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The German Law on Nationality and Citizenship is rather complex and has undergone many changes in the past. The rules on citizenship were thoroughly revised with the entry into force of the amended Nationality Act (Staatsangehörigkeitsgesetz) on 1st January 2000.

For an overview of

• amendments of the Law on Nationality
• provisions for foreigners living in Germany
• provisions for Germans abroad
  
• new provisions regulating choice of citizenship

please refer to the website of the Federal Office of Administration:
BVA_Citizenship

The Federal Office of Administration (Bundesverwaltungsamt) in Cologne is the competent authority for nationality issues for German nationals and applicants resident abroad and processes different procedures regarding citizenship matters in consultation with the Federal Foreign Office's missions abroad:

• Applications for the establishment of German citizenship
• Naturalization
• Opting procedures
• Retaining German citizenship

People living abroad should contact their local German mission if they have any questions about the regulations. Please make sure you read and understand the information provided on the a.m. website of the Federal Office of Administration before contacting your competent German Foreign Mission. For more information on obtaining or loss of German Citizenship you may also consult the Federal Foreign Office's FAQ on citizenship matters (in German only).

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 31 December 1999 and at the time of the child’s birth were ordinarily resident abroad, provided such children acquire another nationality upon birth.
Children that 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.

Case study:
Mr. A relocates to Spain for work purposes in 1999. His daughter Klara is born there on 1 February 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 1st 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.