German Gift Tax

This paper briefly introduces gifts based on the German inheritance tax and gift tax law and other free transfer of free transfer without considering the special provisions based on the double taxation agreement.

Applicable Tax Laws

German gifts in Germany are stipulated in the inheritance tax and gift tax law (ERBSCHAFTS-UND SCHENKUNGUNGSTEUERGESETZ) (hereinafter, Erbst). In addition, other German tax laws, such as the German German Finance Code (ABGABENORDNUNG) (AO) and the evaluation method (BewertungsGesetz) (Bewg), are also applied.

Note: Germany ratifies the US (German Property Tax Treaty), Greece, France, Sweden, Denmark, Switzerland, and may affect German gift tax.

Taxable Lifetime Gifts

In accordance with Article 7 (1) of ERBSTG, the following transfer is considered to be a lifetime gift:

Free profits between those who make a livelihood (especially gifts (Schenkung))
As a result of fulfilling the conditions imposed by the gifts, or as a result of fulfilling the conditions attached to legal transactions before birth, the value was received without a corresponding price.
Those who are voluntarily accepted for the benefits or approval ordered by others in response to the approval of gifts;
The profits of the spouse or registered sam e-sex partner (INGETRAGENER LEBENSPARTNER) based on the agreement of the property community (GütergeMeinschaft);
What is recognized as the price of abandonment of future inheritance (ERBVERZICHT);
Abbreviation
The preliminary heir (Vorabe) gives the heir (Narcelbe) as a paid for the following inheritance;
Transfer of property based on Foundation transactions between those who make a living.
What to get when the Foundation is dissolved;
Transfer of a lifetime to a foreign asset pool (Vermögensmasse Ausländischen Rec:)
Distribution from a foreign asset pool for the purpose of restraining assets, it is performed at the end of the asset pool or at the end.
However, this shall not apply to Erbstg §3 (2). < SPAN> In this article, we will briefly introduce gifts based on the German Inheritance Tax and Gifts Tax Law and other free transfer taxation without considering the special provisions based on the double taxation agreement.

Taxation of Residents

Note: Germany ratifies the US (German Property Tax Treaty), Greece, France, Sweden, Denmark, Switzerland, and may affect German gift tax.
In accordance with Article 7 (1) of ERBSTG, the following transfer is considered to be a lifetime gift:
Free profits between those who make a livelihood (especially gifts (Schenkung))

Non-Resident Taxation

As a result of fulfilling the conditions imposed by the gifts, or as a result of fulfilling the conditions attached to legal transactions before birth, the value was received without a corresponding price.

Valuation

Those who are voluntarily accepted for the benefits or approval ordered by others in response to the approval of gifts;

The profits of the spouse or registered sam e-sex partner (INGETRAGENER LEBENSPARTNER) based on the agreement of the property community;

What is recognized as the price of abandonment of future inheritance (ERBVERZICHT);

Tax Exemptions

Abbreviation

Exemption for the Family Home

The preliminary heir (Vorabe) gives the heir (Narcelbe) as a paid for the afte r-order inheritance;

Transfer of property based on Foundation transactions between those who make a living.
What to get when the Foundation is dissolved;

Transfer of a lifetime to a foreign asset pool (Vermögensmasse Ausländischen Rects);

Appropriate occasional gifts (übliche Gelegenheitsgeschenke)

Distribution from a foreign asset pool for the purpose of restraining assets, it is performed at the end of the asset pool or at the end.

Personal Tax-free Allowance

However, this shall not apply to Erbstg §3 (2). This paper briefly introduces gifts based on the German inheritance tax and gift tax law and other free transfer of free transfer without considering the special provisions based on the double taxation agreement.

Note: Germany ratifies the US (German Property Tax Treaty), Greece, France, Sweden, Denmark, Switzerland, and may affect German gift tax.

