If you hold vested RSUs through an Israeli Section 102 trustee and are about to move to Germany, the day you sell and the day you arrive decide which country taxes what. Sold before you become German tax resident, the shares are Israel’s business alone. Sold afterwards, Germany taxes only the increase in value since your move, but the two countries measure that line differently, and the trustee may not draw it at all. This article explains the German side of the question and the sequence that keeps it simple.
How Germany looks at Section 102 shares
Israel and Germany tax the same shares on different timelines, and that is the root of every question that follows.
Under Section 102 of the Israeli Income Tax Ordinance, the trustee track defers all Israeli tax until the trustee sells the shares or releases them to you. If the sale happens at least 24 months after the grant, the sale price is split: the average share price in the 30 trading days before the grant is taxed as employment income at your marginal rate, and the rest is taxed as a capital gain at 25% or 30%. If you sell within the 24 months, or leave Israel before they end, the Israeli authorities treat the entire sale price as employment income.
Germany does not wait for the sale. From the German perspective, the employment income from an RSU arises when the shares are allocated to you at vesting. The holding period and the fact that a trustee holds the shares do not change this: the Federal Fiscal Court has consistently held that restrictions on sale do not postpone the receipt of income. If your RSUs vested while you lived and worked in Israel, Germany therefore has no claim on that employment income, whenever you sell.
What Germany sees after vesting is simply a shareholding. Your acquisition cost is the market value of the shares at vesting. Any later increase is a capital gain, taxed at a flat 25% plus solidarity surcharge, 26.375% in total, and only if you are German tax resident when you sell.
When German tax residency begins
You become subject to unlimited German tax liability on the first day you either have a residence in Germany or begin a stay that will last longer than six months. Both tests are factual, not formal.
A residence in the sense of the German Fiscal Code requires that you actually have a dwelling at your disposal and intend to keep and use it. A signed lease alone is not enough. If the lease starts on the first of the month but you receive the keys and move in a few days later, the residence begins on the day you take possession. Furniture delivered earlier, a family member staying in the apartment, or an early registration with the local authorities can bring the date forward. The safe course is to keep the lease start, the key handover, the move and the registration on the same day or in that order, and to have the landlord confirm the handover date in writing.
The second test, habitual abode, catches people who start working in Germany before the family moves. A stay in temporary accommodation that turns into more than six months counts from its first day, and short trips home do not interrupt it. Whether the family joins you in the meantime makes no difference. If you want a clean cut-off date, do not start working in Germany before that date.
The tax treaty between Germany and Israel adds a second layer. Even if a German tax office considered you resident a few days early, the treaty would still treat you as resident in Israel until the centre of your vital interests has moved, which for most families is the day they arrive.
Selling before the move
If the trustee sells your shares while you are still resident in Israel, Germany has nothing to tax. Capital gains from shares are not among the items that Germany taxes in the hands of non-residents, and employment income for work performed in Israel is not either. The treaty confirms the result: gains from shares may be taxed only in the state of residence, and that is still Israel.
The sale does not affect your German tax rate for the year of the move either. Germany applies a progression clause to foreign income earned in the part of the year before you became resident, so that your German salary is taxed at the rate that would apply to your total income. Capital gains that would fall under the German flat rate are excluded from this clause. The employment-income element of the shares does not enter into it, because from the German perspective it was received at vesting, in an earlier year. Only if a tax office took the view that the income arose at the sale, which runs against the established case law, could the vesting value be taken into account for the rate, and even then at one fifth of its amount, because the shares vested over several years.
A sale a few days before the move is therefore the cleanest option from the German side. Whether it is also the best option from the Israeli side depends on your Israeli bracket in the year of sale and on the 24-month periods of your grants, and that is a question for your Israeli adviser.
Selling after the move
If you keep the shares in the trust and sell after you have become German tax resident, Germany taxes the gain, but not all of it.
