Inheritance and Gift Tax (Schenkungs- und Erbschaftsteuer)
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German inheritance law
German inheritance law is applied in all of Germany.
Germany follows universal succession, which means that heirs inherit the deceased’s assets – as well as debt obligations – without the need for an executor or a court ruling.
If an executor is nominated in the last will, and nominated by the probate court, he is responsible for settling the tax payments.
German inheritance tax (Schenkungs- und Erbschaftsteuer)
Inheritance tax rates in Germany are consistent in all of Germany.
They apply to savings, property, and other valuable assets, but there are a number of allowances and exemptions.
Charges depend on the heir’s relationship with the deceased. Close relatives such as spouses and children pay less tax than anyone else.
The following table shows which category (I, II and III) relatives and other individuals fit into and the tax-free allowance they benefit from.
I. Spouse/civil partner€ 500,000 I. Children, stepchildren, grandchildren/great-grandchildren € 400,000 I. Grandchildren/great-grandchildren of living children € 200,000 I. Parents and grandparents € 100,000 II. Siblings, nieces/nephews, step-parents, relatives by marriage, divorced spouse € 20,000 III. All other individuals, including legal entities € 20,000
Tax rate (Steuersatz)
These categories are used to determine the rate of inheritance tax charged, ranging from 7% to 50%.
Inheritance tax rates
Taxable base
German inheritance tax applies to what’s known as the "taxable base".
Personal and specific exemptions
The amount you inherit is found by discounting debts of the deceased, funeral costs, and administrative expenses, and personal deductions.
If the funeral and administrative costs aren’t substantiated, a lump sum of € 10,300 per inheritance may be deducted instead.
There are exemptions for certain items, such as:
household goods and personal effects up to €41,000
works of art, cultural assets, or items of scientific interest
German-based pension plans
some business assets
gifts to churches or charities
Some properties are exempt from estate tax in Germany. If there’s a property that’s been used as the family residence before the deceased passed away, it is exempt from German estate tax as long as:
it’s inherited by the spouse
the property will be used as the family home for the next 10 years
it’s located in the EU or EEA
Real estate that has a public interest, and community- or jointly-owned property, is also exempt.
In cases where the property is in another country, Germany has estate tax treaties in place to avoid issues of double taxation. This applies to countries such as Denmark, France, Sweden, Switzerland, and the United States.
There are multiple possibilities to minimize inheritance taxes.
Consult with Dr. Wolfgang Buerstedde
Consult before filing the inheritance tax return (Erbschaftsteuererklärung).
Taxable Transfers of Property on Death
German inheritance tax is imposed on any transfer of property at death.
For example, inheritance tax is imposed on the following transfers:
