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?
- What's the best way to stay invested globally after moving back?
- What happens to my German Pension (GRV and Private) when I move back?
- Tax and reporting implications of moving back
- RNOR status and how it affects you
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.
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.