The treaty contains a provision written for exactly this situation. Where a person moves from one state to the other, the state of departure keeps the right to tax the gains that had accrued up to the move under its own law, and the state of arrival does not tax them. Germany therefore taxes only the increase in value between the day of your move and the day of sale, at 26.375%. The protocol to the treaty fixes the market value of the shares on the day of the move as the reference point.
Two practical consequences follow. First, document the closing price of the shares on the day you take up residence in Germany. It is the figure on which the split between the two countries rests, and it is far easier to record on the day than to reconstruct later. Second, whether you sell before or after the end of the Israeli 24-month periods makes no difference to the German side. Germany does not know these periods; it only asks whether you were resident on the day of sale and what the shares were worth when you arrived.
If the share price falls after the move, the difference is a German capital loss, which can be set off against other gains from shares.
Where the two systems clash
The difficulty with selling after the move is not the German tax itself. It is that Israel may not stop where Germany starts.
For shares sold within the 24-month period, or after a departure from Israel before that period ends, Israel treats the entire sale price as employment income for work performed in Israel. Under the treaty, employment income may be taxed by the state where the work was performed, and the work was performed in Israel. From the Israeli perspective the whole amount, including the increase in value after your move, is therefore taxable in Israel, and the trustee withholds accordingly.
Germany reads the same facts differently. It sees employment income received at vesting, which it leaves to Israel, and a capital gain since the move, which under the treaty only the state of residence may tax. The two readings overlap on one slice: the increase in value after the move. Israel calls it employment income and taxes it; Germany calls it a capital gain and taxes it too.
Germany does not credit the Israeli tax on that slice. German law credits foreign tax on capital gains only where the treaty provides for it, and the treaty does not, because in the German reading Israel has no right to tax that slice in the first place. Relief has to be sought in Israel, by refund, or through a mutual agreement procedure between the two tax authorities, which is slow and has no guaranteed outcome. The amount at stake is limited to the tax on the post-move gain, but for anyone holding a large position over the move it is worth avoiding.
Even where Israel applies the capital gains treatment, its exit tax rules apportion the gain by time rather than by the value on the day of departure. The treaty protocol anticipates this and makes the market value on the day of the move decisive in a mutual agreement procedure, but that is a remedy after the fact, not a mechanism the trustee applies on the day of sale.
What to do before you move
The sequence that avoids the clash is short. Decide on the move date and keep it clean: lease, keys, arrival and registration on or after the same day, no work in Germany before it, written confirmation of the handover from the landlord. Instruct the trustee to sell before that date, on a day that suits your Israeli bracket and your grants‘ 24-month periods. If you want to keep your exposure to the company’s shares, buy them back after your arrival in an ordinary brokerage account outside the trust. From then on, any gain is taxed only in Germany at the flat rate, with no trustee, no treaty conflict and no refund procedure. The cost is the transaction fees and a few days out of the market.
If you prefer to hold the trustee shares over the move, ask your Israeli adviser two questions before you decide: how the trustee will treat a sale after your departure, and whether the Israeli authorities will limit their claim to the value on the day of your move. If both answers are favourable, holding is as good as selling and buying back. If either is uncertain, it is not.
In either case, record the closing price of the shares on the day you take up residence in Germany, and keep the vesting statements showing the number of shares and their value at each vesting date. Your German tax return for the year of the move will need both.
A note on the rest of your portfolio
The same logic applies to other assets you bring with you. Israeli savings funds, shares held outside a Section 102 plan and property abroad all become part of your German tax base on the day you arrive, and Germany taxes income and gains from that day on. Gifts and inheritances from family in Israel are a separate chapter: once you are resident in Germany, German gift and inheritance tax applies to what you receive, and transfers planned before the move are treated very differently from transfers completed after it. If a transfer is on the horizon, it belongs on the same timetable as the move.
This article is general information on German tax law as of October 2026 and does not replace advice on your individual situation. The Israeli rules are described as they are commonly applied and should be confirmed with an Israeli adviser. Kleutgens Advisors advises individuals relocating to or from Germany on the tax consequences of the move, including employee equity, investments and family transfers, and works with local counsel in the other country where the case requires it.
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