In accordance with Article 7 (1) of ERBSTG, the following transfer is considered to be a lifetime gift:

Free profits between those who make a livelihood (especially gifts (Schenkung))

Those who are voluntarily accepted for the benefits or approval ordered by others in response to the approval of gifts;

The profits of the spouse or registered sam e-sex partner (INGETRAGENER LEBENSPARTNER) based on the agreement of the property community;

What is recognized as the price of abandonment of future inheritance (ERBVERZICHT);

Abbreviation

Personal Tax-free Exemption in Case of Non-Resident Taxation

The preliminary heir (Vorabe) gives the heir (Narcelbe) as a paid for the following inheritance;

Transfer of property based on Foundation transactions between those who make a living.

What to get when the Foundation is dissolved;

Transfer of a lifetime to a foreign asset pool (Vermögensmasse Ausländischen Rec:)

Distribution from a foreign asset pool for the purpose of restraining assets, it is performed at the end of the asset pool or at the end.

However, this shall not apply to Erbstg §3 (2).

In Germany, in accordance with §2 (1) ERBSTG (unlimited tax payment obligation), if any of the gifts (Schenker) or the receiver (BESCHENKTER) are the German taxpayers (Inländer) when they are taxable, all gifts. Taxes. In the following cases, individuals will be German (deemed) taxpayers:

It has a Wohnsitz or a Gewöhnlicher aufenthalet in Germany.

If you are a German citizen and have never lived abroad for 5 years without a residence in German y-The gift tax obligations will be expanded unlimited (ERWEITERTE Unbeschränkte Schenkungungungungungungungungungunssteuerpflict) -;

If the gifts are German people and work for overseas German authorities (such as the Embassy of Germany).

If the gifts and recipients are not considered residents or deemed residents based on Article 2 of ERBSTG, only German property (Inlandsvermögen) will be subject to German gift tax. Cash in accounts and individuals in the account are generally not a German property.

"Per Acquisition"

Specific asset classes (such as real estate) have special evaluation rules, but gifts tax rating is based on the fair market price of transfer assets at the time of the gifts.

The value of the right to use (nießBrecH), the right to residence (Wohnrecht) or the same rights (eg, lifetime property) in the property can be deducted from the value of the property that is subject to such rights.

Gift Tax Rates and Gift Tax Classes

The value of use can be deducted from the value of gifts, and inheritance taxes are not levied on the lifetime property that has expired due to the death of the gifts, so the gifts holding their lifetime property are popular inheritance measures in Germany.

Gift Tax Classes

The German inheritance tax and gift tax law stipulates significant exemptions for specific assets (Sachliche Steuerbefreiungen):

Located in the European Union (EU) or the European economy (EAA)

Free profits between those who make a livelihood (especially gifts (Schenkung))

Those who are voluntarily accepted for the benefits or approval ordered by others in response to the approval of gifts;

The profits of the spouse or registered sam e-sex partner (INGETRAGENER LEBENSPARTNER) based on the agreement of the property community;

German Inheritance Tax

Relationship between gifts and receivers

Applicable Tax Laws

Ta x-exempt

Spouse or registered sam e-sex partner (Lebenspartner)

General Concept of the German Inheritance Tax

Child (including companions, adopted children, and extramarital children)

Children who make a livelihood

The child of the preceding child

Parents or relatives

Parent s-i n-law (parent in marriage)

Taxable Transfers of Property on Death

All other people (see the special provisions of trust, including corporations)

Prior to June 2017, the ta x-exempt frame based on §16 (2) ERBSTG was limited to 2, 000 euros in issues related to Citos tax. The European Court of Justice is a Vera Mattner V. Finanzamt Velbert (CASE C-510/08) and Yvon Welte V. Finanzamt Velbert (Case C-181/12) violating the European Law, which violates the European Law. (1) The ruling has been ruled that the full amount of the ta x-exempt frame based on Erbstg must be approved. In response to the abov e-mentioned ruling, §16 (2) Erbstg was revised. The new law is applied on June 25, 2017, and the personal ta x-exempt slot based on §16 (1) ERBSTG is also recognized in the case of Citus taxation, but the amount calculated as follows is reduced by the following part. It was:
Of all the property and gifts given within 10 years, they are not subject to tax in Germany
÷ All gifts for 10 years
Example The permanent domicile when the heir died is Los Angeles, California, USA. At the time of death, the heir owned a 400, 000 euros apartment in Munich. The inheritance of the heir is determined to be 1 million euros. The heir gives everything to his son. Germany only tax on apartments. However, the total tax exemption of 400, 000 euros based on Erbstg §16 (1) is not allowed in full. Instead, §16 (2) ERBSTG reduces 240, 000 euros:
Amount of 600, 000 euros from the ta x-exempt slot (property not subject to address taxation in Germany)

