What taxes apply when inheriting?
June 28, 2023 | 40,00 EUR | answered by Felix Richter
Dear lawyer,
I am contacting you because I am currently dealing with the issue of inheritance law and am unsure about the taxes that may be incurred when inheriting. My grandmother recently passed away and left me an inheritance. I am unsure if I now have to pay taxes and how much they could amount to.
I have heard that there are different types of inheritance taxes depending on how closely related one was to the deceased. As I am the only granddaughter of my grandmother, I wonder if this fact will affect the amount of taxes. Additionally, my grandmother owned a house and a savings account, which makes me wonder if these assets will also be taxed.
My concern is that I may have to pay a large sum of taxes, which could significantly reduce my grandmother's inheritance. Therefore, I am wondering what options there are to minimize the tax burden or avoid it altogether.
I would be very grateful if you could provide me with information on the different types of inheritance taxes and explain how they will affect my inheritance. Additionally, it would be helpful to know if there are strategies to reduce the tax burden. Thank you in advance for your assistance.
Sincerely,
Anna Karpinski
Dear Ms. Karpinski,
Thank you for your trust and your question regarding inheritance taxes. It is understandable that you may feel uncertain and in need of information to better understand the situation. I am happy to explain the different types of inheritance taxes and how they could affect your inheritance.
In Germany, there is an inheritance and gift tax that is imposed on the acquisition of assets by heirs or recipients. The amount of tax depends on the value of the acquired assets and the degree of relationship between the deceased and the heir. In your case as the granddaughter of your grandmother, the tax falls under category III, which has the highest tax rates.
For the calculation of inheritance tax, the value of the entire inherited assets is taken into account, including your grandmother's house and savings account. However, there are exemptions that vary depending on the relationship. For grandchildren, the exemption is currently €20,000. If the value of the entire inherited assets is less than this exemption, the inheritance tax is completely waived.
To minimize the tax burden, you may consider lifetime transfers of assets (gifts). There are also exemptions for gifts that can be used every 10 years. Through timely gifts, you can reduce the tax burden. Additionally, there are ways to optimize the tax burden through testamentary provisions, such as utilizing exemptions or tax brackets.
It is advisable to consult with a specialist in inheritance law early on to discuss individual planning options and find a legally secure solution. The exact calculation of inheritance tax is often complex and depends on many factors, so expert advice is recommended.
I hope this information has been helpful, and I am available for further questions. Thank you for your interest and attention.
Sincerely,
Felix Richter, Attorney at Law
