Non-acquisition of German nationality for children born abroad to German parents (section 4 (4), first and third sentences, of the Nationality Act):
Children born abroad do not acquire German nationality by birth if their German parent(s) were themselves born abroad after December 31, 1999 and at the time of the child’s birth were ordinarily resident abroad, provided such children acquire another nationality upon birth.
Children who fall into this category may acquire German nationality retroactively from birth if their parents register the birth with the German authorities before the child’s first birthday. To do this, they must apply to the competent registry office in Germany or to the competent German mission abroad to have the birth of their child included in the register of births.
Mr A. relocates to Spain for work purposes in 1999. His daughter Klara is born there on February 1, 2000. The family returns some years later to Germany. In 2018, Klara meets an American citizen and moves to the US with him. Her son is born in the US on 1 January 2020. Although his mother is German, he does not acquire German nationality by birth, since he acquires US citizenship by virtue of being born in the US.
In order to obtain German nationality for the child, Klara or the father would have to apply to the competent registry office in Germany or to the competent German mission abroad to register the birth of their child. If the application is submitted on time and with all the necessary supporting documents, the child may be issued with a German passport upon application.
Please note: All Germans (expats and emigrants) who were born abroad and who give birth abroad, regardless of the reason for or duration of their residence abroad, need to be aware of this rule.
More Information can be found here.