German and Foreign Pension Plans

÷ 1 million euros (total transfer amount for 10 years)

Community Property and other Issues of the Matrimonial Property Regime

× 400, 000 euros (ta x-exempt slots)

Therefore, the tax exemption frame of §16 (2) is limited to 160, 000 euros.

Taxation of Residents

The newly established law does not specify the 1 0-year calculation method. The purpose of this law is that "the previous acquisition of the same person has been calculated without the same person in order to prevent taxation from being distributed and deducted by deduction of the same person. It must be included in. " There is room for debate that not only gifts before taxing but also subsequent gifts are included. However, as the second sentence in the Erbstg §16 (2) states that "earning earlier must be recognized by previous values", the newly established law is considered only in the gifts before that. I think it must be interpreted as much as possible. Therefore, it is generally desirable to transfer assets in Germany before overseas assets.

Example: In the above example, the heir gives his son a no n-German asset (for example, the balance of a bank account in Germany). As a result, the ta x-exempt amount that can be used when the apartment is given will decrease further, lower than 160, 000 euros. If the apartment is given after transferring, the tax exemption slot by daily calculation is still available.

Note: Germany ratifies the US (German Property Tax Treaty), Greece, France, Sweden, Denmark, Switzerland, and may affect German gift tax.
Ta x-exempt measures based on Article 16 of the Erbstg and Article 17 of Erbstg are applied to "acquisition" from the same person. Therefore, disposal to multiple people is advantageous.
Free profits between those who make a livelihood (especially gifts (Schenkung))

The German gift tax rate depends on the taxable zone and the taxable acquisition price of the beneficiary (ta x-exempt deduction and special deductions deducted).

The taxation division depends on the family relationship between the heir and the recipient:

Non-Resident Taxation

Relationship with gifts

Spouse or registered sam e-sex partner (Lebenspartner)

Tax Exemptions and Reliefs of the German Inheritance Tax

Child (including companions, adopted children, and extramarital children)

Exemption for the Family Home

Survival child

Transfer of property based on Foundation transactions between those who make a living.
Parents or relatives < Span> The newly established law does not specify the 1 0-year calculation method. The purpose of this law is that "the previous acquisition of the same person has been calculated without the same person in order to prevent taxation from being distributed and deducted by deduction of the same person. It must be included in. " There is room for debate that not only gifts before taxing but also subsequent gifts are included. However, as the second sentence in the Erbstg §16 (2) states that "earning earlier must be recognized by previous values", the newly established law is considered only in the gifts before that. I think it must be interpreted as much as possible. Therefore, it is generally desirable to transfer assets in Germany before overseas assets.

Furthermore, if it is a gift up to 400, 000 euros, it is advantageous because it will not be added even if it is given every 10 years.

Ta x-exempt measures based on Article 16 of the Erbstg and Article 17 of Erbstg are applied to "acquisition" from the same person. Therefore, disposal to multiple people is advantageous.

Exemptions and Reliefs for Agricultural, Forestry or Business Assets

Example A's net assets are 1. 3 million euros. If you give everything to your wife, your wife must pay a German gift tax for 800, 000 euros (19 % tax rate). However, if the two children are given 400, 000 euros at a time and the remaining 500, 000 euros are given to their wives, beneficiaries do not need to pay German gift tax.

Other Tax Exemptions and Tax Relief

The German gift tax rate depends on the taxable zone and the taxable acquisition price of the beneficiary (ta x-exempt deduction and special deductions deducted).

