How to Deregister Tax Residency in Germany Before Moving to Bulgaria

Q: Does the German exit tax (Wegzugsbesteuerung) apply to me?

The exit tax under Section 6 AStG applies if you hold 1% or more of a corporation (domestic or foreign) and have been subject to unlimited tax liability in Germany for at least 7 of the past 12 years. If you own no significant corporate shareholdings, Wegzugsbesteuerung does not apply. Since 2022, the old unlimited interest-free EU deferral has been abolished. Instead, the tax can be paid in seven equal annual instalments.

Q: How do I become a Bulgarian tax resident after leaving Germany?

Apply for a residence certificate at the Bulgarian Migration Directorate, obtain your LNCH (personal identification number), register a business or freelancer activity, and spend 183 or more days in Bulgaria in the calendar year. After meeting the 183-day threshold, apply for a Tax Residency Certificate (TRC) from the Bulgarian National Revenue Agency (NRA). Bulgaria taxes worldwide income at a flat 10%.

Q: What is the combined corporate and dividend tax rate in Bulgaria?

The combined rate is 15%: 10% corporate income tax on company profits plus 5% dividend withholding tax when distributing after-tax profits to individual shareholders. On EUR 100,000 of company revenue, that means EUR 10,000 corporate tax plus EUR 4,500 dividend tax, leaving EUR 85,500 net — compared to approximately EUR 55,000-60,000 net in Germany.

Moving from Germany to Bulgaria means going from one of Europe's highest tax jurisdictions to its lowest. Germany's top marginal income tax rate reaches 45% (plus solidarity surcharge). Bulgaria charges a flat 10% on personal income and 10% corporate tax, with a 5% dividend withholding tax — a combined rate of just 15% for company owners. But the tax savings only materialize if you properly sever your German tax residency. Get it wrong, and you risk double taxation, penalties, or years of disputes with the Finanzamt.

This guide walks you through every step: the Abmeldung at the Einwohnermeldeamt, notifying your Finanzamt, understanding extended tax liability (beschränkte Steuerpflicht), dealing with exit tax (Wegzugsbesteuerung), and establishing your new tax residency in Bulgaria. It is written by a Bulgarian law firm that has helped dozens of German nationals relocate to Bulgaria.

45%

Germany top tax rate

10%

Bulgaria flat tax rate

15%

Bulgaria CIT + dividend

Steps to deregister

Step 1 — Abmeldung (Address Deregistration)

The first and most critical step is the Abmeldung — the official deregistration of your address at your local Einwohnermeldeamt (residents' registration office), also known as the Bürgeramt in some cities. Germany's Federal Registration Act (Bundesmeldegesetz, BMG) requires every person who permanently leaves Germany to deregister.

Timing

You can deregister no earlier than one week before your departure and must do so no later than two weeks after leaving. Missing this deadline can result in a fine of up to EUR 1,000. In practice, we recommend deregistering in person on one of your last days in Germany, so you receive the confirmation document immediately.

How to do it

In person: Visit your local Einwohnermeldeamt with your ID or passport and a completed Abmeldeformular (deregistration form), which you can download from your municipality's website in advance.
By mail: Send the completed form with a copy of your ID to your registration office. Useful if you have already left Germany.
Through a representative: A third party can deregister on your behalf with a signed power of attorney (Vollmacht) and a copy of your passport.

The Abmeldebestätigung

Upon successful deregistration, you receive the Abmeldebestätigung (deregistration confirmation). Keep this document — you will need it for your Finanzamt, for cancelling health insurance, the GEZ broadcasting fee, and as proof for Bulgarian authorities that you have left Germany. It is the single most important document in this entire process.

Warning: Without the Abmeldung, Germany continues to treat you as a resident for tax purposes, health insurance billing, and GEZ fees. We have seen clients who moved to Bulgaria but forgot to deregister — they received tax assessments based on estimated income for years they were not even in Germany.

Step 2 — Notify Your Finanzamt

The Abmeldung at the Einwohnermeldeamt automatically triggers a notification to your local Finanzamt (tax office) in most cases. However, do not rely on this alone. You should independently inform your Finanzamt of your departure.

What to do

Write a letter to your Finanzamt stating your departure date, new address in Bulgaria, and that you are ending your unlimited tax liability (unbeschränkte Steuerpflicht) in Germany. Include your tax identification number (Steuer-ID) and your Steuernummer.
Provide your foreign bank details so any tax refund can be transferred to your new account.
File your final Steuererklärung (income tax return) for the year of departure. This covers all income earned during the period you were still a German tax resident. The filing deadline follows standard rules: July 31 of the following year if self-filed, or the end of February of the second year if filed through a Steuerberater (tax advisor).

