German inheritance tax

A guide to German inheritance tax, inheritance law and writing a German will

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When does German inheritance law and German inheritance apply to your assets? This guide explains who needs to pay inheritance tax in Germany or write a German will, plus German inheritance tax for non-residents and foreigners.

If you relocate or retire to Germany, it's important to consider the implications of German inheritance law on your assets, and whether German inheritance tax will be applicable to your Germany-based assets or worldwide. In particular, German inheritance tax for non-residents and foreigners can be subject to certain exemptions, although it is sometimes recommended to write a German will.

This guide on German inheritance law explains the conditions for paying inheritance tax in Germany, German inheritance tax rates, how to make a German will and issues of unclaimed inheritance. It also explains the regulation on German inheritance tax for non-residents and foreigners.

German inheritance law

German inheritance law

German inheritance law falls under the federal government so is applied uniformly across the country without regional variations. It derives from the German Civil Code (BSB) Book 5 (sections 1922–2385).

Prior to August 2015, German inheritance law dictated that a foreign resident's estate was dealt with according to the law of their home nationality. However, changes to EU rules in 2015 mean that EU citizens living abroad (in most countries) can now choose whether the law of their home country or their country of residence applies. If a foreign resident dies without leaving a will or making an official declaration on which law they wish to apply, the law of the country in which they resided for the last five years will apply.

The main principle of German inheritance law is 'universal succession' which means that both assets and obligations of the deceased transfer to immediately to their heir(s) without the need for an executor or court ruling. German inheritance law doesn't impose 'forced heirship' as rigidly as some other European countries and in principle allows a person to write a German will with the freedom to exclude close relatives who are natural heirs. However, statutory heirs (children, spouse/partner and parents) can make a claim ('Pflichtteil') on the estate if they have been excluded.

If a will is made that excludes statutory heirs, they are entitled to make a claim for 50 percent of what they would have received under German succession laws.

If assets are located in Germany, heirs may be required to present a Certificate of Inheritance under German Probate Law. Applications can be made to the probate court (Nachlassgericht), typically closest to the last residence of the deceased. If the deceased was a non-resident German citizen, then applications can be made to the probate court in Berlin–Schöneberg. Only heirs will be issued with a certificate, excluding beneficiaries of a German will (or a testamentary specific bequest, Vermächtnis) or those entitled to a statutory forced share (Pflichtteil).

For property to be recognised as part of an estate, it needs to be registered in the local land registry ('Grundbuch'). Read more on buying German property.

However, as German inheritance law states that heirs inherit obligations as well as assets, a German inheritance can include debt. Thus German inheritance law permits people to reject an inheritance if they wish. This has to be done within six weeks, or six months if the heir is not a German resident.

German succession law

If a person dies without making a will in Germany, German succession law (intestacy) states that their estate will be distributed as follows:

  • equally among children (or grandchildren, if children are deceased);
  • if no children or other descendants, then equally between parents (or if no parents, then siblings or nieces/nephews);
  • if none of the above, then equally between grandparents (or if no grandparents, then uncles/aunts or cousins).


The rights of the spouse or civil partner depend on the existence of other heirs. The spouse/civil partner will receive:

  • 25 percent of the estate if there are surviving children (or grandchildren, etc.)
  • 50 percent if there are surviving parents, siblings, nieces/nephews or grandparents
  • 100 percent if there are none of the above


The spouse's share is also affected slightly by the matrimonial regime (community property, separation of property, etc.) and will be forfeited in the event of a divorce.

EU inheritance law for foreigners in Germany

A change in EU rules on cross-border successions came into effect in August 2015 that now allows EU citizens to choose whether the laws of their country of residence or their country of nationality apply upon their death. This applies even if you are a non-EU citizen. The rules don't apply in Denmark, Ireland the UK as these countries opted out, although will apply to nationals of these countries if they live elsewhere in the EU.

To activate this inheritance law for foreigners – that is, you want the inheritance laws of your country of nationality to apply rather than German inheritance law – you need to express this clearly in a will or separate declaration. These laws will then apply as long as they don't contravene local public policy (eg. discrimination of heirs based on gender or whether born out of wedlock).

The EU rules do not apply to not apply to the following matters linked to your inheritance:

  • inheritance taxes
  • your civil status
  • the property regime of your marriage/partnership (how your property should be divided after the death of your spouse/partner)
  • matters concerning companies. 

Inheritance tax Germany – German inheritance tax rates

Who is liable to pay German inheritance tax?

In the case of an inheritance, it will be the heir; in the case of a donation, both the donor and the recipient are jointly liable. Where a donation or bequest is made to a special cause (zweckzuwendung), the person who makes the donation or bequest is liable.

The entire inheritance or gift in excess of exemptions is taxable if the deceased, heir, donor or recipient lives in Germany.

The inherited assets are generally valued at fair market value. Amounts are generally rounded down to the nearest EUR 100. If the funeral and certain administrative costs are not duly substantiated, a lump sum of EUR 10,300 per inheritance may be deducted instead.

