Get to know the authorIn an increasingly interconnected world, many Americans are moving abroad, leading more and more to wonder things like “Does Germany allow dual citizenship?” For a long time, the answer was predominantly “no.” However, recent changes in German immigration legislation are signaling a change on the horizon.
Below, we’ll go over everything expats from the United States need to know about dual citizenship in Germany: who’s eligible, how to get it, what the tax implications are, and more.
Let’s dive in!
Historical approach of Germany to dual citizenship
For many years, German residents who had naturalized, and their children, had to renounce their original citizenship before applying for German citizenship.1
In 2021, the coalition government, which includes the Social Democrats, Greens, and Free Democrats, announced plans to modernize the citizenship laws.2 By January 2023, they drafted a law. The Cabinet passed this law in August, and it will soon go to the Bundestag (federal parliament) for review.
While the final decision is anticipated around late November to mid-December 2023, it’s widely expected to pass, given it requires just a simple majority. After approval, President Frank-Walter Steinmeier, a member of the SPD party that initially proposed the law, will sign it.
Proposed changes to dual citizenship rules in Germany
If approved, the new citizenship law will still take some time to implement, with the changes likely to go into effect by April 2024.3 This would permit non-EU naturalized Germans and children born in Germany to foreign parents to hold multiple nationalities and eliminate the requirement to choose between their existing citizenship and German citizenship.
The proposed changes also aim to simplify the citizenship acquisition process by:
- Reducing the number of years of continuous residency required to apply for citizenship from eight years, (or, in cases of “exceptional integration,” six), to five, or just three years for those who show “exceptional integration” via work, education, volunteering, or language (C1 German level)
- Relaxing the language requirements for applicants ages 67 and over and certain groups who have faced hardships in learning German
- Granting children born in Germany to foreign parents automatic citizenship as long as their parents have lived in Germany for five years (previously, the requirement was eight years)
🔎 Worth noting (and perhaps clarifying with an immigration specialist):
It remains unclear whether these updated laws would apply beyond two generations of naturalized Germans (that is, beyond the children of naturalized Germans).
Benefits of dual citizenship in Germany
German citizenship is highly sought-after and with good reason. German citizens enjoy many rights and privileges as a result of their nationality. Some of the benefits of dual citizenship in Germany and the USA include the ability to live, work, and study anywhere in Germany, the EU, the EEA, or Switzerland (with few exceptions) indefinitely. Of particular interest to Americans interested in gaining German citizenship is that doing so makes one eligible for German social programs such as social security and healthcare. Additionally, German citizens are entitled to vote in German elections and may pass German citizenship to their children.
The German passport is also incredibly powerful, allowing for visa-free travel to 190 different countries.4 In 2023, the German passport tied for second place in the world alongside Italy and Spain in the 2023 Henley Passport Index, which ranks the most powerful passports in the world.5 (For context, the US landed in eighth place.)
How to get dual citizenship in Germany
With the new citizenship law expected to pass, some are even applying for citizenship now, hoping that in the 18 to 24 months it takes to process the application, the law will have kicked in. Experts largely agree, though, that it’s best to wait to apply until after the new law has been approved in the rare case of an exceptionally quick application review.
Once the law has taken effect, the process to apply for dual citizenship will generally include:
- Double-checking that you meet all of the citizenship requirements
- Passing the German Test for Immigrants, or DTZ (only for those applying to citizenship by naturalization)
- Gathering the following documents:
- Proof of identity (e.g. passport, birth certificate)
- Proof of parents’ German citizenship (only for those applying to citizenship by descent)
- Marriage certificate (if applicable)
- Completed application form (available at your local immigration office, town/city council, or regional district office)
- Relevant appendices for those applying for citizenship by descent (if applicable)
- German residence records
- Bank statements proving financial stability
- A B1 German language certificate, such as a Zertifikat Deutsch or equivalent (if applicable)
- A certificate of completion of the German citizenship by naturalization test, or DTZ (if applicable)
- Proof of application fee payment (255€ fee per adult, 51€ per minor child)
- Submitting your application materials in person at the same office where you got your application form
- Receiving approval (typically after 18-24 months)6
After gaining German citizenship, you’ll receive a certificate of nationality to serve as proof, which you can use to apply for a passport. At that point, you’ll have all the same rights, protections, and obligations of all other German nationals.
Challenges when applying for German dual citizenship
The application process might seem straightforward when written out, but it’s not uncommon to run into hurdles along the way. These might include:
Navigating technicalities
Figuring out whether you’re qualified for German citizenship (and what kind you qualify for) isn’t always straightforward. Before 1975, for example, German law didn’t automatically grant citizenship to the children of all German parents — only to the children of German men. Those with German mothers and non-German fathers born before 1975 who have not already been granted citizenship, then, would have to apply for naturalization vs. citizenship by descent.
Overcoming bureaucratic challenges
Obtaining all of the documents you need to apply and then receiving approval can be tedious and time-consuming. In some cases, you may be required to provide extra documents or appeal a denial.
Mastering the German language
Many people who have been working and living in Germany for years will have already obtained a strong level of German, but reaching German language proficiency is notoriously challenging when starting from scratch as an adult.
Tax implications for US Citizens with dual citizenship
US citizens who seek to obtain dual citizenship as German citizens need to be mindful of the fact that they could end up responsible for filing tax returns with both the German and US authorities. Note that this does not mean that you are liable to pay taxes to both countries, however a certain amount of self-education is involved in understanding how to ensure international tax compliance if you are going to obtain your German passport and ostensibly move overseas.
German tax obligations
Most expats living in Germany will be required to file a German tax return, or Einkommensteuererklärung, and pay German taxes. If they qualify as German tax residents, their global income is subject to federal income taxes at a rate between 0% and 45%, depending on how much they earn in total. If they aren’t tax residents, however, only German-sourced income would be subject.
In addition, they may also be subject to other taxes, such as property taxes, capital gains taxes, and even a church tax.
US tax obligations
It might not seem fair, but all American citizens and permanent residents who meet the minimum income reporting threshold must file a federal tax return, even if they’re living abroad. As a result, US expats living in Germany could hypothetically be taxed on the same income by both governments.
While a German/US tax treaty does exist, the Savings Clause limits its benefits. Fortunately, there are certain tax breaks available to Americans abroad. In addition to these tax breaks, though, US expats may also face additional reporting requirements. Below is a quick breakdown of some topics that lay a helpful foundation for taxes for Americans living abroad in Germany.
Foreign Earned Income Exclusion (FEIE)
The FEIE allows those who pass the Physical Presence Test or Bona Fide Residence Test to exclude up to $120,000 USD for tax year 2023 ($112,000 USD for tax year 2022) of foreign-earned income from taxation, as well as write off qualifying housing expenses like rent and utilities via the Foreign Housing Exclusion/Deduction.
Foreign Tax Credit (FTC)
In layman’s terms, the FTC allows you to deduct what you pay in foreign income taxes from what you owe in US income taxes, as long as your income meets certain basic criteria.
Foreign Bank Account Report (FBAR) & the Foreign Account Tax Compliance Act (FATCA)
Expats with $10,000 USD or more in foreign bank accounts at any point in the year must report the contents of those accounts to the Financial Crimes Enforcement Network (FinCEN) via FinCEN Report 114.
FATCA, meanwhile, compels those with over $200,000 USD in foreign financial assets by the end of the year — or over $300,000 USD in foreign assets at any time during the year — to report them on Form 8938. Thresholds vary depending on your filing status and country of residence.
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