Tip: Your final German tax return will cover a partial year — from January 1 to your departure date. Germany applies the Progressionsvorbehalt (progression clause), meaning your worldwide income for the full year may be used to determine the applicable tax rate on your German-period income, even though only the German-period income is taxed. A German Steuerberater can optimize this for you.

Appointing an authorized recipient

The Finanzamt is entitled to require you to appoint an authorized recipient in Germany (Empfangsbevollmächtigter) — someone who can receive official mail on your behalf. This is especially important if you expect a tax assessment or refund. Your German Steuerberater can serve this role.

Step 3 — Extended Tax Liability (Beschränkte Steuerpflicht)

After you deregister and leave Germany, your tax status changes from unlimited tax liability (unbeschränkte Steuerpflicht) to limited tax liability (beschränkte Steuerpflicht). This means Germany no longer taxes your worldwide income — but it retains taxing rights on specific categories of German-source income.

What Germany can still tax

Employment income for work physically performed in Germany
Business profits attributable to a German permanent establishment (Betriebsstätte)
Rental income from German real estate
Dividends, interest, and royalties from German sources (subject to withholding tax)
Capital gains from the sale of German real estate (within 10 years of acquisition)
Certain pensions from German pension funds and the state pension system

Extended limited tax liability: German citizens who have been subject to unlimited tax liability for at least 5 of the past 10 years before leaving may face extended limited tax liability (erweiterte beschränkte Steuerpflicht) for up to 10 years after departure. However, this only applies if you move to a low-tax country and still have significant economic interests in Germany. Since Bulgaria is an EU member state with a functioning tax system and a double tax treaty with Germany, this provision is rarely applied to moves to Bulgaria — but it is worth discussing with your German tax advisor.

Step 4 — Wegzugsbesteuerung (Exit Tax)

Germany's exit tax under §6 AStG (Foreign Tax Act) is one of the most aggressive exit tax regimes in Europe. It treats your departure from Germany as a deemed sale of qualifying corporate shareholdings — even though you have not actually sold anything.

Who is affected?

The Wegzugsbesteuerung applies if all three conditions are met:

You hold at least 1% of a corporation (German or foreign) — directly or indirectly.
You have been subject to unlimited tax liability in Germany for at least 7 of the past 12 years.
You are moving abroad and ending your unlimited tax liability.

If you are a salaried employee with no corporate shareholdings, or you own less than 1% of any corporation, the exit tax does not apply to you. You can skip this section.

How it works

On the day you leave Germany, the Finanzamt calculates the difference between the fair market value of your qualifying shares and their acquisition cost. This unrealized gain is taxed at your personal income tax rate — which can be up to 45% plus solidarity surcharge.

Example: You hold 50% of a German GmbH that you founded with EUR 12,500 in share capital. The company is now worth EUR 500,000. Your deemed gain is EUR 237,500 (50% of EUR 500,000 minus EUR 12,500). At a 42% marginal rate, the exit tax would be approximately EUR 99,750 — payable without having sold a single share.

EU deferral — important changes since 2022

Before 2022, relocating within the EU or EEA meant you could defer the exit tax indefinitely and interest-free. This unlimited deferral has been abolished. Under the current rules (following Germany's implementation of the EU Anti-Tax Avoidance Directive), if you move to another EU/EEA country such as Bulgaria:

The tax is due immediately upon departure.
However, you may apply for payment in seven equal annual instalments under §6(4) AStG.
The Finanzamt typically requires collateral — such as a bank guarantee or pledge of the shares — to grant instalment payments.
If you later return to Germany within the seven-year period, the remaining exit tax can be reversed.
If you actually sell the shares while abroad, any remaining instalments become due immediately.

Since 2025, the exit tax has also been extended to shares in investment funds (via amendments to the InvStG) where the taxpayer held at least 1% of the fund or the acquisition cost exceeded EUR 500,000.

Planning tip: If you hold qualifying shareholdings, plan your exit well in advance. Restructuring options — such as contributing shares to a holding company, reducing your stake below 1%, or timing the move to minimize unrealized gains — should be evaluated with a German tax advisor at least 12 months before departure. Talk to us and we will coordinate with your German Steuerberater.

Step 5 — Register Tax Residency in Bulgaria

Once you have completed your German deregistration, the next task is establishing your new tax home in Bulgaria. Bulgaria has a flat 10% personal income tax rate and a well-defined residency framework.

