Does Germany Allow Dual Citizenship? [2025 Tax Guide for US Expats]
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Yes, Germany allows dual citizenship. In 2022, only 168,545 people living in Germany became naturalized citizens, representing just 3.1% of foreign nationals living there for at least ten years. This has been rapidly changing since Germany’s nationality law changes took effect in June 2024.
Thanks to sweeping reforms that eliminated the longstanding renunciation requirement, Germany now allows American expats to obtain German citizenship without renouncing their US citizenship.
This means you can enjoy the benefits of both citizenships: voting rights, visa-free EU travel, access to Germany’s healthcare system, and business opportunities across Europe—all while keeping your US passport and staying compliant with both countries’ tax requirements.
The best part? Most German dual citizens owe little to nothing in US taxes due to Germany’s higher tax rates and the Foreign Tax Credit.
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 when accepting US citizenship upon application. You don’t even need to inform the German authorities about planned naturalization.
Will Dual Citizenship Increase My US Tax Burden?
No. Having German dual citizenship doesn’t increase your US tax obligations; it often reduces them to zero.
As a US citizen, you must file annual US 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 US rates—this often eliminates US taxes entirely.
Example: You earn €70,000 in Germany and pay €22,000 in German taxes. You can claim a $22,000+ credit against your US 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 US 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 US 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 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.
Stop guessing. Download the expert guide now.
What About US Filing Requirements with German Dual Citizenship?
Your US 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 US opportunities. You’ll benefit from Germany’s social safety net and healthcare while keeping US 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 US Social Security eligibility and retirement account access.
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 US 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 simply file as a US resident again while maintaining the flexibility to return to Germany or travel throughout the EU.
Do I Need Special US Government Approval?
No. The US allows dual citizenship; you don’t need to notify the US 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.
No matter how complex your German dual citizenship tax situation may be, you’ll have peace of mind knowing your taxes were done right.
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 US tax obligations. Tax situations vary based on individual circumstances. For personalized advice about your situation, consult a qualified professional specializing in expat tax matters.
