A Guide for NRIs Returning to India from Germany in 2026

Indian professionals who are moving back from Germany often lack clarity about how they can manage their overseas holdings like stocks, ETFs, and German pension contributions after moving back.

This article explains how you can manage your overseas holdings after moving back to India and navigate Germany's Wegzugsbesteuerung (Exit Tax) and pension refunds.

We also cover the new Indian tax and reporting requirements you will be subject to, your changing tax residency status, how you can avoid double taxation, and RNOR rules and opportunities.

Table of contents

• What happens to my stocks when I move back to India?    
• When does my German tax residency actually end?    
• What happens to my company pension (betriebliche Altersvorsorge) when I move back?    
• What happens to my RSUs and stock options when I move back?    
• What happens to my German property when I move back?    
• Tax and reporting implications of moving back to India    
• What is RNOR status and how does it affect me?    
• Common Questions German NRIs Have About Moving Back    
• About Paasa    

What happens to my investments when I move back to India?

When you move back to India from Germany, the first major hurdle you face is the German exit tax, known as Wegzugsbesteuerung.

Germany's Exit Tax (Wegzugsbesteuerung)

For years, Germany's exit tax primarily targeted business owners holding shares in private companies. However, effective January 1, 2025, the rules also apply to private investors with significant portfolio holdings.

If you have been a tax resident in Germany for at least 7 of the last 12 years and you decide to move away, you might trigger an immediate tax bill on your unrealized gains.

The tax applies if you hit either of these thresholds:

• You hold at least 1% of a fund's shares (rare for retail investors), OR
• You have invested more than €500,000 (acquisition cost) in a single fund or ETF.

If you cross these limits, the German tax office treats your departure as a "deemed sale." They act as if you sold your entire portfolio on the exact day you left and demand tax on the "paper profits" immediately, even though you have not actually received any cash.

How to avoid the Exit Tax:

• Watch the clock: If you plan to move back to India, execute your move before you hit the 7-year residency mark.
• Structure smartly: The €500,000 threshold often applies per fund. Diversifying your investments across multiple different ETFs rather than putting €1M into a single asset can help you stay below the limit.

Can I keep my global investments after moving back to India?

Under Indian FEMA regulations, you are legally allowed to indefinitely hold any foreign stocks, ETFs, or properties you acquired while living in Germany. You do not have to sell them just because you moved.

However, while Indian law allows you to keep them, German platforms might not:

• Neobrokers (Trade Republic, Scalable Capital): These platforms generally cater strictly to EU residents. If you update your tax residency and address to India, they may restrict your account or force you to liquidate your positions entirely.
• Traditional Bank Brokers (Comdirect, ING, Deutsche Bank): These are sometimes more flexible and may allow you to maintain a non-resident account. However, you will face high fees, potential restrictions on buying new assets, and you will have to manage your Indian tax reporting manually.

What's the best way to stay invested globally after moving back to India?

The best way to stay invested globally is to transfer your investments into a platform specifically built for global investing from India.

These platforms allow you to maintain your positions and trade normally, while providing India-specific compliance support and tax documents tailored for your mandatory Schedule FA reporting.

What happens to my German Pension when I move back to India?

Germany's pension system consists of a mandatory statutory component and optional private schemes. What happens to your money (and what you should do) depends on which type you hold.

1. Statutory Pension (Gesetzliche Rentenversicherung - GRV)

When you leave Germany, Non-EU citizens (like Indians) can claim a refund of the employee contributions plus interest.

• You can only claim this refund 24 months after your last contribution payment.
• This only applies if you do not expect any future pension entitlement (i.e., you do not plan to return to Germany to retire).
• The employer's share stays in the German system. You must process this refund via the Deutsche Rentenversicherung (DRV). Once refunded, you can freely transfer this money to your Indian NRE or standard savings account.

2. Private Pensions (Riester or Rürup)

If you decide to cash these out early when leaving Germany, you will face steep penalties and you will lose all the state subsidies and tax benefits you received.

It is usually much more financially efficient to retain these plans until retirement and draw the annuity later, reporting the income in your Indian tax returns.

What happens to my company pension (betriebliche Altersvorsorge) when I move back?

Most mid-to-senior employees at German companies also participate in a betriebliche Altersvorsorge (bAV), an employer-sponsored occupational pension scheme. This is widespread across automotive, pharma, engineering, and consulting sectors and often represents a significant part of total compensation.

