Few topics get founders as fired up as emigrating. Dubai, Cyprus, Portugal, Switzerland. Over the years I have looked at this soberly, talked to people who did it and to people who came back. Here is my honest take on who the move really pays off for, and who it does not.
First, because it matters: this is not tax or legal advice, it is my personal view from a lot of conversations. For your specific situation you go to a good tax advisor and lawyer. The details here decide over a great deal of money, and they change faster than most guides on the internet can keep up with.
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The thinking error around saving tax
Most people only run the tax rate. They see low percentages in the target country and feel rich already. What gets lost in the process: exit taxation. If you hold a substantial stake in a corporation, meaning at least one percent, and you leave Germany, the tax office treats you as if you had sold your shares and taxes the unrealized gains. That can trigger a hefty bill before a single euro has actually changed hands. It is set out in Section 6 of the Foreign Tax Act, which since the 2022 reform bites far harder than it used to.
On top of that come relocation hurdles that are easy to underestimate. Where is your actual center of life? Where does your company's management sit? A mailbox is not enough, and the tax authorities now look very closely. Anyone who does not separate this cleanly risks ending up liable to tax in both countries, which is the opposite of what they wanted.
The popular destinations, viewed soberly
Dubai is sold as a zero-tax country, but since 2023 it has had a corporate tax on business profits. Portugal's famous NHR program for newcomers has expired in its old form. Switzerland is expensive but stable, and its lump-sum taxation is tied to strict conditions. Cyprus lures people with non-dom status. What they all share is this: the marketing promises are louder than the reality, and the rules keep changing. What held true last year can be outdated this year.
My point is not that it never pays off. My point is that almost everyone does only half the math. They see the tax rate, but not the exit tax, not the substance requirements, not the cost of living, not the effort of building a network from scratch.
Who it pays off for, and who it does not
From my experience: it tends to pay off for people with a very high, predictable income or a big exit on the horizon, who are ready to truly and permanently move their center of life. Family comes along, friends stay behind, network built anew. That is a life decision, not a tax optimization.
For most founders I know, it does not pay off. Their network, their customers, their peace of mind are here. I am a born Hamburger and a family man myself, and in the end more counts for me than the tax rate. Why that is, I described in the piece on handshake mentality. But I understand everyone who does the math.
What I recommend instead
Before you even think about moving, pick up the obvious wins first. The right legal form, a clean salary and distribution structure, investment deductions, the funding that fits. For many people there is more money lying in the street there than they would ever save by leaving, and all of it without packing a suitcase. I put together an overview of public funding pots in the post on funding programs for founders.
And if you really do want to go abroad, then talk to someone who has run the numbers independently before you follow your gut. Not the Instagram coach who happens to sit in Dubai himself, but a specialist tax lawyer who also names the risks.
Frequently Asked Questions
What exactly is exit taxation?
If you hold at least one percent in a corporation and move your residence abroad, you are treated for tax purposes as if you had sold the shares. Tax falls due on the increase in value, the unrealized gains, even though no sale has taken place. The legal basis is Section 6 of the Foreign Tax Act.
Is a residence abroad enough to save tax?
No. What matters is where your actual center of life lies and where your company is run from. A mailbox or a holiday apartment is not enough. Anyone who does not do this cleanly stays liable to tax in Germany and may end up paying twice.
Who does emigrating as an entrepreneur really pay off for?
Most of all for people with a very high, predictable income or a big exit on the horizon, who are ready to move their center of life permanently and completely. For most founders, the downsides of losing their network and the effort involved outweigh the pure tax saving.
Warm regards,
Dennis Weidner
Note: AI tools supported me in writing this article, and some images were edited with AI. I stand behind its content and every statement with my name.
