German Dual Citizenship for Americans: Law Changes, Tax Rules, and How to Apply
Germany allows dual citizenship for Americans. The Modernization of the Citizenship Law (StARModG), which took effect on June 27, 2024, eliminated the longstanding requirement to renounce one citizenship when obtaining the other. Americans can now become German citizens without giving up their U.S. passport, and Germans who naturalize as U.S. citizens no longer automatically lose their German nationality. A retention permit is no longer required, and there is no obligation to notify German authorities.
The reform also shortened the residency requirement from eight to five years (three years with special integration achievements). It granted automatic citizenship to children born in Germany if one parent has been a legal resident for five years. Since the law took effect, naturalizations in Germany have surged, with approximately 292,000 people naturalized in 2024, of whom nearly 80% retained their previous nationality.
For Americans in Germany, dual citizenship does not increase your U.S. tax obligations. Germany’s income tax rates (up to 45%) are higher than U.S. federal rates, meaning the Foreign Tax Credit typically eliminates your U.S. tax liability. You will still need to file a U.S. return, an FBAR if your German accounts exceed $10,000, and Form 8938 if your foreign assets exceed FATCA thresholds. For a full breakdown of filing in both countries, see our Germany country guide. Here’s what the law change means for eligibility, the application process, and your U.S. tax situation as a dual citizen.
What Changed with Germany’s Dual Citizenship Laws?
Germany’s reformed Nationality Law, which took effect on June 27, 2024, made three major changes:
- Dual citizenship is now allowed: Naturalized residents can keep their original nationality when obtaining German citizenship.
- Faster path to citizenship: Residency requirements dropped from eight to five years (or just three years with special integration accomplishments).
- Easier birthright citizenship: Children born in Germany automatically become citizens if one parent has been a legal resident for five years.
Since the law took effect, a retention permit is no longer required to avoid automatic loss of German citizenship upon applying for U.S. citizenship. You don’t even need to inform the German authorities about planned naturalization.
Will Dual Citizenship Increase My U.S. Tax Burden?
No. Having German dual citizenship doesn’t increase your U.S. tax obligations; it often reduces them to zero.
As a U.S. citizen, you must file annual U.S. tax returns on worldwide income regardless of your citizenship status. However, Germany’s tax rates typically work in your favor through two key protections:
Foreign Tax Credit: Your Best Defense Against Double Taxation
The Foreign Tax Credit provides a dollar-for-dollar credit for German taxes paid. Since Germany’s income tax rates reach up to 45%, generally higher than U.S. rates, this often eliminates U.S. taxes.
Example: You earn €70,000 in Germany and pay €22,000 in German taxes. You can claim a $22,000+ credit against your U.S. tax liability using Form 1116, typically reducing it to zero.
Foreign Earned Income Exclusion: Additional Protection
If you meet residence or physical presence requirements, the FEIE allows you to exclude up to $130,000 (2025 tax year) of German employment income from U.S. taxation.
Most German dual citizens benefit more from the Foreign Tax Credit due to Germany’s higher tax rates, but you can strategically combine both protections for different income types.
Planning ahead for German dual citizenship? Learn about tax treaty benefits in our US Germany totalization agreement guide to see how it protects your Social Security benefits.
Who Qualifies for German Dual Citizenship?
Current German Residents
To qualify for naturalization while keeping U.S. citizenship:
- Residency: Five years of legal residence (three years with special integration)
- Financial stability: Support yourself and your family without social assistance
- Language skills: German proficiency at the B1 level minimum
- Clean record: No serious criminal convictions
- Citizenship test: Pass the naturalization test (33 questions, need 17 correct)
Special Integration Path (Three Years)
Qualify for faster citizenship by demonstrating:
- Advanced German language skills (above B1)
- Outstanding academic, professional, or vocational achievements
- Significant civic engagement or volunteer work
- Full-time employment with strong performance
Americans with German Heritage
If you have German ancestry, you might already qualify for German citizenship by descent, which has always allowed dual citizenship.
What About U.S. Filing Requirements with German Dual Citizenship?
Your U.S. filing obligations remain the same, but you may need additional forms:
Required Annual Filings
- Form 1040: Report worldwide income (German taxes typically provide substantial credits)
- FBAR: Required if German bank accounts exceed $10,000 total at any point
- Form 8938: Required for higher asset thresholds (typically $200,000+ for expats)
Don’t worry about additional paperwork. As a German dual citizen, you may need to file an FBAR (if your accounts exceed $10,000) and Form 8938 (for higher asset thresholds). These are informational forms only and don’t create additional taxes. Most German dual citizens still owe zero US taxes thanks to the Foreign Tax Credit.
How Does This Work for Different Expat Situations?
Corporate Expats in Germany
Dual citizenship provides long-term security beyond your assignment period. Your employer’s tax equalization typically handles both countries’ taxes during assignment, while dual citizenship opens future opportunities in the EU market.
Entrepreneurs and Self-Employed
German citizenship provides EU market access for business while maintaining U.S. opportunities. You’ll benefit from Germany’s social safety net and healthcare while keeping U.S. business operations flexible.
Families with Children
Children born in Germany to American dual citizens automatically receive both citizenships, providing educational and career opportunities in both countries without future naturalization requirements.
Future Retirees
German dual citizenship ensures access to Germany’s healthcare system and social benefits while maintaining U.S. Social Security eligibility and access to retirement accounts.
Managing German benefits and US taxes? Read our guide on how to report German social security on US tax returns to handle both systems correctly.
Common Questions About German Dual Citizenship and Taxes
Will I Pay Double Taxes?
Unlikely. Germany’s higher tax rates usually eliminate U.S. tax liability through the Foreign Tax Credit. The US-Germany tax treaty also prevents proper double taxation.
Can I Use Both FEIE and Foreign Tax Credit?
Yes, but not on the same income. To maximize benefits, you might use FEIE for employment income and the Foreign Tax Credit for investment income.
What If I Move Back to the US Later?
Your German citizenship remains valid. You’ll file as a U.S. resident again while maintaining the flexibility to return to Germany or travel throughout the EU.
Do I Need Special U.S. Government Approval?
No. The U.S. allows dual citizenship; you don’t need to notify the U.S. government when obtaining German citizenship.
How to Apply for German Dual Citizenship
Step 1: Verify Eligibility
Confirm you meet the five-year residency requirement (or three years with special integration) and gather required documents, including birth certificates, passports, proof of residence, and income documentation.
Step 2: Submit Application
You can apply at your local naturalization authority (find yours here) with all required documents. Application fees typically range from €255 to € 1,695.
Step 3: Complete Requirements
You must take the German citizenship test and demonstrate B1 language proficiency. The entire process typically takes 6-24 months.
Step 4: Receive Citizenship
Attend your naturalization ceremony to receive your certificate, then apply for your German passport.
Processing times have increased since the law changes took effect, so start early if you plan major life changes.
Managing Taxes as a German Dual Citizen
Having dual citizenship means dealing with two tax systems, but it doesn’t have to be overwhelming. At Greenback Expat Tax Services, we’ve helped over 23,000 expats file more than 71,000 tax returns while maintaining a 4.9-star average across 1,200+ TrustPilot reviews.
If you’re ready to be matched with a Greenback accountant, click the get started button below. For general questions on expat taxes or working with Greenback, contact our Customer Champions.
This article provides general information about German dual citizenship and U.S. tax obligations. Tax situations vary based on individual circumstances. For personalized advice about your situation, consult a qualified professional specializing in expat tax matters.