The taxation division depends on the family relationship between the heir and the recipient:
Relationship with gifts
Spouse or registered sam e-sex partner (Lebenspartner)
Child (including companions, adopted children, and extramarital children)
Survival child
The child of the preceding child
Parents or relatives are newly enacted, and no calculation methods for 10 years have been specified. The purpose of this law is that "the previous acquisition of the same person has been calculated without the same person in order to prevent taxation from being distributed and deducted by deduction of the same person. It must be included in. " There is room for debate that not only gifts before taxing but also subsequent gifts are included. However, as the second sentence in the Erbstg §16 (2) states that "earning earlier must be recognized by previous values", the newly established law is considered only in the gifts before that. I think it must be interpreted as much as possible. Therefore, it is generally desirable to transfer assets in Germany before overseas assets.
Example: In the above example, the heir gives his son a no n-German asset (for example, the balance of a bank account in Germany). As a result, the ta x-exempt amount that can be used when the apartment is given will decrease further, lower than 160, 000 euros. If the apartment is given after transferring, the tax exemption slot by daily calculation is still available.

Deductible Estate Debts and Costs of Administration

Furthermore, if it is a gift up to 400, 000 euros, it is advantageous because it will not be added even if it is given every 10 years.

Ta x-exempt measures based on Article 16 of the Erbstg and Article 17 of Erbstg are applied to "acquisition" from the same person. Therefore, disposal to multiple people is advantageous.
Example A's net assets are 1. 3 million euros. If you give everything to your wife, your wife must pay a German gift tax for 800, 000 euros (19 % tax rate). However, if the two children are given 400, 000 euros at a time and the remaining 500, 000 euros are given to their wives, beneficiaries do not need to pay German gift tax.
The German gift tax rate depends on the taxable zone and the taxable acquisition price of the beneficiary (ta x-exempt deduction and special deductions deducted).
The taxation division depends on the family relationship between the heir and the recipient:

Relationship with gifts

Spouse or registered sam e-sex partner (Lebenspartner)

Child (including companions, adopted children, and extramarital children)

Valuation

Valuation Date

Survival child

Valuation Methods

The child of the preceding child

Parents or relatives

In this article, we will briefly introduce the heritage taxation based on the German Inheritance Tax and Gifts Tax Law, without considering special cases based on the double taxation agreement.

Heritage taxation in Germany is systematized under the inheritance and gift tax law (hereinafter abbreviated as Erbst). In addition, other German tax laws are also applied, including the German Financial Code (ABGABENORDNUNG) (hereinafter abbreviated as AO) and the evaluation method (Bewertungsgesetz) (hereinafter abbreviated as Bewg).
Note: Germany may not be able to impose inheritance taxes (German inheritance / Gift Treaty), Greek, France, Sweden, Denmark, and Switzerland.
Germany imposes inheritance tax (ERBSCHAFTSTEUER) instead of heritage tax. In contrast to the heritage tax, inheritance tax is not liven to the heritage itself, but is levied on the acquisition of beneficiary (ERWERB). See Article 1 of ERBSTG. Therefore, the beneficiary must pay the German inheritance tax on all the transferred transfer. See Article 20 of ERBSTG.
In Germany, inheritance tax and gift tax are unified: the dying or pr e-life, especially the gifts between the same person within 10 years, are included in the sum of taxes (r e-tax) ) Calculated. See Article 14 of ERBSTG.

Example: A gave a gift to the only child in 2010 and died in 2019 with heritage.

As a result, the applied taxes can be minimized.

Personal Tax-free Exemptions

If A was given in 1999, the ta x-exempted slot could be used twice and the tax rate would be lower.

Personal Tax-free Exemption

Germany's inheritance tax is imposed on the transfer of property at the time of death. For example, the following transfer is taxed:

Inheritance (Erbschaft), heritage (Vermächtnis), forced shared property (pflichtteil);

Note: Germany ratifies the US (German Property Tax Treaty), Greece, France, Sweden, Denmark, Switzerland, and may affect German gift tax.

Located in the European Union (EU) or the European economy (EAA)

Death transfer to the Foundation (Stiftung) or Foreign Asset Pool (Vermögensse Ausländischen Recots) (see special article on trust tax under the German tax law).