You cannot cash out a bAV when you leave Germany. Unlike the GRV statutory pension where Indian nationals can claim a contribution refund after 24 months, a bAV cannot be refunded or liquidated on departure. Your accumulated entitlement remains locked in the scheme until you reach the eligible retirement age, regardless of where you live.

Your contributions stop when your German employment ends. The tax and social security advantages of a bAV are tied to active German employment, so no further contributions are possible after you leave. Your existing capital remains invested and continues to grow according to the underlying fund's performance.

Vesting rules apply. If your bAV was employer-financed and you leave before the statutory vesting period is complete, you may forfeit part or all of the employer-funded portion. For contracts concluded after 2018, entitlements generally vest after three years of scheme membership and once you have turned 21. Check your specific scheme documents before confirming your departure date.

Receiving payouts from India

Once you reach the eligible retirement age (generally between 63 and 67 depending on your scheme), you can receive your bAV payouts from India. Under Article 18 of the India-Germany DTAA, pension income is generally taxable only in the country of residence. This means that once you are a full Indian tax resident (ROR), Germany should not withhold tax on your bAV payments, and you declare and pay tax on them in India at your applicable slab rate.

During your RNOR window, bAV payouts received in your German bank account are not taxable in India, giving you a window to draw down part of your balance at a lower overall tax cost.

Note: The DTAA treatment depends on the specific structure of your bAV (Direktversicherung, Pensionskasse, or Direktzusage) and how Germany characterises the payment. Before you begin drawing down, confirm the correct German withholding position with your scheme provider and a Steuerberater to avoid having tax unnecessarily deducted at source.

What happens to my RSUs and stock options when I move back?

If you worked at a German company or a multinational with German operations, you likely hold RSUs or stock options as part of your compensation. Germany has specific and consequential rules for how these are taxed when you leave.

RSUs are taxed as employment income at vesting. Under German law, the full fair market value of the shares on the vesting date is treated as Arbeitslohn (employment income) and subject to wage tax (Lohnsteuer) at your marginal rate, plus social contributions up to the applicable ceiling. This happens regardless of whether you sell the shares immediately or hold them.

When you leave mid-vesting period, the income at future vesting events is apportioned between Germany and India based on workdays. The German-source portion covers the workdays spent in Germany during the full vesting period from grant to vest. The India-source portion covers workdays in India during the same period.

Germany taxes the German-source portion. Under the Bundesfinanzhof ruling of 21 December 2022 (I R 11/20), confirmed in the BMF circular of 12 December 2023, residency at the time of vesting is the decisive factor. If you are resident in India when the RSUs vest, India has primary taxing rights, and Germany only taxes the portion attributable to German workdays during the vesting period.

During your RNOR window in India, the German-source portion of the vesting income is foreign employment income and is not taxable in India. Once you become a full Resident (ROR), it becomes taxable in India at your slab rate, with a foreign tax credit available for any German tax already withheld.

Example

You have a 4-year RSU grant. You worked in Germany for 3 years of the vesting period and in India for 1 year. At vesting, the shares are worth €120,000.

Note: Keep a workday log from the grant date of every RSU through to vesting. Your employer's payroll team should track this, but it is your responsibility to verify the split is correctly applied. The apportionment covers the entire vesting period, not just the period after you moved.

What happens to my German property when I move back?

German real estate is not subject to the Wegzugsbesteuerung exit tax. You can keep your German property after returning to India. However, two ongoing obligations apply once you become a non-resident.

Rental income as a non-resident

If you rent out your German property after leaving, you fall under beschränkte Steuerpflicht and must file a German income tax return annually to declare the rental income, even as a non-resident.

Unlike some other countries, Germany has no upfront withholding mechanism on rental income paid to non-residents. Your tenant pays you gross rent, and you file and settle the tax yourself with your German Finanzamt.

Rental income from German property is taxed at Germany's progressive income tax rates (14% to 45%) under §21 EStG, plus the 5.5% solidarity surcharge. As a non-resident you will not receive the standard personal allowance (€11,604 in 2025) unless 90% or more of your worldwide income is German-source income.

You can deduct legitimate expenses against the rental income: mortgage interest, property management fees, repairs, insurance, and the standard 2% annual building depreciation (AfA).

