Undeclared foreign income from your time in Germany: late return and voluntary disclosure (Selbstanzeige), also for heirs

Do I have to declare foreign income in Germany if it has already been taxed abroad?

Yes, if you have unlimited tax liability in Germany, which means that you have a residence (Wohnsitz) or your habitual abode (gewöhnlicher Aufenthalt) here (§ 1(1) EStG, Income Tax Act). A continuous stay of more than six months always counts as habitual abode, from the very first day, except where the stay is exclusively for visits, recreation, health cures or similar private purposes and lasts no more than one year (§ 9 AO, Fiscal Code). All income you earn during this period is then subject to German income tax (§ 2(1) EStG).

If you have neither a residence nor your habitual abode in Germany, you are instead generally subject to limited tax liability (beschränkte Steuerpflicht), which covers only German-source income within the meaning of § 49 EStG (§ 1(4) EStG).

When you have to file a return under unlimited tax liability is governed by § 25(3) EStG and § 56 EStDV, the Income Tax Implementing Ordinance:

• Without wages subject to wage tax withholding, you must file if your total income (Gesamtbetrag der Einkünfte) exceeds the basic tax-free allowance (Grundfreibetrag), or twice that amount for spouses assessed jointly.
• With wages subject to wage tax withholding, an assessment is carried out, among other cases, if income not subject to wage tax withholding or income subject to the progression clause (Progressionsvorbehalt) exceeds 410 euros in each case (§ 46(2) no. 1 EStG).
• Taxable investment income without German tax withheld must always be declared, even below 410 euros (§ 32d(3) EStG).

What applies in the year you move to Germany?

Germany does not tax foreign income from the period before your move. It can still raise your tax rate through the progression clause (§ 32b(1) sentence 1 no. 2 EStG), so it belongs in your German return for the year of the move.

When is German tax still due on foreign investment income?

Interest, dividends and gains from selling securities (§ 20(1) nos. 1 and 7 and (2) EStG) are generally taxed at 25 percent (§ 32d(1) EStG), the flat tax known as Abgeltungsteuer. It is only settled with final effect to the extent that a German institution, such as the German bank that holds your securities account, has withheld Kapitalertragsteuer, the withholding tax on investment income (§ 43(5) and § 44(1) EStG). For income from foreign payers credited to an account or securities account abroad, and for sales through such a securities account, no German tax is withheld, which is why the duty to declare applies.

The foreign withholding tax is credited at no more than 25 percent of each individual item of income and at most up to the German tax on it. Only foreign tax that has been assessed and paid can be credited, reduced by any entitlement to a reduction in the other country (§ 32d(5) EStG).

Worked example: a dividend from abroad

Model case: A single person resident in Germany receives a dividend of 10,000 euros from a foreign company into a securities account abroad. The other country withholds 15 percent, which is 1,500 euros, and there is no entitlement to a reduction. There is no other investment income.

The solidarity surcharge and church tax are not included. On application, the investment income is instead subject to the standard income tax scale if this results in lower income tax including surcharges (Günstigerprüfung, § 32d(6) EStG). The example does not calculate this comparison. The calculation uses the current version of the law, and for earlier years the version in force at the time applies.

What applies to salaries and self-employed work with a foreign connection?

For salaries, bonuses and share plans from a foreign employer, working days abroad and fees from foreign clients, the first question is whether Germany has a double tax treaty with the other country. If there is one, it determines which country has the right to tax. What the specific treaty provides must be examined in the individual case. For treaty cases, the Income Tax Act provides two methods:

• Exemption: Germany does not tax the income, although it can raise the tax rate on your other income through the progression clause (§ 32b(1) sentence 1 no. 3 EStG). For employment income, the exemption is only granted to the extent that you prove that the other country has waived its right to tax or that the taxes assessed there have been paid (§ 50d(8) EStG).
• Credit: Germany taxes the income and credits the foreign tax creditable under the treaty, at most up to the German tax on that income (§ 34c(1) and (6) EStG).