Those who are voluntarily accepted for the benefits or approval ordered by others in response to the approval of gifts;

In many jurisdictions, spouses acquire joint property during marriage. In such cases, only the share of the first-to-die spouse is taxable under German inheritance and gift tax law.

Under German law governing marital property (if applicable), there is no joint marital property unless the spouses agree to such an arrangement in a contractual agreement (prenuptial agreement, postnuptial agreement). However, in the absence of such an agreement, if the marriage ends, for example due to the death of one spouse, the surviving spouse is entitled to an equalization of unpaid benefits (Zugewinnausgleich). The claim for equalization is tax-free. See § 5 ErbStG

What is recognized as the price of abandonment of future inheritance (ERBVERZICHT);

Abbreviation

Personal Tax-free Exemption in Case of Non-Resident Taxation

He has a domicile (Wohnsitz) or habitual residence (gewöhnlicher Aufenthalt) in Germany;

Transfer of property based on Foundation transactions between those who make a living.

He is a German citizen working for a German authority abroad (e. g. a German embassy).

A legal entity (Kapitalgesellschaft), a partnership (Personengesellschaft), an association (Verein) and/or a foreign asset pool (Vermögensmasse ausländischen Rechts) is a German taxpayer if its registered office (Sitz) or place of effective management (Ort der Geschäftsleitung) is in Germany.

Special Spousal Tax-free Exemption

Note: This does not necessarily mean that Germany impose Germany's inheritance tax, as German may not be able to impose inheritance tax. Germany is currently concluding a treaty in the field of inheritance tax and heritage tax with the United States (German Heritage Gift Treaty), Greece, France, Sweden, Denmark, Switzerland.

Special Tax-free Exemption for Children of the Deceased

If neither the heir or the beneficiary is a German (deemed) taxpayer, beneficiaries are usually levied only on German inheritance tax based on the German property. This is generally referred to as a limited tax payment obligation (beschränkte SteuerPflicht) or Citus tax.

Tax-free Exemption for the Equalization of surplus Claim

Important: Most (personal) financial investment in Germany (account cash, listed investment trusts, stocks, bonds, etc.) are not subject to situs tax, but most financial institutions are Germany transfer certificates. After receiving the name of the tax payment certificate (SteuerLiche Unbedenklichkeitsbesbesbesbesbescheinigung), we will publish such assets.

"Per Transfer"

The German inheritance tax and gift tax law stipulates significant tax exemptions and reduction measures:

The reserved spouse or registered sam e-sex partner (Eingetragener Lebenspartner) is completely ta x-exempt in the following cases.

Inheritance Tax Classes and Rates

It is located in the European Union (EU) or the European economy (EAA).

Inheritance Tax Classes

The German inheritance tax and gift tax law stipulates significant exemptions for specific assets (Sachliche Steuerbefreiungen):

Considering the heritage plan This ta x-exempt measure is also applied when giving the parents' home to the spouse before the gift of the gift. In this case, you do not need to live for 10 years after giving a gift. Therefore, it is recommended that you give your home before you live.

Free profits between those who make a livelihood (especially gifts (Schenkung))

Those who are voluntarily accepted for the benefits or approval ordered by others in response to the approval of gifts;

In many jurisdictions, spouses acquire joint property during marriage. In such cases, only the share of the first-to-die spouse is taxable under German inheritance and gift tax law.

The profits of the spouse or registered sam e-sex partner (INGETRAGENER LEBENSPARTNER) based on the agreement of the property community;

What is recognized as the price of abandonment of future inheritance (ERBVERZICHT);

Acquisitions by churches (Kirche) and Jewish cultural communities in Germany;

Inheritance Tax Rates

Acquisitions by legal persons, associations or pools of assets pursuing ecclesiastical purposes (kirchlichen Zwecke), charitable purposes (gemeinnützige Zwecke) or charitable purposes (mildtätige Zwecke);

Acquisitions by legal persons, associations or pools of assets pursuing ecclesiastical purposes (kirchliche Acquisitions by foreign legal entities, associations or asset pools pursuing public interest (mildtätigte Zwecke), charitable purposes (mildtätige Zwecke) or philanthropic purposes (mildtätige Zwecke) and which qualify for preferential tax treatment in Germany on German-source income. If the preferential tax purpose is realized exclusively abroad, the exemption is only granted if individuals resident in Germany are supported or if the activity contributes to the reputation of the Federal Republic of Germany.

