Author
Omar Sami
Attorney at Law (Germany) I Legal and Tax Consultant (UAE) I Managing Partner
Direct Answer
Yes, since September 2018. The United Arab Emirates exchange financial account data with Germany automatically under the CRS – annually, without cause, regardless of residence visa status. What matters is not the residence visa, but the tax residency of the account holder. Furthermore, the double taxation agreement (DTA) between Germany and the UAE expired on 31 December 2021 and has not been renewed.
Introduction
Emirates ID in hand, bank account opened in Dubai – and many German-speaking expats believe the German tax authority can no longer reach them. That is one of the most costly misconceptions we encounter in our practice. This article explains how the data exchange works mechanically, who gets reported and who does not, where the legal grey zone lies – and what the expiry of the DTA at the end of 2021 means in practice.
Key Takeaways
- Automatic reporting since 2018: UAE financial institutions report annually to Germany’s Federal Central Tax Office (BZSt).
- Residence Visa ≠ Tax Exemption: Banks report based on tax residency, not immigration status. An Emirates ID does not protect you if German indicators remain.
- DTA expired (31 Dec 2021): No treaty safety net; full withholding tax on dividends, no tie-breaker rule for dual-residency situations.
- Structures do not shield: FZCOs and Foundations classified as passive entities lead to reporting of the controlling persons.
- Clean relocation = protection: Those who fully relocate won’t be reported – but must factor in exit tax, withholding tax and look-back periods.
How the CRS Works Between the UAE and Germany
The Common Reporting Standard (CRS) is an OECD-developed multilateral framework for the automatic exchange of financial account information. Over 110 countries participate; the UAE joined in September 2018. The legal basis for the exchange with Germany is the OECD Multilateral Convention on Mutual Administrative Assistance in Tax Matters, not the expired DTA.
1. Assessment by the Financial Institution
Banks, custodians and investment entities in the UAE assess at account opening and on an ongoing basis where the account holder is tax resident – using the self-certification form and an indicia check (address, phone number, correspondence address, powers of attorney).
2. Reporting to the UAE Ministry of Finance
If the account holder is identified as tax resident in Germany, the institution reports name, tax ID, account number, year-end balance and capital income to the UAE Ministry of Finance.
3. Forwarding to BZSt and Local Tax Offices
The Ministry forwards the data automatically once a year to Germany’s Federal Central Tax Office (BZSt) in Bonn, which passes them on to the competent local tax offices. The entire process is automatic – no suspicion or request is required.
What Exactly is Reported
| Data Point | Reported? | Notes |
|---|---|---|
| Name, address, tax ID | Yes | Linked to tax residency per self-certification |
| Account number / IBAN | Yes | Each reportable account individually |
| Year-end account balance | Yes | Snapshot as at 31 December |
| Interest & dividends | Yes | Credited during the calendar year |
| Proceeds from disposals | Yes | Relevant for custody accounts |
| Directly held real estate | No | Not a financial account; possible MLA request |
| Cash | No | Not captured by the financial account system |
| Direct company interests (no depot) | Depends | Only if held via a financial account |
Important note. The CRS is a financial account exchange, not a comprehensive asset register. Directly held real estate or cash are not subject to automatic reporting. However, via the OECD Multilateral Convention, the German tax authority may still request information on non-CRS assets on a case-by-case basis – provided the request is of “foreseeable relevance” for tax purposes.
Tax Residency: The Visa Is Not the Deciding Factor
The most common misconception we hear: “I have a UAE residence visa – so I’m invisible to the German tax authority.” This is wrong for two reasons.
CRS level: The financial institution determines tax residency through the self-certification and an indicia check. If the bank finds German indicators – a registered German address, a German phone number, a c/o address in Germany, a power of attorney to a German resident, standing orders to a German account – it must follow up. Without a convincing explanation, it will report to Germany. Many institutions report to both countries as a precaution.
Substantive level: The self-certification at the bank does not affect the underlying German tax liability. Anyone who has a domicile or habitual abode in Germany under sections 8 and 9 of the German Fiscal Code (AO) remains subject to unlimited tax liability there – on worldwide income. A false self-certification does not eliminate the problem; it adds the risk of criminal tax evasion.
OECD Watchlist. The OECD has explicitly listed UAE golden visa and residency-by-investment programmes on its list of regimes potentially misused for CRS avoidance. Banks are required to apply heightened scrutiny when a freshly issued UAE residence visa is presented as the sole proof of tax residency.
