European flags representing British French and German expats considering MM2H Malaysia

MM2H for British, French, and German Expats: What Changes by Nationality

Q: Should I have separate wills for UK and Malaysian assets?

Yes. A single will referencing both jurisdictions can create probate conflicts. Have a UK will for UK assets and a Malaysian will for Malaysian assets.

Investment

April 19, 2026

The MM2H programme treats all nationalities equally at the application stage. The fixed deposits, property thresholds, and visa terms are the same whether you hold a British, French, or German passport. The differences start after the visa is approved, because your pension system, your home country's tax rules, and your estate planning obligations vary by nationality in ways that materially affect your financial position in Malaysia. This post covers what British, French, and German expats specifically need to consider before and after securing MM2H.

Key Takeaways

The MM2H programme requirements are identical for all nationalities, but the financial implications differ significantly based on your home country's pension rules, tax treaties, and estate planning laws.
British expats face UK-specific considerations around DB pensions, CETV transfers, HMRC's Statutory Residence Test, and UK inheritance tax that persists based on domicile, not residency.
French expats must account for France's worldwide taxation principle, the treatment of French state pensions under the France-Malaysia DTA, and forced heirship rules that override Malaysian succession law.
German expats should understand the Progressionsvorbehalt mechanism, the German statutory pension's taxation under the DTA, and Germany's exit tax provisions on unrealised gains.

How Does MM2H Affect British Expats Specifically?

British expats face three connected issues that other nationalities do not: the Statutory Residence Test governs when UK tax obligations actually end, DB pension CETV transfers require careful timing around residency changes, and UK inheritance tax follows domicile rather than residency. Each of these interacts with the MM2H decision.

UK Tax Residency and the Statutory Residence Test

Holding an MM2H visa does not make you a non-UK tax resident. HMRC determines your UK tax status through the Statutory Residence Test, which counts days spent in the UK and examines your ties to the country. If you maintain a UK home, UK bank accounts, a UK spouse, or UK economic interests, you may remain a UK tax resident even while spending most of your time in Malaysia.

The practical implication for MM2H holders: if you spend 90 days in Malaysia (the programme minimum for under-50s) and 120 days in the UK, you are still a UK tax resident under the SRT. Your worldwide income remains taxable by HMRC. The MM2H tax exemption on foreign income in Malaysia is irrelevant if the UK is still taxing you as a resident.

To genuinely benefit from Malaysia's favourable tax position, you need to spend 182+ days in Malaysia (becoming a Malaysian tax resident) while simultaneously meeting the SRT departure conditions for the UK. For most expats, this means spending fewer than 16 days in the UK in the year of departure and fewer than 46 days in subsequent years if significant UK ties remain. For the full mechanics, see our guide on cross-border tax residency rules.

DB Pension Transfers and CETV Timing

British expats with defined benefit pensions face a decision that is unique to the UK system. The cash equivalent transfer value (CETV) of a DB pension is the lump sum a scheme will pay to release you from the defined benefit. CETV values fluctuate with gilt yields and scheme funding levels. Timing the transfer around a move to Malaysia, rather than leaving it to chance, can mean a six-figure difference in the amount you receive.

The interaction with MM2H is specific. If you transfer a DB pension to a QROPS or a SIPP while resident in Malaysia, the tax treatment depends on your residency status in both countries at the time of transfer, the jurisdiction of the receiving scheme, and whether the overseas transfer charge applies.

For a pension above the GBP 30,000 threshold, regulated financial advice is required before a transfer can proceed. This is an FCA requirement, and bypassing it is not possible. The decision should be coordinated with your MM2H timing, not made in isolation. See our DB pension CETV transfer guide for UK expats in Southeast Asia for the full picture.

UK Inheritance Tax and Domicile

UK inheritance tax (IHT) is one of the most misunderstood areas for British expats. IHT follows domicile, not residency. If you are domiciled in the UK, your worldwide estate is subject to IHT at 40% above the nil-rate band, regardless of where you live or hold assets. Moving to Malaysia on MM2H does not change your domicile unless you can demonstrate you have permanently left the UK with no intention of returning.

HMRC treats domicile of origin as sticky. A British-born expat who has lived in Malaysia for 10 years on MM2H, owns Malaysian property, and holds Malaysian bank accounts may still be treated as UK-domiciled if they maintain UK assets, family ties, or a UK will. The implications are significant: your Malaysian property, your MM2H fixed deposit, and your offshore investments are all potentially within the scope of IHT.

