German Inheritance & Gift Tax
German tax advice for inheritances and gifts
German tax advice and compliance for inheritances, legacies and gifts. We review tax liability, personal allowances, valuation, reporting obligations and international transfers of wealth.
Succession and wealth transfers
Clarify the German tax consequences of an inheritance or gift
Germany imposes inheritance and gift tax on gratuitous transfers of assets. Whether German tax applies and the amount of tax due depend in particular on the personal tax nexus, the relationship between the recipient and the deceased or donor, the type and value of the transferred assets and any available exemptions.
In addition to the actual tax calculation, reporting requirements, valuation issues and procedural deadlines often need to be considered. This can also apply where no tax is ultimately payable because the transfer falls within a personal allowance.
Real estate, business assets, substantial company interests and international estates can require additional analysis. Early planning and proper documentation can materially affect the tax result.
Scope of services
Our inheritance and gift tax services
The scope of the engagement depends on the individuals involved, the assets transferred, valuation requirements, available tax relief and any international connections.
Initial tax analysis
We determine whether German inheritance or gift tax applies and which personal allowances and tax classes are relevant.
- Unlimited or limited German tax liability
- Relationship between the parties
- German tax class
- Personal allowances
Reporting and tax returns
We assist with statutory notifications, inheritance and gift tax returns and communication with the German Finanzamt.
- Notification under Section 30 ErbStG
- Inheritance tax returns
- Gift tax returns
- Deadlines and tax-authority correspondence
Real estate and valuation
Real estate often represents a substantial part of an inheritance or gift. We assist with the German tax classification and valuation.
- Residential and rental property
- German tax value of real estate
- Family-home exemption
- Foreign real estate
Businesses and company interests
Where businesses or company interests are transferred, we review valuation and potential German inheritance-tax relief.
- GmbH shares
- Partnership interests
- Business assets
- Business succession
Lifetime gifts and succession planning
Planned transfers of wealth can be analyzed before implementation and, where appropriate, structured over time.
- Transfers to children
- Staged gifts
- Use of personal allowances
- Reserved rights and usufruct arrangements
International inheritances and gifts
Where individuals or assets are located in more than one country, we coordinate the German tax treatment with the rules of the other jurisdiction.
- Foreign deceased persons or donors
- Heirs and recipients abroad
- Foreign assets
- Double taxation and foreign tax relief
Allowances and tax classes
The relationship between donor and recipient is a key factor
The amount of German inheritance or gift tax depends substantially on the personal relationship between the recipient and the deceased or donor. German inheritance tax law assigns recipients to different tax classes and provides different personal allowances depending on that relationship.
For gifts, personal allowances can generally become available again after the relevant ten-year period. As a result, a planned transfer of wealth over time may produce a different tax result than a single large transfer.
The allowance is only one part of the analysis. Prior transfers, valuation, consideration, reserved rights and the nature of the transferred assets must also be considered.
Reporting and tax procedure
Inheritances and gifts often have to be reported to the Finanzamt
German inheritance tax law contains reporting requirements for certain inheritances and gifts. The notification obligation is separate from a later request by the Finanzamt to file a formal inheritance or gift tax return.
For gifts in particular, the reporting requirement should be reviewed promptly. The German tax administration generally requires information about the parties, the date of transfer and the assets transferred.
In inheritance cases, some information may already be transmitted to the tax authorities by courts, notaries or other institutions. Whether the recipient must file a separate notification depends on the specific circumstances.
Typical situations
When inheritance or gift tax advice is useful
Real estate, brokerage accounts, company interests or other assets pass to one or more heirs.
Assets are to be transferred during lifetime to children, a spouse or another person.
Owner-occupied, rental or foreign real estate forms part of a gift or inheritance.
A business or company interest is to be transferred within the family or to another person.
Assets were transferred in earlier years and need to be taken into account for the current inheritance or gift.
The deceased, heirs or assets have connections to Germany and at least one other country.
How we work
From the initial review to the tax assessment
Facts
We identify the deceased or donor, recipient, family relationship, assets transferred and international connections.
Tax liability and valuation
We review German tax liability, personal allowances, prior transfers and the relevant tax value of the assets.
Notification or tax return
Required notifications and tax returns are prepared together with the necessary information and supporting documents.
Tax assessment
We review the assessment and assist with tax-authority questions, valuation issues and necessary amendments or objections.
Cross-Border Estate & Gift Tax
International inheritances and gifts
In cross-border transfers of wealth, more than one country may claim taxing rights. Personal tax liability, situs rules, foreign taxes and available double-tax relief therefore need to be analyzed together.
Germany–Switzerland
The deceased, donor, recipient or assets can create tax connections to both Germany and Switzerland.
- Residence and personal tax liability
- Real estate in Germany or Switzerland
- Businesses and company interests
- Coordination of German and Swiss tax procedures
Germany–United States
German–U.S. estates can create complex tax issues because the two countries apply different connecting factors and tax bases.
- U.S. estate tax and German inheritance tax
- U.S. gift tax and German gift tax
- U.S. real estate, brokerage accounts and company interests
- Coordination of tax returns and double-tax relief
Insights
Inheritances, gifts and wealth transfers in detail
Additional guidance covers German reporting obligations, real estate, company interests and selected tax issues involving private transfers of wealth.
Frequently asked questions
German inheritance and gift tax
When does German inheritance tax apply?
Does a tax-free inheritance or gift still have to be reported?
What is the deadline for reporting an inheritance or gift?
Can gift tax allowances be used more than once?
Do you assist with transfers of real estate or GmbH shares?
Do you handle international estates?
Contact
Let us discuss your inheritance or gift.
During the initial consultation, we review the individuals involved, assets transferred, personal allowances, potential reporting obligations, valuation issues, international connections and the expected scope of services.