Founder Moves to Germany: When Can Existing Foreign Companies Trigger German CFC Rules?
A founder can move to Germany without changing a single line of the group chart. That does not mean the German tax analysis remains unchanged. Existing foreign entities may need to be tested under the Hinzurechnungsbesteuerung rules in §§ 7 ff. AStG — but only through a sequence of separate factual and legal gates.
Reviewed 1 October 2026 · Analytical material, not individual legal or tax advice.
German tax nexus
Start with the founder, not the company. Under § 1(1) EStG, an individual with a Wohnsitz or gewöhnlichen Aufenthalt in Germany is subject to unlimited German income-tax liability. §§ 8–9 AO define those domestic concepts; the analysis is therefore not reducible to a single 183-day rule.
Moving to Germany does not itself create CFC income. It creates a need to test whether the founder enters the German taxpayer nexus to which the AStG rules can apply.
Management gate
Before testing the foreign-company condition, first determine whether the foreign legal form qualifies as a Körperschaft, Personenvereinigung or Vermögensmasse within the relevant German corporate-tax framework. § 7(1) AStG then requires that the qualifying entity have neither Geschäftsleitung nor Sitz in Germany.
If actual management follows the founder to Germany, the entity-level corporate-tax analysis may become primary. The correct sequence is German taxpayer nexus → entity classification → seat / management facts → §7 foreign-company condition → control → income analysis, not foreign incorporation → CFC.
Entity & control
German CFC analysis is not limited to the founder’s headline share percentage. Under § 7(2) AStG, control exists where the taxpayer alone or together with related persons is attributable more than half of the voting rights, more than half of the nominal capital, or a right to more than half of the profits or liquidation proceeds, directly or indirectly.
Do shares held by family members count?
Section 7 does not use “family member” as an automatic aggregation category. Under § 7(3) AStG, the related-person test refers to § 1(2) AStG; § 7(4) separately covers persons acting together in relation to the foreign company. A spouse, child or other relative therefore should not be added mechanically merely because of the family relationship. The statutory related-person or coordinated-conduct test has to be met on the facts.
The BMF forms published 27 March 2026 make the control mechanics explicit: if the taxpayer does not control the foreign company alone, direct and indirect interests of persons related to that taxpayer are taken into account for the control test. Different control criteria are tested separately; voting rights, nominal capital and profit/liquidation rights are not simply mixed together into one percentage.
Related-person interests can help satisfy the more-than-50% control gate under § 7(2). But once that gate is met, § 7(1) generally attributes the relevant CFC income to the taxpayer according to the taxpayer’s own direct and indirect participation in nominal capital, or the applicable profit-distribution measure where nominal capital is not decisive. Do not confuse the control threshold with the taxpayer’s inclusion percentage.
“I own 49%” is not, by itself, an AStG conclusion — but neither is “my family owns the rest”.
Income analysis
§ 8(1) AStG is income-specific. A company should not simply be labelled “active” or “passive”. Manufacturing, trading, services, leasing, licensing, dividends, disposals and reorganisations follow different statutory branches and conditions.
The useful question is: which income streams does the company earn, and how does § 8 classify each of them?
Low-tax test
Current § 8(5) AStG treats relevant income as low-taxed where the burden by income taxes is less than 15%, based on the CFC income determined under the German rules. A headline corporate-tax rate is not the statutory test.
Version control. The 15% threshold is subject to the transition rule in § 21(6). Older materials can still contain the former 25% threshold, so the relevant foreign-company financial year must be identified before applying examples or administrative guidance.
Activity exception
For the ordinary § 7 / § 8 route, § 8(2)–(4) AStG can protect income connected with a substantial economic activity in the state of seat or management. The statute looks to real resources, qualified personnel, independent activity, the link between activity and income, arm’s-length conditions and limits on outsourcing.
But this ordinary exception is geographically constrained by § 8(3) to EU/EEA companies and by the information-exchange condition in § 8(4). Real substance and availability of the statutory § 8(2) exception are not identical statements.
De minimis
§ 9 AStG contains a narrow mixed-income de-minimis rule. It is not a general EUR 100,000 exemption: the relevant income must not exceed one third of total income and the statutory amount condition must also be satisfied.
The current version is period-sensitive under § 21(9). Historical periods require the law applicable to the relevant foreign-company financial year.
Attribution & credits
Under § 10 AStG, qualifying income can be attributed as a Hinzurechnungsbetrag without a prior dividend. German-law computation matters; foreign statutory accounts are evidence, not automatically the German CFC tax base.
§ 11 AStG contains the correction mechanism for later distributions and related events, while § 12 AStG contains foreign-tax credit mechanisms subject to their own conditions.
CFC attribution, later-distribution correction and foreign-tax credit are three separate calculations.
§ 13 investment income
Where the general § 7 control condition is not met, the analysis may still continue under § 13 AStG for certain low-taxed Einkünfte mit Kapitalanlagecharakter where at least 10% of voting rights or nominal capital is attributable to the taxpayer alone or together with specified related persons.
Section 13 has its own timing and de-minimis rules. Its § 13(4) activity route also must not be collapsed into the ordinary EU/EEA limitation of § 8(3): § 13(4) refers to § 8(2) and (5), not § 8(3), and contains its own information-exchange condition.
Filing & evidence
§ 18 AStG makes filing and evidence part of the analysis. Relevant bases can require separate determination, and current law includes electronic filing or notification routes depending on the statutory position.
The BMF forms published 27 March 2026 are current procedural authority and expressly address the § 8(2) activity notification, including where relevant through § 13(4).
A defensible file should connect ownership, voting rights, management location, income streams, actual foreign taxes, personnel, premises, functions, outsourcing, arm’s-length support, prior CFC determinations and distribution history.
Treaties & timing
§ 20(1) AStG provides that §§ 7–18 are not displaced by double-tax treaties. A treaty can still matter elsewhere — for example for personal treaty residence — but “there is a DTT, therefore German CFC rules cannot apply” is unsafe.
§ 21 AStG must then be used as a version-control provision: the 15% threshold, current § 13 wording, § 18 procedure and current de-minimis rules do not all share the same application date.
Before / after relocation
Before relocation
Map every entity, legal form, management location, ownership/control rights, income streams, foreign tax burden, operating substance, retained profits and expected distributions before the German nexus starts.
After relocation
Reconstruct the first relevant period: when German nexus began, whether management moved, which foreign-company year applies, what income and tax arose, which rights existed at year-end and what filing/evidence obligations follow.
German tax nexus → entity classification → management / seat → foreign-company gate → ownership & control → income type → low-tax test → activity/substance route → attribution / corrections / credits → filing / evidence / timing.
Planning a move to Germany — or already moved?
Map the management facts, ownership chain, income streams, foreign tax burden and operating substance before drawing a CFC conclusion.
Request a ReviewThis is a general structural analysis, not a German tax opinion for a specific taxpayer. German taxpayer status, entity classification, management location, income classification, effective tax burden, application periods, treaty residence, filing obligations and any available activity exception must be tested for the specific founder, entity, jurisdiction and financial year. Jurisdiction-specific tax conclusions should be provided by appropriately qualified professionals.