For a full breakdown, see our guide on UK inheritance tax for expats in Malaysia. The MM2H visa is the best route for long-term residency in Malaysia for British expats, as covered in our guide to MM2H visas for UK expats, but the estate planning layer requires separate, specialist attention.

What Should French Expats Know About MM2H?

French expats must contend with France's worldwide taxation principle, the specific treatment of French state pensions under the France-Malaysia double taxation agreement, and forced heirship rules that can override the succession law of the country where you live. These three issues interact with MM2H in ways that do not apply to other nationalities.

French Tax Residency and Worldwide Taxation

France taxes the worldwide income of its tax residents. If you are a French tax resident (foyer fiscal in France), moving to Malaysia does not change your French tax obligations until you formally establish non-residency. The criteria are similar to the UK's SRT but structured differently: France looks at your principal home (habitation principale), your centre of economic interests, and your professional activity.

An MM2H visa holder who maintains an apartment in Paris, receives rental income from French property, and returns to France for three months each year may still be treated as a French tax resident by the Direction Generale des Finances Publiques. The MM2H tax exemption in Malaysia is irrelevant to the French tax authorities.

To benefit from Malaysia's tax position, French expats need to sever enough ties with France to establish non-residency under French domestic law. This typically means selling or renting out your French property (or designating it as non-principal residence), closing French professional activities, and spending fewer than 183 days per year in France. The France-Malaysia DTA then governs how specific income types are taxed.

French State Pension Treatment

Under the France-Malaysia DTA, French state pensions (retraite de base from the regime general or AGIRC-ARRCO) are taxable in France regardless of where you live. This differs from the UK treaty, where pension income is generally taxable only in the country of residence.

This means a French MM2H holder receiving EUR 2,000 per month from the French state pension system will pay French income tax on that pension even while living in KL. The MM2H foreign income exemption does not override the treaty's allocation of taxing rights to France.

Private pension income and investment income follow different rules. Under the DTA, these are generally taxable in the country of residence. If you are a Malaysian tax resident, these income types fall under the MM2H exemption. For practical planning, French expats on MM2H typically have a split: state pension taxed in France, private pension and investment income exempt in Malaysia.

Forced Heirship and Estate Planning

French succession law imposes forced heirship rules (reserve hereditaire). Your children are entitled to a minimum share of your estate under French law, regardless of what your will says or where you live. For two children, the reserve is two-thirds of the estate. For one child, it is half.

If you are a French national living in Malaysia on MM2H, and you die while holding Malaysian property, the question of which country's succession law applies becomes complex. EU Regulation 650/2012 (the Brussels IV Regulation) allows EU nationals to choose the law of their nationality to govern succession, but Malaysia is not party to this regulation. Malaysian succession law does not recognise forced heirship in the same way.

French expats should have a separate Malaysian will for their Malaysian assets and a French will for their French assets, drafted by lawyers who understand both systems. Failing to do this creates the risk that your MM2H property and fixed deposit are contested under conflicting legal frameworks. This is one area where the comparison of residency programmes globally matters. Some jurisdictions handle cross-border succession more cleanly than others.

What Are the Key Considerations for German Expats on MM2H?

German expats face three specific issues: the Progressionsvorbehalt mechanism that uses exempt foreign income to increase tax rates on German-taxed income, exit tax provisions on unrealised capital gains, and the German statutory pension's treatment under the Germany-Malaysia DTA. Each requires planning before the move, not after.

German Tax Residency and Progressionsvorbehalt

Germany taxes the worldwide income of its tax residents. Establishing non-residency requires deregistering from the Einwohnermeldeamt, giving up your German apartment or home, and spending fewer than 183 days per year in Germany. Maintaining a permanent home in Germany, even a rented apartment, can be enough for the German tax authorities to treat you as a tax resident.

Even after establishing non-residency, the Progressionsvorbehalt rule can still affect you. If you earn income that is exempt from German tax under the DTA (such as Malaysian rental income), Germany still uses that income to calculate the applicable tax rate on any income that remains taxable in Germany. The exempt income pushes up the marginal rate applied to your German-taxed income.

For a German MM2H holder who retains German rental property, a German pension, and German bank accounts, the Progressionsvorbehalt means that the MM2H tax exemption on foreign income in Malaysia does not translate to a simple reduction in overall tax. The interaction is more complex than most assume.