Acquisitions by German political parties.

The following liabilities imposed on the taxpayer (beneficiary) are deductible:

Debts of the decedent (nursing home/hospital expenses, guardianship fees, etc.);

The value of any estate (Vermächtnis), testamentary charges (Auflage) or compulsory distribution (Pflichtteil) payable by the taxpayer;

Expenses for burial, a suitable gravestone, normal grave maintenance, and capital values for an undetermined period.

Expenses incurred by the recipient as a direct result of the disposal and distribution of the estate.

Generally, such expenses must be substantiated by submitting supporting documentation (e. g. invoices) with the inheritance tax return. However, the standard deduction is 10, 300 euros, with no substantiating factors.

Deduction of Foreign Estate Taxes and Inheritance Taxes

Maintenance costs (e. g. electricity bills) and expenses for selling the property (e. g. real estate brokerage fees) are generally not deductible. However, if the testator instructs the executor to sell all the estate assets and distribute the cash to the beneficiaries, all expenses incurred in selling the assets can be deducted.

In cross-border inheritance matters, it is also arguable that beneficiaries who live abroad and therefore cannot use the inheritance without liquidation can deduct the expenses of selling such assets.
The valuation is based on the date on which the tax arises, see Section 11 ErbStG. Inheritance tax arises upon the death of the decedent (not when the personal representative makes distributions to the beneficiaries), see Section 10 ErbStG. Thus, any decline in the value of stocks after death is not taken into account.
Under Section 12 ErbStG, the valuation is determined on the basis of the German Act on Valuation of Assets (Bewertungsgesetz).
For example, securities are valued at their minimum price on the German stock exchange, see Section 11 BewG.
Domestic real estate is valued based on its fair market value (§ 162 I 1, 177 BewG). Taxpayers do not determine the value themselves, but must fill out a special tax return so that the tax authorities in the location of the real estate can determine the fair market value in a special tax procedure. Depending on the type of real estate, the local tax office assesses the value of the domestic real estate based on:

a comparative market survey (especially for one- or two-family homes),

the land/building price, or

the net income (especially for rental real estate), or

Personal Tax Liability under the German Inheritance and Gift Tax Act

or a combination thereof.

German Inheritance Tax Return and Duty of Disclosure

If the real estate was sold within one year prior to the taxable event (e. g. death), the purchase price is generally considered to be the fair market value. An appraisal is usually not required. If the taxpayer considers that the local fiscal authority's valuation exceeds the fair market value, he or she can prove the lower price by an appraisal.

Foreign real estate is also valued at market value. Unlike the valuation of domestic real estate, the valuation of foreign real estate is not determined in a special tax procedure. Instead, the taxpayer must state its value and provide the inheritance tax office with information based on the stated value.

It is called an inheritance tax exemption slot (FreibetRag) or an inheritance tax. There are three types of personal ta x-exempt frames:

Personal ta x-exempt slots vary depending on the family relationship between the heir and the beneficiary. In the case of an uncontrolled tax obligation, the following ta x-exempt slots are applied (see §15 Erbstg and §16 Erbstg):

Relationship with the heir

Ta x-exempt

Spouse or registered sam e-sex partner (Lebenspartner)

Child (including adopted or extramarital children) and sugar

Children who make a livelihood

Tax Clearance / Transfer Certificate

The child of the preceding child

Estate Income Tax Return

Child's remarriage partner child

Elim Poon - Journalist, Creative Writer

Last modified: 27.08.2024

The Annual Tax Act , adopted on December 16, , includes notable changes to the German Valuation Act ("Valuation Act"). These changes could lead to an. The German gift tax (Schenkungsteuer) is. Have you inherited something? You may have to pay inheritance tax. Gifts given during the lifetime of the giver are subject to gift tax.

Play

accepted