Exit taxation ECJ 2025: New opportunities for entrepreneurs and investors
- Patricia Lederer
- 12 hours ago
- 3 min read
The ECJ is examining exit taxation in 2025. What does this mean for businesses and investors?
Frankfurt am Main
October 25, 2025
Exit taxation ECJ 2025 – entrepreneurs and investors can breathe a sigh of relief?
Anyone who wants to move abroad as an entrepreneur knows the problem: Exit taxation strikes mercilessly. It applies fictitious capital gains – even if no actual sale has taken place. But now the tide may be turning: The European Court of Justice (ECJ) is currently examining whether this approach is even compatible with the EU's fundamental freedoms.
Background: The exit tax hits entrepreneurs hard
In Germany, individuals who move abroad with significant capital holdings (Section 17 of the Income Tax Act) or fund investments are treated as if they had sold their investments – with all the associated tax consequences. Since 2022, the previously possible interest-free and unlimited deferral (so-called "eternal deferral") has been abolished. Now, immediate payment is threatened – often in installments over seven years, plus security deposits.
What's particularly tricky is that hidden liabilities—that is, losses in value—are not taken into account in the calculation. The tax authorities only want to see hidden reserves.
The ECJ case: Poland as a test run for Europe
This very practice is now being examined by the European Court of Justice (ECJ) on the subject of exit taxation (ECJ 2025). The reason for this is a case from Poland in which an Italian-American entrepreneur was planning to move to Germany – and was being asked to pay by the Polish tax authorities for potential capital gains. The deferral requirement has also been tightened in Poland: a permanent deferral is no longer provided for, even if the move takes place within the EU.
The competent Polish administrative court has referred three key questions to the ECJ (C-430/25, Gena). These include:
whether increases in value that did not occur during the stay in the country of origin may also be taxed ,
whether it is permissible for hidden burdens to be disregarded, and
whether the absence of a permanent interest-free deferral until the actual sale is in line with EU law.
Relevance for Germany: The parallels are obvious
The German exit tax system is almost identical to the Polish one. Here, too, the principle of deemed disposal applies, hidden burdens are excluded, and there is no longer any genuine perpetual deferral. The questions that the ECJ will clarify in these proceedings therefore directly affect German law —and could jeopardize the entire exit tax system.
Your chance: Get advice now before facts are created
The ECJ has already emphasized in the past (Wächtler judgment, C-581/17) that immediate taxation upon departure, regardless of whether the property has actually been sold, may violate the free movement of capital. If the court now rules in favor of the taxpayer in the current case, Germany will have to revise its regulations.
Until then, entrepreneurs planning to move within the EU or to Switzerland should insist on an interest-free deferral – with reference to the ongoing ECJ submission and the applicable case law.
TaxPro protects your assets when you move away
At TaxPro, we understand the levers of exit taxation – and know how to use them. We provide you with legally sound advice on all deferral options, are familiar with the relevant double taxation agreements, and represent you before the tax office if necessary.
TaxPro is your first port of call if you want to expand your business abroad or emigrate – without any tax pitfalls.