German Exit Tax (Wegzugsteuer)

Germany's exit tax applies to shareholders who hold 1% or more of a German corporation and leave Germany. Unrealised capital gains on those shares are deemed realised and taxed at departure. This provision is specific to significant shareholdings and does not apply to standard investment portfolios.

If you are a German executive with equity in a German company and you are relocating to Malaysia on MM2H, the Wegzugsteuer needs to be quantified and planned for before you leave. Deferral arrangements exist within the EU/EEA, but Malaysia is not an EU/EEA member state, so the full tax liability may crystallise on departure. Specialist German tax advice is not optional here.

German Statutory Pension Treatment

Under the Germany-Malaysia DTA, German statutory pensions (gesetzliche Rente) are taxable in Germany. This applies regardless of where you live. A German MM2H holder receiving EUR 1,800 per month from the Deutsche Rentenversicherung will pay German income tax on that pension.

The taxable portion of German statutory pensions has been increasing annually under the 2005 Alterseinkuenftegesetz (Retirement Income Act). For pensions commencing in 2026, 86% of the pension is taxable. This percentage rises by 0.5% per year until 100% is reached in 2058.

Private pension income (Riester, Ruerup, or company pensions) follows residency-based rules under the DTA and is generally taxable in the country of residence. For Malaysian tax residents on MM2H, these fall under the foreign income exemption. The MM2H tax implications guide covers the broader tax position.

How Should European Expats Structure Their Finances Around MM2H?

The financial structure around MM2H should account for three layers: the programme's capital requirements (fixed deposit and property), the ongoing tax position across two or more jurisdictions, and the estate planning framework that protects your assets and your family. Getting one right while ignoring the others creates gaps.

The fixed deposit locks up USD 150,000 to USD 1,000,000 depending on your tier. The property purchase adds a second capital commitment. Your remaining portfolio, held offshore or in your home country, needs to be structured so that the tax position is clean in both Malaysia and your country of nationality. For most European expats, this means Irish-domiciled accumulating UCITS ETFs as the default investment vehicle, with the portfolio structured to avoid triggering issues under your home country's rules. See our post on why waiting until your 50s to plan for retirement is a costly mistake.

The insurance layer, including IPMI at the right coverage level, is covered in our guide on MM2H insurance and healthcare requirements. The MM2H fixed deposit strategy and property purchase rules cover the remaining financial components.

Frequently Asked Questions

Q: Is the MM2H application process different for British, French, or German expats?
A: No. The application process, fixed deposit requirements, property purchase thresholds, and visa terms are identical for all nationalities. The differences arise in how each country treats your income, pension, and estate after you relocate to Malaysia.

Q: Can I transfer my UK defined benefit pension to Malaysia?
A: Not directly. Malaysia has no QROPS schemes. A DB pension can be transferred to a QROPS in a qualifying jurisdiction like Malta or Gibraltar, or to a UK SIPP. Regulated advice is required for pensions above GBP 30,000 in CETV value. The timing of the transfer relative to your residency change affects the tax treatment.

Q: Will France still tax me if I move to Malaysia on MM2H?
A: France taxes worldwide income of its tax residents. If you establish non-residency in France (no principal home, no centre of economic interests, fewer than 183 days per year), your French tax obligations reduce to French-sourced income only. French state pensions remain taxable in France under the DTA regardless of where you live.

Q: Does Germany's exit tax apply if I relocate to Malaysia?
A: The Wegzugsteuer applies to shareholders holding 1% or more of a German corporation. Standard investment portfolios are not affected. If you hold qualifying shareholdings, the full tax liability may crystallise on departure because Malaysia is outside the EU/EEA.

Q: How does UK inheritance tax apply to my MM2H property in Malaysia?
A: If you are domiciled in the UK, your worldwide estate is subject to UK IHT at 40% above the nil-rate band. This includes Malaysian property, your MM2H fixed deposit, and offshore investments. Changing domicile requires demonstrating permanent departure from the UK with no intention of returning.

Q: Should I have separate wills for UK and Malaysian assets?
A: Yes. A single will that references both jurisdictions can create conflicts in probate. The standard approach is a UK will for UK assets and a Malaysian will for Malaysian assets, drafted to ensure they do not inadvertently revoke each other. This applies equally to French and German expats.