German inheritance tax for non-residents

If none of the parties involved in an inheritance or gift is domiciled in Germany, only ‘German-situ' properties transferred are subject to tax.

Examples of German-situ property include German real estate (including mortgages), German business property, and more than a 10 percent stake in a German company.

German inheritance tax rates

Individual heirs are typically responsible to pay German inheritance tax if either the deceased was or the heir is a German resident. The same residency rules apply to German gift tax, referring to any gifted inheritance or donations given during someone's lifetime.

The taxable base is the value of the inheritance minus the debts of the deceased, as well as the funeral and administrative expenses, and any personal and other exemptions (eg. for business property). German inheritance tax rates and tax-free allowances depend on the relationship between the deceased and heir.

Various exemptions apply equally to gifts and transfers upon death. German inheritance tax rates and exemptions apply to recipients based on three categories:

Category

Relationship

Tax-free allowance

1   

Spouse/civil partner 

EUR 500,000

Children, stepchildren, grandchildren/great-grandchildren of deceased children

EUR 400,000

Grandchildren/great-grandchildren of living children

EUR 200,000

Parents and grandparents

EUR 100,000

2  

Siblings, nephews/nieces. Step-parents, relatives by marriage, divorced spouse

EUR 20,000

3  

All other individuals, including legal entities

EUR 20,000


There are also exemptions for certain items, such as household goods and works of art. Other tax reliefs exist for business income (85 percent of business assets may be inherited tax free under strict conditions), and for houses used as the family residence before the deceased passed away that are inherited by the surviving spouse or civil partner.

German inheritance tax rates in 2017 are:

Value of the gift/inheritance

Category 1

Category 2

Category 3

Up to EUR 75,000

7 percent

15 percent

30 percent

EUR 75,000–300,000

11 percent

20 percent

30 percent

EUR 300–600,000

15 percent

25 percent

30 percent

EUR 600,000 – 6.0mn

19 percent

30 percent

30 percent

EUR 6–13.0mn

23 percent

35 percent

50 percent

EUR 13–26.0mn

27 percent

40 percent

50 percent

More than EUR 26.0mn

30 percent

43 percent

50 percent


Germany has estate tax treaties to avoid double taxation with a number of countries, including Denmark, France, Greece, Sweden, Switzerland and the US. Full details of double tax treaties in Germany can be found here.

Double tax relief on inheritance tax in Germany

Foreign tax, if similar to German inheritance and gift tax, may be credited proportionally against the payable German inheritance or gift tax, but may not exceed the German tax. If the deceased or donor was a resident in Germany, a tax credit is available only with respect to foreign inheritance and gift tax imposed on foreign-situ assets that correspond to the assets on which non-residents are liable to German inheritance or gift tax.

If the deceased donor was a non-resident, a tax credit is available with respect to foreign inheritance and gift tax levied on all foreign-sourced assets. The tax credit may only be claimed where the German inheritance and gift tax liability did not arise later than five years after the inheritance tax and gift tax liability abroad. Treaties dealing with inheritance taxes may modify these foreign tax credit provisions.

German will

Do you need a German will?

There is no legal requirement to make a will in Germany if you are a foreigner or non-resident. German authorities recognise wills drawn up in other countries. German inheritance laws can apply, however, to foreign residents who didn't stipulate in an international will that they wanted the laws of their citizen country to apply.

There are other factors to consider writing a German will, for example, it can save having to pay for a foreign will to be translated as well as speed up proceedings in Germany, for example, residents with a British will would have to wait for the UK to issue a Grant of Probate first.

It is perfectly fine to have two wills – a German will and one drawn up in your own country – as long as they are drafted correctly to ensure one doesn't accidentally revoke or negate the other. It is recommended to consult with a solicitor familiar with international and German inheritance law.

There are two main types of German will:

  • Holographic testament – handwritten will signed by the testator
  • Public testament – a will prepared by a notary and registered.


Joint wills can also be drawn up with spouses or partners. In certain circumstances (eg. if someone is close to death and hasn't prepared a will) an 'irregular will' can be drawn up in the presence of a mayor or three attesting witnesses.

German wills can be revoked or modified at any time. Revoking a German will can be done by writing another will, writing an intention to revoke it, destroying the will or withdrawing it from the will registry.

Writing a will in Germany

Holographic testament

This German will needs to be handwritten, signed and dated by the testator. It should also include full name and place where the will was drawn up.

Public testament

This German will is given orally by the testator and written down by a notary who checks that it complies with German standards. The will is signed and the notary will then file it with the German will registry. Information on finding a notary in German can be found here.

When making a German will, the testator is permitted to:

  • appoint an heir or executor to administer the estate; it is not compulsory appoint a separate executor
  • exclude statutory heirs from inheritance
  • impose a debt on an heir.


There is no requirement under German inheritance law to have a will signed or attested by witnesses.

Unclaimed inheritance

If an inheritance is unclaimed or rejected by all beneficiaries, then the estate is passed to the German state. 

More information:

 

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