The process

Obtain your EU residence certificate. As a German (EU) citizen, apply at the Migration Directorate in Bulgaria. Bring your passport, rental agreement, health insurance proof, and financial proof. Processing: 3 business days (fast-track). The certificate is valid for 5 years. You will receive your LNCH (personal identification number for foreigners) as part of this process. Full guide here.
Secure accommodation proof. You need a rental agreement with a notarized landlord declaration (or property deed if you own). This is part of your Migration Directorate application. Detailed walkthrough.
Register a business or freelancer activity. Freelancer registration at the NRA takes 1 day. EOOD (single-member company) registration takes 3 business days via the Trade Registry. We prepare all documents and file on your behalf via Power of Attorney.
Open a Bulgarian bank account. Required for receiving income and paying taxes. Since January 2026, all accounts are in euros — no currency conversion from your German clients needed.
Spend 183+ days in Bulgaria. The 183-day rule is the strongest basis for tax residency. Both arrival and departure days count. Keep records: utility bills, bank statements, boarding passes.
Apply for the Tax Residency Certificate (TRC). After establishing sufficient presence, submit your application to the NRA (National Revenue Agency). Processing: 7–30 days. The TRC is the document you present to the German Finanzamt to prove your Bulgarian tax residency under the double tax treaty.

About the LNCH: Your LNCH (Lichен Nomer na Chuzhdenets) is issued by the Migration Directorate, not by any municipal office. It serves as your tax identification number in Bulgaria and appears on all NRA correspondence, tax returns, and social security filings. You cannot register a business or file taxes without it.

The Germany-Bulgaria Double Tax Treaty

The Germany-Bulgaria Double Tax Treaty (signed 2010, based on the OECD Model Convention) prevents double taxation and provides tie-breaker rules for residency conflicts.

Key articles

Income type	Taxing rights	Treaty article
Employment income	Taxed where work is physically performed	Art. 15
Business profits	Taxed only in country of residence, unless a permanent establishment exists in the other country	Art. 7
Dividends	Residence country primary; source country may withhold up to 5% (qualifying) or 15%	Art. 10
Interest	Residence country primary; source country may withhold up to 5%	Art. 11
Royalties	Taxed only in country of residence	Art. 12
Real estate income	Taxed in the country where the property is located	Art. 6
Capital gains (real estate)	Taxed in the country where the property is located	Art. 13
Pensions	Generally taxed only in the country of residence	Art. 18

Tie-breaker rules (Article 4)

If both Germany and Bulgaria claim you as a tax resident in the same year (common in the year of transition), the treaty resolves the conflict using this hierarchy:

Permanent home: Where do you have a permanent home available? If only in Bulgaria — Bulgaria wins.
Centre of vital interests: Where are your personal and economic ties closer? Business registration, family, bank accounts.
Habitual abode: Where do you spend more time?
Nationality: If all else fails, your citizenship determines it.

This is why the Abmeldung and giving up your German apartment are so critical — they eliminate Germany's strongest argument under the permanent home test.

Timeline & Checklist

Here is a month-by-month checklist for a clean transition from Germany to Bulgaria:

When	Action	Details
6–12 months before	Plan with tax advisors	Assess exit tax exposure, social security implications, and optimal departure date. Engage both a German Steuerberater and a Bulgarian law firm.
3 months before	Secure Bulgarian housing	Sign a rental agreement. This is required for your residence certificate application.
2 months before	Begin Bulgarian setup	Power of Attorney to your Bulgarian lawyers. We start preparing residence card documents, business registration, and bank account applications.
1–2 weeks before	Abmeldung	Deregister at your Einwohnermeldeamt. Collect your Abmeldebestätigung.
Same week	Cancel German obligations	Health insurance, GEZ, liability insurance, gym memberships, subscriptions tied to your German address.
Departure day	Move to Bulgaria	Your German unlimited tax liability ends on the day you leave.
Week 1 in Bulgaria	Residence certificate + LNCH	Apply at Migration Directorate. Fast-track: 3 business days.
Week 2	Accommodation + landlord declaration	Secure rental agreement and notarized landlord declaration for your Migration Directorate file.
Week 2–3	Business registration	Register as freelancer (1 day) or incorporate EOOD (3 days).
Week 3–4	Bank account	Open a Bulgarian bank account in euros.
Month 2	Notify German Finanzamt	Letter with new address, Abmeldebestätigung copy, foreign bank details.
By July 31 next year	Final German tax return	File your Steuererklärung for the departure year.
After 183 days	Apply for Bulgarian TRC	Submit application to NRA. Processing: 7–30 days.