Three Scenarios at a Glance
| Criterion | Case 1: Clean Relocation | Case 2: Grey Zone | Case 3: Foundation |
|---|---|---|---|
| UAE Residence Visa | Yes | Yes | Yes (Father) |
| Property in Germany | No – sold | Yes – room available | Partly (daughter) |
| CRS report to Germany | No | Yes | Yes (daughter) |
| German tax liability | No (exit tax issues) | Yes – worldwide income | Possible attribution taxation |
| Main risk | Exit tax, withholding tax | Sec. 8 AO domicile; place of mgmt | Secs. 5, 15 AStG attribution |
Three Case Studies
All cases are fictional, typified examples. They do not represent real client matters and are provided for general illustration only.
Case 1 – Markus, 48: GmbH Shareholder, Clean Relocation [No CRS Report]
Markus holds 100% of a GmbH incorporated in Baden-Württemberg (enterprise value approx. EUR 5m) and fully relocates to Dubai: house sold, family joins, rental agreement in Dubai Hills, Emirates ID, day-to-day management delegated to an employed director. He spends approximately 300 days per year in the UAE.
CRS outcome: No report to Germany. Self-certification names only the UAE; no German indicators are on file with the bank.
What still applies – three German tax issues:
- Exit taxation (sec. 6 AStG): Departure triggers a deemed disposal of the GmbH shares at fair market value. Tax on the notional gain arises without any cash inflow. For relocations to third countries such as the UAE – unlike EU/EEA moves – indefinite interest-free deferral is unavailable; at best, instalment payments over seven years against security may be applied for.
- Dividends without DTA protection: Since the DTA expired at end of 2021, distributions from the GmbH are subject to the full German withholding tax of 25% + solidarity surcharge, without any treaty-based refund entitlement.
- Look-back periods: Extended limited tax liability (sec. 2 AStG) for up to ten years on German-source income; German inheritance tax exposure as a German national for five years after departure (sec. 2 ErbStG).
No CRS report does not mean no German tax issue. Anyone who gets the order of events wrong and only does the numbers after relocating will pay for it.
Case 2 – Sandra, 36: Online-Marketing FZCO, Bedroom in Cologne [Grey Zone]
Sandra sets up an FZCO in a Dubai free zone, obtains her investor visa and rents an apartment in JVC. However, the furnished bedroom in her parents’ house in Cologne remains available to her at any time. She spends approximately five months per year in Germany; her German mobile number is still on file with the bank and post is sent to the Cologne address.
CRS outcome: The bank identifies German indicators (phone number, correspondence address) and must follow up. As Sandra’s FZCO earns predominantly passive income, it is classified as a Passive NFE – Sandra is reported personally as the controlling person behind the company account. The corporate account provides no shield.
Substantive risk – twofold:
- Domicile (sec. 8 AO): The room available at any time may constitute a German domicile – without any formal registration. Result: unlimited tax liability in Germany on worldwide income.
- Place of effective management (sec. 10 AO): If Sandra takes the key business decisions for her FZCO from the desk in Cologne, the place of effective management is in Germany. The FZCO itself then becomes subject to German corporate income tax and trade tax – a Dubai company with a German tax return. This is the most common and most painful scenario in our practice.
Sandra does not have a tax problem because she is reported. She has a tax problem because she never truly relocated. The reporting merely makes it visible.
Case 3 – The Berger Family: Foundation as Supposed CRS Shield [CRS Applies Regardless]
The Berger family transfers a seven-figure securities portfolio into a UAE foundation: the father (resident in Abu Dhabi) is the settlor; beneficiaries are his wife and two children, one of whom – an adult daughter – is resident in Germany. The portfolio is held in the foundation’s name.
CRS – two reporting paths, one outcome:
- Foundation as financial institution: If professionally managed and holding primarily financial assets, the foundation reports itself – settlor, beneficiaries and, where applicable, the protector are reported.
- Foundation as Passive NFE: If not classified as a financial institution, the custodian bank reports the controlling persons behind the structure.
In both scenarios, the daughter resident in Germany appears as a reportable person. The structure only determines who reports – not whether.
Substantive consequence: The foundation’s income may be attributed directly to the daughter under sections 5 and 15 of the German Foreign Tax Act (AStG). Gift and inheritance tax questions arise on the initial transfer and on distributions.
A foundation can be a sound vehicle for succession planning, governance and asset protection. As a screen against the German tax authority, it does not work.