How does India treat this rental income?

This depends on your Indian residency status:

• During RNOR: Rental income from your German property is tax-free in India, provided it is received in your German bank account first. If it is wired directly to your Indian account, it becomes taxable in India immediately. Read our guide on foreign rental income for RNORs for the full treatment.
• After becoming ROR: India also taxes the rental income at your slab rate. Under Article 6 of the India-Germany DTAA, Germany retains primary taxing rights on rental income from German property. India gives you a foreign tax credit for the German tax already paid, so you pay the difference rather than the full amount twice.

Example

You rent your Munich property for €2,500 per month (€30,000 per year). Your deductible expenses (mortgage interest, management fees, depreciation) are €12,000. You are in the 30% Indian tax slab with income above ₹2 crore.

Note: India calculates its tax on gross rental income, not on the net income after German deductions. The foreign tax credit reduces but does not eliminate the Indian liability once you become ROR. Claiming all legitimate deductions in Germany is still worthwhile as it reduces the German side of the equation and therefore the total outflow.

Selling German property as a non-resident

Germany has a ten-year speculation period (Spekulationsfrist) under §23 EStG. If you sell a German property within ten years of the original notarised purchase contract date, the capital gain is taxable in Germany at your personal income tax rate plus the 5.5% solidarity surcharge. This applies to you as a non-resident just as it applies to German residents.

After ten years, the gain is completely tax-free in Germany.

Which country taxes the gain, and how much?

Both Germany and India have taxing rights, but how much each takes depends on when you sell.

Under Article 13 of the India-Germany DTAA, Germany has primary taxing rights on gains from immovable property situated in Germany. Germany taxes the full gain if the property is sold within the ten-year speculation period.

For India, the treatment depends on your residency status at the time of sale:

• During RNOR: The gain is completely exempt in India. Only Germany taxes the sale. This is the most efficient window to sell if you are planning to do so anyway.
• After becoming ROR: India also taxes the gain. For property held for more than 24 months, this is long-term capital gains at 12.5% without indexation under post-2024 budget rules. India gives you a foreign tax credit for the German tax already paid. For those with significant gains, the German tax will typically exceed India's 12.5% LTCG liability, meaning no additional Indian tax is owed in practice. Confirm your specific position with a CA before the sale.

Example

You sell your Frankfurt property for €900,000. You bought it for €500,000 eight years ago, within the ten-year speculation period.

Scenario A: You sell during RNOR

Scenario B: You sell after becoming ROR

Note: The ten-year clock runs from the original notarised purchase contract date, not from when you moved in or when you returned to India. If you are approaching the ten-year mark on a German property with significant appreciation, timing the sale to fall after that date eliminates German tax on the gain entirely.

When does my German tax residency actually end?

Moving back to India does not automatically end your German tax liability. Germany taxes worldwide income for anyone who maintains a Wohnsitz (registered residence) or gewöhnlicher Aufenthalt (habitual abode) in Germany under §1 Abs. 1 EStG.

Until both of these are genuinely severed, Germany continues to treat you as an unlimited tax resident and tax your worldwide income accordingly.

The Abmeldung is necessary but not sufficient on its own.

The Abmeldung is the formal deregistration of your address at the local Einwohnermeldeamt (registration office). You are legally required to complete it within two weeks of leaving, and you should retain the Abmeldebestätigung (deregistration confirmation).

This document is what your German Finanzamt and banks will request as proof of departure. However, the Abmeldung alone does not end your German tax residency.

What actually ends it is the physical termination of your Wohnsitz: you must give up genuine access to a German dwelling.

If you retain a property, a room at a relative's house, or any space you can use at will, the German tax office can argue your Wohnsitz persists regardless of your registration status. The Bundesfinanzhof has confirmed this in case law.

To actually sever German tax residency, you need to:

• Give up all personal access to a German property. Hand back the keys. If you own a property, ensure it is rented out to a third party and you have no personal right of use.
• Complete the Abmeldung at the Einwohnermeldeamt within two weeks of leaving.
• Notify your Finanzamt in writing of your departure date and new address in India.
• Spend fewer than 183 days in Germany in any calendar year after leaving. Crossing this threshold re-establishes gewöhnlicher Aufenthalt regardless of your registration status.

What continues after you leave

Once your German tax residency ends, you shift to beschränkte Steuerpflicht (limited tax liability) under §49 EStG.