Common Mistakes

After assisting numerous German nationals with this transition, these are the errors we see most frequently:

Keeping a German apartment. This is the single biggest mistake. If you retain a dwelling in Germany that is available for your use, the Finanzamt can argue you still have a Wohnsitz (domicile) and therefore remain subject to unlimited tax liability — regardless of your Abmeldung. Terminate your lease or sell/rent out the property before you leave.
Not cancelling German health insurance promptly. German statutory health insurance (gesetzliche Krankenversicherung) does not automatically end when you deregister. You must actively cancel. Without the Abmeldebestätigung, your insurer may continue billing you.
Forgetting about Kindergeld. If you receive German child benefit (Kindergeld), it generally stops when you move abroad and no longer work in Germany. Failing to notify the Familienkasse can result in overpayment claims years later. Notify them proactively.
Not closing or restructuring German bank accounts. Active German accounts can be used as evidence of ongoing economic ties. If you keep them, inform both the bank and your Finanzamt of your non-resident status. Interest income from German banks is subject to withholding tax under limited tax liability.
Ignoring the transition year. In the year you move, you may be tax resident in both countries for different parts of the year. Germany taxes your income from January to your departure date; Bulgaria taxes your worldwide income from your arrival onward (if you meet the 183-day rule that year). The double tax treaty resolves overlaps, but you must file in both countries.
Underestimating the exit tax. If you hold qualifying shareholdings, the Wegzugsbesteuerung can generate a six- or seven-figure tax bill based on unrealized gains. Plan restructuring at least 12 months in advance.
Not gathering enough proof of Bulgarian presence. The Bulgarian NRA may request documentation of your 183 days. Keep everything: boarding passes, bank transaction locations, utility bills, medical receipts, gym check-ins. A simple spreadsheet tracking your daily location is invaluable.

Get Your Personalized Deregistration Roadmap

Every move is different — your shareholdings, your income sources, your family situation. Tell us about your case and we will map out the exact steps, timeline, and costs.

Frequently Asked Questions

How long does the Abmeldung take? +

The Abmeldung itself is processed on the spot at the Einwohnermeldeamt and takes about 15 minutes. You receive the Abmeldebestätigung immediately. You can deregister no earlier than one week before your departure and must do so no later than two weeks after leaving Germany. Missing the deadline can result in a fine of up to EUR 1,000.

Do I need to file a final German tax return after leaving? +

Yes. You must file a final Steuererklärung for the year of departure covering income earned during the period of unlimited tax liability. Deadlines are the same as regular returns — July 31 of the following year if self-filed, or February 28 of the second year via a Steuerberater. Include your new Bulgarian address on the return.

Will Germany still tax me after I move to Bulgaria? +

Only on German-source income. After deregistration, you switch from unlimited tax liability (unbeschränkte Steuerpflicht) to limited tax liability (beschränkte Steuerpflicht). Germany retains taxing rights on rental income from German property, employment income for work performed in Germany, business profits from a German permanent establishment, and certain pensions. The Germany-Bulgaria double tax treaty prevents double taxation on these items.

Does the German exit tax (Wegzugsbesteuerung) apply to me? +

The exit tax under §6 AStG applies if you hold 1% or more of a corporation (domestic or foreign) and have been subject to unlimited tax liability in Germany for at least 7 of the past 12 years. If you own no significant corporate shareholdings, the Wegzugsbesteuerung does not apply. Since 2022, the old unlimited interest-free EU deferral has been abolished — the tax can now be paid in seven equal annual instalments.

Can I do the Abmeldung from abroad? +

Yes. You can deregister by mail or through an authorized representative. Send the completed Abmeldung form along with a copy of your passport or ID to your local Einwohnermeldeamt. A representative will need a signed power of attorney and a copy of your ID. Some municipalities also accept online deregistration.

How do I become a Bulgarian tax resident after leaving Germany? +

Apply for a residence certificate at the Bulgarian Migration Directorate, obtain your LNCH (personal identification number for foreigners), register a business or freelancer activity, and spend 183 or more days in Bulgaria in the calendar year. After meeting the 183-day threshold, apply for a Tax Residency Certificate (TRC) from the Bulgarian National Revenue Agency (NRA). Bulgaria taxes worldwide income at a flat 10%. Read our complete guide to Bulgarian tax residency.

What is the combined corporate and dividend tax rate in Bulgaria? +

The combined rate is 15%: 10% corporate income tax on company profits plus 5% dividend withholding tax when distributing after-tax profits to individual shareholders. On EUR 100,000 of company revenue, that means EUR 10,000 corporate tax plus EUR 4,500 dividend tax, leaving EUR 85,500 net — compared to approximately EUR 55,000–60,000 net in Germany.

Should I close my German bank accounts before moving? +

You do not legally need to, but keeping German bank accounts active after deregistration can create complications. German banks may restrict non-resident accounts or charge different fees. More importantly, active German bank accounts can be used by the Finanzamt as evidence of ongoing economic ties. If you retain German accounts, ensure your Finanzamt is aware you are a non-resident and that interest income is reported correctly under limited tax liability.

Disclaimer: This article provides general information about German tax deregistration and Bulgarian tax residency and does not constitute legal or tax advice. Tax residency determinations depend on individual circumstances. For German tax matters, consult a qualified German Steuerberater. For Bulgarian setup, consult our team. Last updated: April 6, 2026.