Inheritance and Gift Taxes
My father recently died. He had a bank account here, even though he did not live in Germany. Do I have to pay German inheritance tax?
No. But you are subject to taxation at home. After all, your world income is subject to taxation. Therefore, even if you live far away in Australia, your inheritance is subject to Australian taxation if you have neither an apartment nor a habitual residence here in Germany.
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How is inheritance taxed in Germany?
First subjects of taxation fall into classes I to III (§15 I ErbStG). To class I belong:
- spouse,
- children,
- stepchildren,
- deceased’s grandchildren and stepgrandchildren
- deceased’s parents or grandparents
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To class II belong:
- sisters and brothers,
- child of sister or brother of descendant,
- in-law children,
- in-law parents,
- spouse.
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To class III belongs: everybody else.
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How much inheritance tax do I have to pay?
That depends on your class, what the estate consists of and last but not least, the estate’s value after deductions. If your estate adds up to € 246,000 and you are in tax class II then you will pay 17%, or at most € 45,520.
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Amount of Estate or Gift Tax
|
Amount of Estate or Gift Tax at most in €
|
% in tax class
|
||
|
I
|
II
|
III
|
|
|
52,000
|
7
|
12
|
17
|
|
256,000
|
11
|
17
|
23
|
|
512,000
|
15
|
22
|
29
|
|
5,113,000
|
19
|
27
|
35
|
|
12,183,000
|
23
|
32
|
41
|
|
25,565,000
|
27
|
37
|
47
|
|
Above 25,565,000
|
30
|
40
|
50
|
What can I deduct from the value of my estate for tax purposes?/h5>
There are, first of all, general deductions for the heirs, then special deductions for the surviving spouse (spouse’s exemption) and for children up to 27 years of age (child’s exemption). Each heir will be granted a special tax allowance for household objects (including laundry and garments) and other movable objects including pieces of art and collections. The amount left over after all deductions is the estate’s value and that will be taxed.
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The general deduction is
- € 307,000 for the spouse,
- € 205,000 for children and deceased children,
- € 51,200 for all persons in tax class I,
- € 10,300 for persons in tax class II, and
- € 5,200 for persons in tax class III.
The exemptions are:
- € 256,000 for the surviving spouse,
- € 52,000 for children up to five years old,
- € 10,300 for children between 20 and 27 years old.
The tax allowance for household objects is as follows for persons of
- tax class I: € 41,000,
- but not including money, securities, coins, noble metals, precious stones and pearls; they get a tax allowance of € 10,300,
- tax class II and III: € 10,300.
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