Expiry of the Germany–UAE DTA: What Changed
The double taxation agreement between Germany and the UAE expired on 31 December 2021 and was not renewed by either side.
| Topic | With DTA (until 2021) | Without DTA (from 2022) |
|---|---|---|
| Dual residency | Tie-breaker rule applied | German law applies in full; no protection |
| Dividend withholding tax | Reduced to 5% / 15% | Full 25% + solidarity surcharge; no refund |
| Information exchange | DTA exchange clause + CRS | OECD Multilateral Convention + CRS |
| Protection for UAE residents | Treaty protection available | None; sec. 8 AO is determinative |
Particularly relevant for those relocating. Beyond the DTA expiry, several often-overlooked issues arise after relocation: German inheritance tax exposure for German nationals for five years (sec. 2 ErbStG), gift tax on asset transfers, and the controlled foreign company rules (CFC / Hinzurechnungsbesteuerung) under secs. 7 ff. AStG for passively held foreign companies. Each of these deserves dedicated advice before departure – not after.
Key Terms Explained
Common Reporting Standard (CRS). OECD standard for the automatic multilateral exchange of financial account information between tax authorities. Applicable between the UAE and Germany since September 2018.
Tax Residency. The country in which a person is subject to unlimited tax liability. Under German law: domicile (sec. 8 AO) or habitual abode (sec. 9 AO).
Passive NFE (Passive Non-Financial Entity). An entity earning predominantly passive income (interest, dividends, rents) that is not a financial institution. Under the CRS, its controlling persons are reported.
Exit Taxation (sec. 6 AStG). Taxation of a notional disposal gain upon departure from Germany when shareholdings of 1% or more in corporations are held. Arises without any cash receipt.
Place of Effective Management (sec. 10 AO). The location where the key business decisions of an enterprise are actually made. If located in Germany, the foreign entity becomes subject to German corporate income tax and trade tax.
Tie-Breaker Rule. A treaty provision that allocates primary taxing rights to one state when a person is regarded as resident in both contracting states. No longer applicable to the Germany–UAE relationship since 31 December 2021.
Conclusion
All three case studies show the same pattern: the CRS report was never the underlying tax problem – it was the moment at which what was already true became visible. Those who structure their relocation correctly from a tax perspective have nothing to fear from data exchange. Those who do not will not eliminate the problem by concealing it from their bank.
The bottom line, in four points:
- The UAE have reported financial account data to Germany automatically since 2018 – annually, without cause.
- A residence visa prevents neither reporting nor tax liability. What matters is tax residency.
- Those who relocate cleanly will not be reported – but must factor in exit taxation, withholding tax and look-back periods.
- Since the DTA expired in 2021, there is no treaty safety net. Requirements for a tax-compliant relocation have increased, not decreased.
Frequently Asked Questions
Does a Dubai bank automatically report to the German tax authority?
Yes. Since September 2018, the UAE have participated in the OECD Common Reporting Standard (CRS). Banks and financial institutions in the Emirates report annually to the UAE Ministry of Finance the financial account data of all account holders identified as tax resident in Germany – which then forwards them to Germany’s Federal Central Tax Office (BZSt).
Does a UAE residence visa prevent reporting to Germany?
No. What matters is tax residency, not immigration status. The bank assesses residency using the self-certification form and an indicia check (addresses, phone numbers). The OECD explicitly flags UAE residency programmes as potentially used to circumvent CRS reporting.
Is the Germany–UAE double tax treaty still in force?
No. The DTA expired on 31 December 2021 and was not renewed. Since 2022, there is no tie-breaker rule and no treaty-based protection for dividend withholding tax.
When is a UAE FZCO or Foundation reportable under the CRS?
An FZCO earning predominantly passive income is treated as a Passive NFE – its controlling persons are reported. A Foundation that primarily holds financial assets may itself be classified as a financial institution and report autonomously.
What is exit taxation when moving to Dubai?
Section 6 AStG deems a disposal of corporate shareholdings of 1% or more at fair market value upon departure from Germany. Tax on the notional gain arises without any cash receipt. For relocations to the UAE (a third country), indefinite interest-free deferral is not available.
When is the place of effective management of a UAE company in Germany?
The place of effective management (sec. 10 AO) is where the key business decisions are actually taken. If the owner runs their UAE FZCO from a home office in Germany, the place of effective management may be in Germany, making the UAE company subject to German corporate income tax and trade tax.
What data is exchanged between the UAE and Germany under the CRS?
Reported data includes: name, address, tax identification number, account number, year-end account balance, and credited income (interest, dividends, disposal proceeds). Not covered: directly held real estate, cash, company interests held without a financial account.
This article is provided for general information purposes only and does not constitute legal or tax advice in any individual case. The law may change at any time; as at August 2026. For advice on your specific situation, please contact TME Legal Consultants FZ-LLC or a licensed German tax adviser. All case studies in this article are fictional and typified; they do not represent any real client matters.
