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US Taxes for Americans in Germany: FBAR, FEIE, the Treaty and Catching Up (2026 Guide)
Updated: Oct 6
Who this guide is for: Americans in Germany, and German founders selling to the US
Moving to Germany does not end your relationship with the IRS. A US citizen or green-card holder files a US return on worldwide income every year, wherever they live, and reports foreign accounts on top of it. Most of the people who call us from Berlin, Munich and Frankfurt are not trying to avoid that — they simply never heard it, or heard it years after they moved. This guide lays out the US rules that actually apply in Germany, what the local Finanzamt (Germany's local tax office; the federal Bundeszentralamt für Steuern, or BZSt, handles cross-border and identification matters, not individual assessments) side of the picture means for the US return, and how to catch up if you are behind.
I am an Enrolled Agent, licensed by the US Treasury to represent taxpayers before the IRS from anywhere in the world. We work with four groups in Germany: US citizens working in Berlin, Munich or Frankfurt for German employers or on freelance visas; dual US-German citizens and military-connected families who stayed after a posting; retirees drawing US pensions and Social Security while living in Germany; German founders, engineers and freelancers who want a US LLC, EIN and US bank account to bill American clients. This is general information, not individual advice.
The US-Germany tax treaty and totalization: what they do and do not do
The US and Germany have an income tax treaty in force; it coordinates pensions, annuities, dividends and residency tie-breaks and contains detailed rules for cross-border workers, but the saving clause means it does not exempt US citizens from filing.
The US and Germany have a totalization agreement in force, which generally prevents dual social-tax exposure and assigns coverage for most posted and cross-border workers to one country at a time.
The single most common misunderstanding we correct: a treaty never removes the obligation to FILE. It changes how specific income types are taxed, and the saving-clause in every US treaty lets the IRS tax its own citizens as if most of the treaty did not exist.
FBAR, FATCA and the accounts you have in Germany
FBAR applies to euro accounts at Deutsche Bank, Commerzbank, the Sparkasse and Volksbank networks and every other German bank once the combined high balance crosses the reporting threshold; brokerage and pension accounts count too.
FATCA (Form 8938) is a second, separate report with higher thresholds for people living abroad; missing one and not the other is common and fixable. Both are informational — no tax is due on the form itself — but the penalties for skipping them are the largest in the expat rulebook.
FEIE vs. Foreign Tax Credit in Germany
The Foreign Earned Income Exclusion covers wages and freelance income earned while a bona fide resident of Germany or physically present abroad long enough; it does not cover German pension distributions, US-source income or investment income.
Because German income tax is generally higher than US tax, the Foreign Tax Credit is usually the primary tool and often reduces the residual US bill to zero on earned income; the FEIE is rarely the better choice here.
The choice is not permanent, but revoking the exclusion locks you out of it for several years, so the decision should be modeled against your actual mix of wages, self-employment and investment income before the first return is filed.
Businesses, pensions and investments: the forms that surprise people in Germany
German private pension products and Riester-style contracts can carry their own US reporting; German investment funds are typically PFICs, and a German GmbH or UG owned by an American triggers Form 5471.
US Social Security and most US pensions paid to a resident of Germany are coordinated by the treaty, but the return still has to be filed and the treaty positions disclosed correctly.
Every one of these forms carries an automatic, per-form penalty for non-filing that has nothing to do with whether tax was owed — which is why they matter more than the 1040 itself for many long-term residents.
What the local Finanzamt (Germany's local tax office; the federal Bundeszentralamt für Steuern, or BZSt, handles cross-border and identification matters, not individual assessments) taxes — and how it interacts with your US return
Germany taxes residents on worldwide income, so a US citizen in Berlin is generally filing in both countries every year and reconciling the two through the credit mechanism.
Freelancers in Germany face a threshold classification question on the local side — whether their work counts as a liberal profession, generally outside trade tax, or a commercial trade, which is not — plus VAT registration; that sits outside the US return, and we coordinate with the local Steuerberater rather than advising on German filings ourselves.
We are a US firm: we handle the US side in-house and coordinate with your local accountant on the Germany side, rather than pretending to be licensed in both.
Germany-specific patterns we see
Three things come up in Germany cases more than anywhere else:
The German freelance and creative scene means many Americans there are self-employed; even with a totalization agreement, the certificate-of-coverage question has to be answered correctly or dual social-tax exposure appears.
German bank accounts are routinely reported to the IRS under FATCA, and German banks have closed accounts of Americans who could not produce a US taxpayer number — discovery is not the risk it used to be.
Long-term residents often hold a stack of German fund investments bought through a local advisor, each one a separate PFIC calculation; unwinding that portfolio is usually step one of the cleanup.
Behind on US taxes? The streamlined path back
Americans in Germany who have not filed for years generally qualify for the Streamlined Foreign Offshore Procedures — three years of returns, six years of FBARs, a non-willfulness statement and no failure-to-file penalty — as long as the IRS has not already written to them.
The program is designed for exactly this population, and the non-willfulness statement is the part that needs a professional's attention — it is a signed narrative to the IRS, not a checkbox.
German founders and freelancers: reaching US clients with a US LLC
Not everyone reading this is American. Many of our Germany clients are German founders, freelancers and agencies who bill US customers and want dollar banking, Stripe and a US invoice. A non-US person can own a US LLC and get an EIN without a Social Security Number; the annual price is a Form 5472 information return and a pro-forma 1120, and the reward is US market access without a US tax return on the owner's worldwide income in most single-owner setups.
The trap is doing it halfway — forming the LLC and skipping the 5472, which carries its own automatic penalty.
Germany cities we serve
We work with clients in Berlin, Munich, Frankfurt, Hamburg, Cologne, Stuttgart and Düsseldorf and everywhere else in Germany, entirely by video call, secure portal and e-signature, on US hours and Germany hours.
Frequently Asked Questions
Do I have to file US taxes if I live in Germany?
Yes. US citizens and green-card holders file on worldwide income every year regardless of where they live; the treaty and the FEIE reduce the tax, not the filing duty.
Do my Germany bank accounts need an FBAR?
FBAR applies to euro accounts at Deutsche Bank, Commerzbank, the Sparkasse and Volksbank networks and every other German bank once the combined high balance crosses the reporting threshold; brokerage and pension accounts count too.
Is there a US-Germany tax treaty?
The US and Germany have an income tax treaty in force; it coordinates pensions, annuities, dividends and residency tie-breaks and contains detailed rules for cross-border workers, but the saving clause means it does not exempt US citizens from filing.
Does Germany have a Social Security totalization agreement with the US?
The US and Germany have a totalization agreement in force, which generally prevents dual social-tax exposure and assigns coverage for most posted and cross-border workers to one country at a time.
I have not filed in years while living in Germany. What now?
Americans in Germany who have not filed for years generally qualify for the Streamlined Foreign Offshore Procedures — three years of returns, six years of FBARs, a non-willfulness statement and no failure-to-file penalty — as long as the IRS has not already written to them.
Related Reading
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This article is general information, not individual tax advice. Book a free 20-minute review or call, text or WhatsApp us to talk through your own situation.
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