International tax law
Cross-border inheritance and gift tax
Tax clarity on asset transfers with a cross-border dimension.
International tax law
Tax clarity on asset transfers with a cross-border dimension.
Inheritances and gifts with an international dimension are tax-complex. Different national rules interact, sometimes with a considerable impact on the overall tax burden.
Even a domicile or habitual residence in Germany may give rise to unlimited tax liability and thus to taxation of worldwide assets. This can apply for up to 5 years after emigration. In other cases, only German-situs assets, such as real property or company shareholdings, fall within the limited tax liability.
In cross-border asset transfers, the recurring question is which state holds the taxing right and whether foreign taxes may be credited against German gift or inheritance tax.
Differing valuation standards and tax rules therefore require careful analysis and forward-looking planning, particularly where internationally structured assets or corporate groups are involved.
Together with you, we develop a tax-efficient strategy for your succession planning. We support you both in the forward-looking planning stage and in the event of bereavement.
Your expert
CEO
Tax Consultant, Bachelor of Arts, Expert Adviser for International Taxation, Expert Adviser for Customs and Excise Duties
Inheritances and gifts with an international element arise in many different life situations. These are the cases we handle most frequently.
A holiday apartment in Spain, a rental property in the Netherlands or a farmhouse in France. We value the property under German law, take account of the country of situation and ensure the correct credit is applied.
Children or spouses domiciled abroad inherit assets from Germany. We clarify unlimited or limited tax liability, allowances and disclosure obligations in both countries.
GmbH shares, stock or partnership interests abroad are inherited or gifted. We assess valuation, relief provisions and possible double taxation in the company's country of incorporation.
A deceased person with their last domicile abroad leaves assets in Germany. We clarify the limited inheritance tax liability and assess which assets are taxable in Germany.
Accounts, portfolios or life insurance policies in Switzerland, Luxembourg, Austria or other countries form part of the estate. We take account of disclosure obligations, voluntary disclosure for historical assets and valuation at the relevant date.
Transfer of assets during one's lifetime to the next generation with a cross-border element. We use allowances multiple times, avoid unintended exit taxation and plan usufruct arrangements.
Germany has concluded specific inheritance tax DTAs with only a small number of countries. In all other cases, the credit rule under section 21 ErbStG applies. We know these frameworks and apply them correctly.
USA
DTA on inheritance and gift tax with credit and exemption rules
France
DTA on inheritance and gift tax, priority taxation in the country of situation
Switzerland
DTA on inheritance tax, though Switzerland has no federal-level inheritance tax
Sweden
DTA on inheritance tax, though Sweden no longer levies inheritance tax
Greece
DTA on inheritance tax, special rules for movable and immovable property
All other countries
Credit of foreign inheritance tax under section 21 ErbStG
Answers to the most common questions on international inheritance and gift tax.
Your question is not listed? Get in touchThe key factors are the domicile of the deceased, the domicile of the heir and the location of the assets. If the deceased or the heir was domiciled in Germany, the entire worldwide estate is in principle subject to German inheritance tax. In addition, many countries levy their own inheritance tax on assets situated there, such as real property or shareholdings. We assess which double taxation agreements apply and to what extent foreign inheritance tax can be credited against German inheritance tax under section 21 ErbStG.
Foreign real property is often subject to inheritance or gift tax both in the country where it is situated and in Germany. The country of situation generally has the primary taxing right; Germany taxes the worldwide estate and credits the tax paid abroad. Valuation takes place under German rules, which can lead to significant divergences from the local market value. We value the property correctly, check applicable allowances and ensure the foreign tax is properly credited.
An advance inheritance arrangement can be tax-advantageous where allowances are to be used more than once or where increases in value are to be passed on to the next generation. Where there is a cross-border element, exit taxation, the extended limited tax liability under section 4 AStG and the gift tax rules of the foreign country concerned must all be taken into account. We develop a transfer strategy that makes optimum use of allowances, safeguards liquidity and minimises tax risks in both Germany and abroad.
Yes, section 21 ErbStG provides for a credit of inheritance tax paid abroad against German inheritance tax, provided the foreign assets are also taxed in Germany. The requirements are comparability of the tax, assessment within five years and proof of actual payment. Existing double taxation agreements for inheritance and gift tax - such as those with the USA, France, Sweden, Switzerland or Greece - may provide more favourable rules. We assess the individual case and submit all required evidence to the tax office.
Whether a foreign property, an heir resident abroad or an advance inheritance arrangement - speak to our international tax specialists.