Move your company abroad
Move your company abroad: corporate tax, exit taxes, substance and the best locations
Relocating as a business owner is not a lifestyle decision — it is a financial investment. One-off costs (exit tax, advice, company structure, relocation) sit against annual savings. On €100,000 of annual dividends, 0 % instead of 26 % dividend tax is €26,000 a year. On €200,000 it is €52,000. The question is not whether, but where, how — and when the break-even arrives. This guide covers the legal layers, calculates exit-tax scenarios and compares the best jurisdictions on real numbers.
Last updated 9 September 2026 · Reading time approx. 13 minutes
Three layers: the company, the distribution, the person
Most guides cover one layer. The explorer calculates all three:
- Layer 1 — The company: where is it tax-resident? This determines corporate tax, local levies and substance requirements. The decisive factor is the place of effective management (where key decisions are made) — not the registered address. A letterbox company in Cyprus whose sole director makes all decisions from Germany is tax-resident in Germany.
- Layer 2 — The distribution: how is the profit distribution from the company to the owner taxed? This depends on the company's residence (withholding tax) and the owner's residence (dividend tax). Cyprus levies no withholding on dividends paid to non-Cypriots; most other EU countries do, at rates reduced by treaty.
- Layer 3 — The person: how is the director's salary taxed? Does the exit tax apply to the company shares? How long do trailing rules follow you? And — after everything — how much does life cost in the new place?
The explorer calculates all three for every city: corporate tax on the local company + dividend tax at the owner's new residence + income tax on salary + social contributions + living costs = annual disposable income.
Corporate tax worldwide: the leading locations compared
Germany combines corporate income tax (15 %), solidarity surcharge (0.825 %) and trade tax (Gewerbesteuer, roughly 14–17 % depending on municipality) for an effective combined rate of 30–33 % on company profit. That is before distribution — then 26.375 % dividend tax applies to the shareholder.
| Country / structure | Corporate tax | Local levy | Effective combined | Withholding on dividends |
|---|---|---|---|---|
| Germany (GmbH) | 15 % | 14–17 % trade tax | 30–33 % | 26.375 % to shareholder |
| Cyprus | 12.5 % | none | 12.5 % | 0 % to non-Cypriots |
| Malta (refund system) | 35 % nominal | none | ~5 % effective after refund | 0 % after refund |
| UAE (Dubai, free zone) | 0–9 % | none | 0–9 % | 0 % |
| Estonia | 0 % on retained profits | none | 22 % only on distribution | 22 % to shareholder |
| Ireland | 12.5 % (trading) | none | 12.5 % | 20 % (reduced by treaty) |
| Bulgaria | 10 % | none | 10 % | 5 % |
| Hungary | 9 % | 0–2 % local | 9–11 % | 0 % |
| Andorra | 10 % | none | 10 % | 0 % on Andorran dividends |
| Switzerland (Zug) | 11.9–20.5% (combined) | included | 11.9–20.5% | 35 % withholding (refundable) |
| Singapore | 17 % (startup reliefs) | none | 17 % | 0 % |
| Portugal | 20 % (SME relief) | none | 20 % | 28 % |
Important nuances: Malta's nominal 35 % becomes ~5 % effective through the 6/7 refund mechanism for trading income — but the structure is complex and substance requirements are high. Estonia's 0 % only applies while profits are retained; distributions are taxed at 22 %. For growing businesses that reinvest, that is very attractive; for businesses distributing profits, it equals 22 %.
How dividend taxation actually works
Total tax on one euro of company profit = corporate tax + dividend tax at shareholder level + any withholding.
Cyprus example: 12.5 % corporate → €0.875 after corporate tax → distribution to owner (now Cyprus resident, non-dom) → 0 % dividend tax → €0.875 net per €1 of profit. Effective total rate: 12.5 %.
Germany example: ~30 % combined → €0.70 after corporate tax → distribution: €0.70 × 73.625 % (after 26.375 % Abgeltungsteuer) = ~€0.515 net. Effective total: ~48.5 %.
UAE free zone example: 0 % corporate → €1.00 after corporate tax → 0 % dividend tax → €1.00 net. Provided the free-zone substance requirements are met — manageable for most service companies.
Exit tax: what it costs and when it falls away
Who is affected?
Anyone who has been unlimited-liable in Germany for at least 7 of the last 12 years and holds at least 1 % in a corporation on departure. Since 2025: fund holdings with acquisition costs above €500,000 or above 1 % of fund assets are also captured.
How much is it?
Fair market value of the shares on departure day minus acquisition costs = deemed gain. Tax: partial income method — 60 % of the deemed gain taxed at personal rate (typically 42–45 % + Soli) = effectively roughly 26–28 % of the full deemed gain.
Worked example:
- Company value: €2,000,000
- Acquisition cost: €25,000
- Deemed gain: €1,975,000
- Taxable amount (60 % partial): €1,185,000
- Tax at 45 % + Soli: ~€560,000
When does it fall away?
- Return within 7 years (extendable to 12 with credible return intent): tax lapses retrospectively on application; deferral possible against security.
- Move within EU/EEA: instalments over 7 years (on application, with security, now interest-bearing).
- Move to third country: due immediately (or instalments with interest).
- Holding below 1 %: no exit tax.
Break-even despite exit tax
€560,000 exit tax ÷ €52,750 annual dividend-tax saving (after moving to Cyprus) = ~11-year break-even. That rises quickly with higher distributions: at €200,000 of dividends the saving is ~€52,750/yr (26.375 % saved); at €300,000 it's ~€79,000/yr, break-even ~7 years. The explorer calculates the break-even for your numbers.
Substance: what "real seat" means and why it matters
The biggest tax trap in company relocation is the letterbox. A company incorporated in Cyprus, Malta or the UAE whose sole director takes all decisions in Germany has a permanent establishment or is effectively managed in Germany — and pays German tax.