If there is no treaty and you are subject, in the country from which the income derives, to a tax corresponding to German income tax, the foreign tax assessed and paid there, reduced by any entitlement to a reduction, is credited against the German income tax attributable to the income from that country (§ 34c(1) EStG). On application, it is instead deducted when determining the income (§ 34c(2) EStG).

Florian Enders explains how to declare foreign income from your time in Germany

What applies to rental income from a property abroad?

Here too, the first question is whether Germany has a treaty with the country in which the property is located. If there is one, it determines whether the rent is exempt in Germany or the foreign tax is credited. Without a treaty, § 34c(1) and (2) EStG applies as for salaries. If the rent is exempt under a treaty, the progression clause does not apply if the property is not located in a third country (§ 32b(1) sentence 2 no. 3 EStG). Third countries are those outside the EU, with EEA states treated like EU member states if they exchange with Germany the information required for taxation (§ 32b(1) sentence 3 in conjunction with § 2a(2a) EStG).

Not filed, filed incompletely, noticed later: what are the consequences?

• No return filed: The obligation remains, and the tax office can impose a late filing surcharge (Verspätungszuschlag, § 152(1) AO). It must be imposed if the return for a calendar year was not filed within 14 months after the end of that year, or within 19 months in the cases of § 149(2) sentence 2 AO (§ 152(2) AO). This does not apply if the tax office has extended the filing deadline, if the tax is assessed at zero euros or a negative amount, or if the assessed tax does not exceed the assessed prepayments and creditable withheld taxes (§ 152(3) AO). For each month or part of a month of delay, the surcharge is 0.25 percent of the assessed tax less prepayments and withheld taxes, at least 25 euros per month, at most 25,000 euros in total (§ 152(5) and (10) AO).
• Incomplete return: The foreign income is missing, and the tax may have been assessed too low.
• Error noticed later: Anyone who subsequently realises, before the assessment period (Festsetzungsfrist), meaning the time limit for assessing tax, has expired, that a return filed by them or on their behalf is incorrect or incomplete and that this may result or has already resulted in tax being understated must report this without delay and make the necessary correction (§ 153(1) AO). Failing to do so in breach of this duty can amount to tax evasion by omission (§ 370(1) no. 2 AO).

If the income tax assessment in one of these situations leads to additional tax, the difference bears interest: generally from 15 months after the end of the year in which the tax arose, and from 23 months if income from agriculture and forestry predominates in the first assessment (§ 233a(1) and (2) AO), at 0.15 percent per full month (§ 238(1) and (1a) AO). The further consequences depend on fault:

The same late report can count as a correction, as a late filing that avoids an administrative fine or as a voluntary disclosure. If a tax offence is suspected, the tax authority investigates, and the public prosecutor's office can take over the case (§ 386(1) and (4) AO).

What does a voluntary disclosure require?

Under § 371 AO, a person is not punished for tax evasion if they

• report fully, covering all tax offences relating to the type of tax concerned in their entirety (§ 371(1) sentence 1 AO), so for income tax this also includes evasion on German income,
• cover the whole period: all offences not yet time-barred, at least those of the last ten calendar years (§ 371(1) sentence 2 AO),
• act in time, before a ground for exclusion (Sperrgrund) arises (§ 371(2) sentence 1 nos. 1 and 2 AO),
• have evaded no more than 25,000 euros of tax per offence (§ 371(2) sentence 1 no. 3 AO),
• have committed no offence amounting to a particularly serious case under § 370(3) sentence 2 nos. 2 to 6 AO (§ 371(2) sentence 1 no. 4 AO),
• pay: the evaded taxes, the interest on evaded tax and the interest under § 233a AO credited against it, within the reasonable period set (§ 371(3) AO, § 235(4) AO). Interest on evaded tax is 0.5 percent per full month (§ 238(1) AO).

If exemption from punishment fails only because of the monetary threshold or a particularly serious case under § 370(3) sentence 2 nos. 2 to 6 AO (§ 371(2) sentence 1 no. 3 or 4 AO), prosecution is dropped if you pay the taxes and interest on time plus an additional sum: 10 percent of the evaded tax, 15 percent where the amount evaded exceeds 100,000 euros and 20 percent where it exceeds 1,000,000 euros (§ 398a(1) AO).

