Foreign assets and accrued gains: which property law applies

First the property law, then the calculation

In a purely German case, the Zugewinngemeinschaft (community of accrued gains) clearly applies. Once the assets or the spouses themselves have a connection abroad, that can no longer be taken for granted. Before asking how much has to be equalized, you need to know under which law the assets are divided at all. Not every country has a Zugewinnausgleich (accrued gains). Other legal systems work with a community of acquisitions or with models entirely of their own.

Since 2019, this preliminary question has been answered by the European Matrimonial Property Regulation Regulation (EU) 2016/1103. It applies in Germany and the other participating member states and sets uniform rules on which property law governs a marriage.

Which property law applies without a choice of law?

If the spouses have agreed on nothing, a tiered set of connecting factors applies Art. 26 Regulation (EU) 2016/1103. First in line is the law of the state where they had their first shared habitual residence after the wedding. If there was none, their common nationality at the time of the marriage decides, and failing that, the closest connection.

What matters is the permanence of this connection. Once determined, the property regime does not, as a rule, move with the couple. A German couple who lived in Germany at first after the wedding usually remains under German property law, even if they later move abroad.

The choice of law as a lever

Spouses do not have to leave this to the accident of where they happen to live. With a choice of law, they decide the applicable property law themselves Art. 22 Regulation (EU) 2016/1103: the law of the habitual residence or the nationality of either spouse, before or during the marriage. The choice has formal requirements and is usually recorded by a notary.

For binational and mobile couples, it is the most important planning tool there is. It creates clarity before a dispute arises, and it is the only point at which the connecting factor can still be influenced. Everything else follows from places of residence that lie far in the past.

Do assets outside the EU count toward the accrued gains?

Once the applicable law is settled, it covers all assets worldwide Art. 21 Regulation (EU) 2016/1103. Where the individual items are located makes no difference. It applies even if it is the law of a non-EU state Art. 20 Regulation (EU) 2016/1103.

So if German property law applies, that includes the vacation home on the Mediterranean, the account in your home country and the stake abroad. They go into the Zugewinnausgleich (accrued gains) just like assets in Germany. No asset stays outside this calculation as a “tax-free haven abroad.”

For marriages before 2019, the old rules still apply

This is where many explanations stop and where most cases begin.

The Matrimonial Property Regulation covers marriages entered into on or after January 29, 2019, and cases in which a choice of law was made on or after that date. For all older marriages, the conflict-of-laws rules that applied before it still govern, and they used different connecting factors.

In practice, this means that for a marriage from 2005, looking at Art. 26 of the regulation gets you nowhere. Which property law applies then has to be answered under the older rules, and the answer may be a different one.

Because most divorces involve marriages entered into well before 2019, this is currently the rule, not the exception. If you find an explanation of the regulation online and apply it to your 1998 marriage, you are calculating under the wrong law.

What a foreign property regime actually changes

That a different law applies sounds abstract. Three examples show what the difference looks like.

The community of acquisitions, which Spanish law, for example, has as its default regime, does not split the increase in value. Instead, it assigns what was acquired during the marriage to both spouses jointly. That is not a claim to payment but joint ownership, and it is divided up rather than equalized.

Gütertrennung (separation of property) as the default regime, as some other legal systems provide, means there is simply nothing to equalize when the marriage ends. A spouse who looked after the children during the marriage is then left without any claim under property law.

The valuation date differs too. German law calculates as of the day the Scheidungsantrag (divorce petition) is served § 1384 BGB. Other legal systems look to the separation or to the date the divorce becomes final, and with fluctuating values that makes a considerable difference.

The difference, then, lies not in the size of a share but in the structure. That is why a foreign property regime cannot be roughly converted into German terms either.

The real hurdle: valuation and enforcement

That settles the law. The practical work only starts here. The right to disclosure extends to assets abroad as well § 1379 BGB. But having the right is one thing, enforcing it is another. Obtaining documents from abroad, valuing real estate and business stakes there and enforcing a German court decision across the border takes effort. It also requires working with colleagues on the ground. So in a cross-border case, the added cost lies mainly in the preparation, less in the calculation itself.

In our experience, four things take the most time. The first two are certified land or company register extracts and a valuation report under the standards of the country where the asset is located. The other two are converting foreign currencies as of the cut-off date and the question of whether a German decision can be enforced there at all.

If you only start on this after the Scheidungsantrag (divorce petition) has been served, you lose months. Gathering the documents can be done earlier, whether the case ends up in a dispute or in negotiations.

If a property abroad is at the center, the same rules apply to its valuation as in Germany; see Property in the equalization of accrued gains. If a business is involved, the route leads through business valuation. Our page on the equalization of accrued gains explains the framework of the calculation as a whole. The other cross-border questions, namely jurisdiction, the law applicable to the divorce and recognition, are covered on our page on international family law.

What these cases hinge on in the first consultation

Almost never the legal question. People who come to us with assets abroad usually have a clear idea of what they own and a very unclear one of what they can document.

The second thing we see again and again concerns the other side. Many people think assets abroad are harder to reach, and some count on it. The right to disclosure reaches them all the same. Anyone who makes assets vanish without explanation has to expect them to be added to their final assets as if they were still there.

So if you own property abroad, gather three things for the first appointment: proof of purchase with date and price, a current register extract and papers on every encumbrance. That way half the work is done before you have even hired us.