What substance means in practice:
- Place of effective management: where are strategic decisions, contract approvals and key management actions made? That is the company's tax seat.
- Physical presence: a real office or substantive shared-office arrangement in the destination.
- Local director: at least one director who genuinely acts and is present in the destination. Nominee directors who take no real decisions don't count.
- Bank account, staff, infrastructure: the more complex the business, the more substance the tax authority expects.
Permanent-establishment risk at home: if the owner-director continues to work from home (meetings, negotiations, signing), Germany can assert a permanent establishment of the foreign company there — taxing the profits attributable to it in Germany.
Rule of thumb: the business needs to genuinely run from the destination. For location-independent activities (software, consulting, investment) this is feasible; for businesses with home-country customers, staff or supply chains it is more complex.
Trailing tax rules: the 10-year risk
Moving to a low-tax country (§ 2 AStG, Germany) with substantial German economic interests leaves you taxable on certain German-source income for up to 10 years — beyond normal non-resident liability.
Low-tax country: income tax more than one-third below Germany's at €77,000 of income, or preferential treatment for incoming residents. UAE (0 % income tax), Monaco, Bahamas: clearly yes. Cyprus with non-dom: treated as low-tax by German authorities, disputed. Portugal: generally not.
What is caught: income from substantial German shareholdings (> 25 %), German property, licence income with German source, German-source income above €62,000/yr.
What is not caught: foreign investment income, dividends from a Cypriot company on non-German profits, salary from genuine foreign employment.
Practical implication: moving to Dubai while keeping a 50 % stake in a German GmbH and drawing a salary from it keeps you taxable in Germany for 10 years on those earnings. The solution: restructure or sell the German shareholding before departure — which may itself trigger exit tax.
Location comparison for business owners
| Location | Corporate tax | Dividend to owner | Director salary | Note | Best for |
|---|---|---|---|---|---|
| Cyprus (Limassol) | 12.5 % | 0 % (non-dom) | 0–35 % | EU, 60-day rule, English, int. schools, infrastructure | Owners, families, investor-retirees |
| UAE (Dubai, free zone) | 0–9 % | 0 % | 0 % | Maximum saving; high living costs, no welfare state | High distributions, mobile or no children |
| Malta | ~5 % effective | 0 % after refund | 35 % (non-dom offsets) | EU, English, holding structure needed, complex | Experienced structurers |
| Bulgaria (Sofia) | 10 % | 5 % | 10 % flat | EU, cheap, growing infrastructure, limited int. schools | Cost-focused owners without school needs |
| Hungary | 9 % | 0–13 % | 15 % | EU, cheap; dividend complications | High-growth companies |
| Estonia | 0 % retained | 22 % on distribution | 20 % | EU, digital; best for reinvesting | Growing companies not distributing |
| Andorra | 10 % | 0 % (Andorran) | 0–10 % | Non-EU, small, stable, low costs | Wealthy owners without EU need |
| Switzerland (Zug) | 11.9–20.5% | Partial taxation | 22.1–45.5% | Substance; very high costs; close to home | Owners with Swiss clientele |
| Singapore | 17 % | 0 % | 0–24 % | Very high costs; strict residency | Asia-focused businesses |
Related
Dubai vs Portugal vs Cyprus: the three most popular destinations compared · 11 min read
Worked example: €80k salary + €100k dividends
Married, two children, company worth €2m, moving from Germany. Live values from the explorer:
€80k salary + €100k dividends
| Germany (Aachen) | Limassol (CY) | Dubai | Sofia (BG) | |
|---|---|---|---|---|
| Corporate tax on company profit | 0 € | 12.500 € | 450 € | 10.000 € |
| Income tax on €80k salary | 37.242 € | 17.885 € | 0 € | 8.000 € |
| Dividend tax on €100k | 26.375 € | 0 € | 0 € | 10.000 € |
| Social security / health insurance | 15.029 € | 5.218 € | 0 € | 12.000 € |
| Family living costs / yr | $57,872 | $69,333 | $94,862 | $54,019 |
| Disposable / yr | 201.354 € | 244.397 € | 279.550 € | 240.000 € |
| Savings / yr | 0 € | 43.043 € | 78.196 € | 38.646 € |
| Break-even after exit tax (approx.) | – | 13.0 yrs | 7.2 yrs | 14.5 yrs |
Automated estimate based on the stored tax rates for salary, company profit and distribution. Break-even based on a roughly €560,000 estimated exit tax (see worked example above) and the annual saving; the exact valuation of your shares needs professional tax advice.
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dont-tax.me is a data and comparison tool, not tax or legal advice. All figures are estimates based on public sources.
Frequently asked questions
Not directly as a company conversion. Cross-border conversions within the EU became easier in 2023 but remain complex. The standard route: incorporate a new entity in the destination, build the business there, wind down or sell the German company over time. Liquidation may trigger a disposal gain. Professional advice is essential.
Yes — the threshold is 1 %. At a 10 % holding, the exit tax applies to 10 % of the company's value.
Legitimate structuring options exist: gifting shares to family remaining in Germany (the tax moves with the shares), contributing shares to a holding company before departure (shifts the taxable base), partial sale before departure (establishes a new higher acquisition cost). All are complex, fact-specific and require qualified advice. dont-tax.me answers "where" — your adviser handles the structure.
Yes, if they are the sole director taking decisions. Most owners become director of the new entity and relocate. With multiple directors, at least the one actually running the business must be genuinely present abroad.
B2B services to German companies: reverse charge — the German recipient accounts for VAT. B2C to German consumers: VAT of the company's country of establishment via the OSS scheme. For B2B, generally straightforward.