Germany no longer taxes your worldwide income, but it retains the right to tax any remaining German-source income: rental income from German property, German pension payments, and certain German capital income. You will need to file a German non-resident tax return for any year in which you have such income.

Note: The Abmeldung is a legal requirement under the Bundesmeldegesetz, not optional. Without it, your German banks, insurers, and Finanzamt will continue to treat you as a resident, creating compliance complications on both sides.

Tax and reporting implications of moving back to India

When you permanently return to India, your tax status eventually shifts from being a Non-Resident Indian (NRI) to a Resident.

This brings two major changes: your global income becomes taxable in India, and your reporting requirements increase significantly.

To learn more about how your global income is taxed in India and the reporting requirements, read:

• How Global Stocks and ETFs Are Taxed for Indian Investors
• Tax on Repatriation of Foreign Income to India
• Foreign Asset Disclosure (Schedule FA) Requirements for Indians

When do you become an Indian Tax Resident?

Under the Income Tax Act, you are considered a tax resident of India if:

• You are physically present in India for a period of 182 days or more in the tax year (182-day rule), or
• You are physically present in India for a period of 60 days or more during the relevant tax year and 365 days or more in aggregate in the four preceding tax years (60-day rule).

Once you meet this criterion, you are legally required to pay tax in India on income earned anywhere in the world, including German interest, dividends, and capital gains.

What is RNOR status and how does it affect me?

RNOR (Resident but Not Ordinarily Resident) is a transitional tax residency status for returning NRIs. It functions as a bridge between being a Non-Resident and becoming a full Ordinary Resident.

You typically qualify for this status if you meet one of the following criteria:

• You have been an NRI for 9 out of the last 10 financial years.
• You have lived in India for 729 days or less in the preceding 7 financial years.

This status grants you a 1 to 3-year window where your global income is treated differently from that of a standard Indian resident.

What benefits can I get from this status?

As long as you hold RNOR status, your foreign income is NOT taxable in India, provided it is received outside India first. This allows you to manage your German assets without immediate tax liability in India.

• Global Stocks & ETFs: If you sell them while you are RNOR, the capital gains are tax-free in India.
• German Bank Interest: The interest earned in your German accounts is tax-free in India.
• Dividends: Tax-free in India during this period.

To utilize these exemptions, you must receive the funds in your German bank account first. If you wire sale proceeds or dividends directly to an Indian bank account, the income is considered "received in India" and becomes fully taxable.

Common Questions German NRIs Have About Moving Back

Can I send money from India and buy more overseas stocks?

Yes. You can remit up to $250,000 USD equivalent per financial year under the Liberalised Remittance Scheme (LRS) to invest in foreign stocks. However, be aware that transfers exceeding ₹10 Lakhs in a year attract a 20% TCS (Tax Collected at Source), which you can claim back as a refund or tax adjustment when filing your income tax return in India.

When do I become subject to FEMA upon moving back?

You become a resident under FEMA immediately upon landing in India if your intention is to stay for an uncertain period or for employment and business. Unlike income tax residency (which counts days), FEMA residency applies the moment you return to settle.

Can I continue operating my German bank account?

Yes. Section 6(4) of FEMA allows you to continue holding and operating foreign bank accounts, stocks, and properties if they were acquired when you were a resident outside India. You are not legally required to close your N26, Deutsche Bank, or Commerzbank accounts.

Can I keep my NRO account?

No. Once your status changes to Resident, you are legally required to inform your bank and convert your NRO account to a standard Resident Savings Account. Continuing to hold an NRO account as a resident is a violation of FEMA regulations.

About Paasa

Paasa is a global investing platform built specifically for Indian residents and returning NRIs. We provide direct access to over 10 global exchanges and support 9 global currencies, allowing you to build a truly international portfolio.

• Seamless "In-Kind" Transfers: You can move your entire global stock portfolio directly to Paasa. This allows you to consolidate your assets in one place without triggering a tax event.
• The Compliance Advantage: Paasa provides the exact reports you need for your Indian tax returns and foreign asset disclosures, eliminating the need for manual calculations.
• Estate Tax Protection: Paasa offers access to Ireland-domiciled (UCITS) ETFs, allowing you to legally shield your investments from the US Estate Tax if your portfolio includes US equities.