Why timing matters

There is no exemption from punishment if, before the voluntary disclosure (§ 371(2) sentence 1 nos. 1 and 2 AO),

• you, your representative, the person who benefited from the offence or their representative were notified of an audit order, limited to the substantive and temporal scope of the announced external audit,
• you or your representative were notified that criminal or administrative fine proceedings had been initiated,
• an official of the tax authority appeared for a tax audit, limited to the substantive and temporal scope of the audit,
• an official appeared to investigate a tax offence or a tax-related administrative offence,
• an official of the tax authority appeared for an inspection (Nachschau) and has identified themselves,
• one of the offences had already been wholly or partly discovered and you knew this or should have expected it on a reasonable assessment of the facts.

Under the automatic exchange of information, the Federal Central Tax Office (Bundeszentralamt für Steuern) receives financial account data from the competent authorities of the participating countries and forwards it to the competent tax authority of the federal state (Landesfinanzbehörde) for the purposes of taxation (§ 5(3) FKAustG, Financial Account Information Exchange Act). Whether the receipt of such data already counts as discovery of an offence is not answered by the wording of the law, and this question should be clarified with an adviser before any voluntary disclosure.

How many years back can the tax office (Finanzamt) assess tax?

Example: A return was required for 2020 and is missing, and § 170(6) AO does not apply. The assessment period then begins at the latest at the end of 2023 and ends at the end of 2027, for gross negligence at the end of 2028, for evasion at the end of 2033. Where investment income from countries outside the EU and EFTA that is not reported automatically is concerned, the start may be later under § 170(6) AO. A late report, a tax audit or a tax investigation (Steuerfahndung) can postpone the end, and for evasion or gross negligence the period does not end before prosecution is time-barred (§ 171(4), (5), (7) and (9) AO).

I no longer live in Germany. Does that settle the matter?

No. For the years in which you had a residence or your habitual abode in Germany, you had unlimited tax liability on all your income from that period (§ 1(1) and § 2(1) EStG). For those years, the filing obligations, the duty to correct under § 153(1) AO and the time limits in the table above apply, and a voluntary disclosure has the same requirements.

The year you leave works like the year you move in: Germany does not tax foreign income from the period afterwards. It can still raise your tax rate through the progression clause (§ 32b(1) sentence 1 no. 2 EStG) and therefore belongs in your return for that year. German-source income from that period is also included in the assessment for that year (§ 2(7) sentence 3 EStG). Whether the move itself triggered exit tax (Wegzugsteuer) is covered in the article Exit tax for private individuals.

Still renting out a flat in Germany? Then every euro counts

Rent from a flat in Germany remains German-source income after you leave (§ 49(1) no. 6 EStG). Under limited tax liability for the whole year, however, there is no basic tax-free allowance: taxable income (zu versteuerndes Einkommen) is increased by it (§ 50(1) sentence 2 EStG). Tax is therefore calculated as if your very first euro were above the basic tax-free allowance, which is 12,348 euros for 2026 (§ 32a(1) sentence 2 no. 1 EStG).

Under limited tax liability, withholding settles the tax with final effect only for income subject to withholding on wages, on investment income or under § 50a EStG (§ 50(2) sentence 1 EStG). Rent for a flat does not fall into any of these categories, and withholding that the tax office orders as security does not settle the tax with final effect (§ 50a(7) EStG). Rent is assessed, and a return has to be filed for it (§ 25(1) and (3) EStG).

On application, you are treated as having unlimited tax liability in respect of your German-source income if at least 90 percent of your income in the calendar year is subject to German income tax, or if your other income does not exceed the basic tax-free allowance, which may have to be reduced according to the circumstances in your country of residence. The amount of that other income must be certified by the foreign tax authority (§ 1(3) EStG), and this income can then raise your tax rate through the progression clause (§ 32b(1) sentence 1 no. 5 EStG).

