually managed raises separate questions — covered in the next section — rather than being a personal-ties factor.

It is important not to import a different concept here: the "centre of vital interests" idea comes from double-taxation treaties, where it functions as a tie-breaker between two countries that already both claim a person as resident. With the former Germany–UAE treaty no longer in force, that specific tie-breaker mechanism does not apply between the two countries. Family location outside the UAE does not, by itself, prevent someone from meeting the UAE's own domestic residency tests (described later in this article), and family remaining in Germany does not, by itself, mean German domestic residency continues — both questions turn on the specific domestic tests of each country, applied to the actual facts, not on a single ties-based rule.

Founders, managing directors and company shareholders

People who own or run companies often face additional layers of complexity. Holding shares in a company, acting as a managing director, or being closely involved in where a business is effectively managed can each raise questions that go beyond personal residency alone. Where a company is managed from, and where its decisions are effectively made, can be relevant to how the company itself is treated.

For a German founder relocating to the UAE, this means the analysis is rarely just about personal day counts. The role held in a company, the ownership structure, and the practical location of management can all interact with personal residency questions. These are precisely the situations where individual professional review is most likely to be appropriate, because the outcome depends heavily on the specific structure and facts.

Possible exit-tax exposure

German law contains exit taxation rules (Wegzugsbesteuerung, AStG §6) that can apply to individuals who hold a qualifying shareholding (broadly, 1% or more in a company, by reference to §17 EStG) and who were subject to unlimited German tax liability for at least seven of the twelve years before the triggering event — most commonly, giving up the German home or habitual abode that made them liable in the first place. Where these rules apply, they treat the departure as if the shares had been sold at fair market value, which may crystallise a tax charge on unrealised gains even though no actual sale has taken place.

Whether these rules are relevant to a particular person depends on the size and nature of their shareholding, how long they were liable to German tax, and their specific circumstances. A move to the UAE could, depending on the facts, fall within the scope of these rules, or it might not. Because the consequences can be significant and highly fact-dependent, potential exit-tax exposure is an area that should be reviewed by a qualified adviser well before any relocation is finalised. This article does not state whether any exit tax is or is not due in your case.

UAE tax residency and Tax Residency Certificates

On the UAE side, tax residency is determined under UAE domestic law (Cabinet Decision No. 85 of 2022), which sets out three ways a natural person can be treated as UAE tax resident: having their usual or primary place of residence and centre of financial and personal interests in the UAE; being physically present in the UAE for 183 days or more within a rolling 12-month period; or being present for 90 days or more within a rolling 12-month period while also being a UAE national, holding a valid UAE residence permit, or holding the nationality of a GCC state, and having either a permanent place of residence or employment or business in the UAE. A person who meets one of these tests may apply for a UAE Tax Residency Certificate, a document issued by the Federal Tax Authority that can be used in certain contexts to evidence UAE tax residency.

It is important not to over-read what such a certificate does. A UAE Tax Residency Certificate reflects a position under UAE rules; it does not by itself decide a person's status under German law, and it does not override German domestic rules. With the former treaty no longer in force, there is no longer a treaty tie-breaker to reconcile competing residency positions, which is one reason a person could, depending on the facts, face questions from more than one country at once. How a certificate is best used in any individual case should be reviewed by a qualified adviser.

Documentation expats should retain

Whatever the eventual analysis, keeping clear and consistent records can help a person and their adviser understand and, where appropriate, evidence their situation. Good documentation is not a substitute for professional review, but it can make that review more straightforward and reduce the risk of gaps if questions arise later.

• Evidence of the UAE move: residence visa, Emirates ID and tenancy or accommodation records.
• Records relating to any German home: whether it was kept, let, sold, or given up, and the relevant dates.
• A record of time spent in each country, such as a travel log with supporting flight and travel documents.
• Registration and de-registration records, including the German municipal de-registration (Abmeldung) where applicable.
• Documents relating to companies, shareholdings and roles held, and where relevant business decisions are made.
• Correspondence and certificates, including any UAE Tax Residency Certificate and related applications.

Common misconceptions

• "There is no treaty, so German tax no longer applies to me." Domestic law continues to operate regardless of whether a treaty exists.
• "I spend fewer than 183 days in Germany, so I am definitely not German tax resident." Day counts can be relevant but do not by themselves determine German tax residency.
• "I have a UAE Tax Residency Certificate, so Germany can no longer treat me as resident." A certificate reflects a UAE position and does not override German domestic law.
• "Moving to Dubai automatically ends all my German obligations." Whether and when obligations change depends on the individual facts and may require individual review.
• "Exit tax never applies if I do not sell anything." Exit taxation rules can, in certain cases, apply to a departure even without an actual sale.

When professional review is appropriate

Because so much depends on the specific facts, professional review is often the sensible next step rather than an optional extra. Situations that may indicate an elevated clarification need include keeping a home available in Germany, having family remaining there, holding shares in or managing a company, or having significant or complex economic ties across both countries.

A suitably qualified tax or legal adviser can assess the full picture, apply the current rules of each country to the actual facts, and help a person understand their position and options. Educational material like this article can help frame the questions to ask, but it cannot replace that individual review — and it does not attempt to reach any conclusion about a specific person's circumstances.

ExpatDon Tax Residency Evidence & Clarification Check

Our free, educational Tax Residency Evidence & Clarification Check helps you identify which facts, evidence and topics in your Germany–UAE situation may be worth clarifying. It does not determine your tax residence, your tax liability, or provide advice — it helps you organise the questions worth reviewing.

FAQ

Sources

Every source below must be verified against an official, current publication before this article moves out of draft status.

This article provides general educational information about tax residency concepts. It is not tax or legal advice and does not account for your individual circumstances. Rules referenced may change. Always confirm current requirements with a qualified adviser before making decisions.