Practice insight from Florian Enders: People who no longer live in Germany and rent out a flat here often assume that low rental income below the subsistence minimum remains tax-free. Many are surprised to hear that this does not apply under limited tax liability.

Discovered through an inheritance: what do heirs have to do?

On death, the deceased's assets pass as a whole to the heirs (§ 1922 BGB, Civil Code), and with them the claims and debts arising from the tax relationship (Steuerschuldverhältnis, § 45(1) AO). Three situations need to be kept apart:

• Own income after the inheritance: From the date of death, income from inherited assets abroad is earned by the heirs themselves, who declare it in their own return if they have unlimited tax liability in Germany.
• Errors in the deceased's returns: If heirs subsequently realise, before the assessment period expires, that such a return is incorrect or incomplete and that this may result or has already resulted in tax being understated, they must report this without delay and correct it (§ 153(1) sentence 2 AO). Failing to do so in breach of this duty can amount to tax evasion by omission on their own part (§ 370(1) no. 2 AO). For evaded taxes, the assessment period is ten years (§ 169(2) sentence 2 AO).
• No return filed: § 153 AO refers to a return that has been filed. What heirs have to do if the deceased filed no return at all for a year is an open question to be examined with an adviser. Even in that case, they owe any tax that arose for that year, insofar as it can still be assessed (§ 45(1) and § 169(1) AO).

Inheritance and gift tax are covered in the articles Inheritance not reported to the tax office and Gift not reported.

Step by step: what to do now

1. Do not file anything half-finished. A voluntary disclosure must be complete, and even a late return should only be filed once the legal classification of your case is clear.
2. Record your residence periods: the dates you moved to Germany and left, homes in Germany and abroad, longer stays outside Germany.
3. Gather documents for every year of your time in Germany, including the remaining months of the years in which you moved to Germany and left, and after leaving for every year with income from Germany: account and securities statements, withholding tax receipts, foreign returns and assessments, payslips including bonuses and share plans, records of working days abroad, rental agreements. Keep your German returns and assessments alongside them, and as an heir those of the deceased as well.
4. Set aside money for tax and interest, because with a voluntary disclosure, exemption from punishment depends on paying on time.
5. Get advice promptly and check post from the authorities. The notification under § 153 AO must be made without delay, and a ground for exclusion such as an audit order or the initiation of proceedings can arise at any time. To have your situation assessed, you can book an initial consultation.

Frequently asked questions

How many years must a voluntary disclosure cover?

All tax offences relating to the type of tax concerned that are not yet time-barred, at least those of the last ten calendar years (§ 371(1) sentence 2 AO), even if prosecution for some of those years is already time-barred. Years without a tax offence are not included.

Does rental income below the subsistence minimum stay tax-free if I live abroad?

Not if you have limited tax liability for the whole year, because taxable income is increased by the basic tax-free allowance (§ 50(1) sentence 2 EStG). Treatment as having unlimited tax liability on application is only possible under the conditions of § 1(3) EStG.

Do heirs have to correct errors in the deceased's tax returns?

Yes, if they realise before the assessment period expires that a return is incorrect or incomplete and that this may result or has already resulted in tax being understated. They must then report this without delay and correct it (§ 153(1) sentence 2 AO).

Sources, assumptions and limits of this article

Assumptions: an individual with a residence or habitual abode in Germany in the years concerned or, after moving away, with rent from Germany, who now lives in Germany or abroad, or their heirs, income tax. Open questions: the applicable treaty, residence under the treaty where you have homes in both countries, when the limitation period for prosecution begins, the degree of fault, how bonuses and share plans are split. Not covered: investment funds, foreign pensions, inheritance and gift tax, heirs' liability, extended limited tax liability under § 2 AStG (Foreign Tax Act), VAT, social security, solidarity surcharge, church tax, special rules under § 1a EStG, entry, extradition, enforcement abroad and foreign law. Case law was not evaluated. Statutory texts: gesetze-im-internet.de, checked on 3 to 5 November 2026.

This article is general information and does not replace individual advice.