How does double taxation affect inheritances?
December 29, 2022 | 120,00 EUR | answered by Guido Hoffmann
Dear tax advisor,
My name is Adele Otremka and I have a question regarding double taxation in relation to inheritances. My grandfather recently passed away and left me a large fortune. Now I am concerned that I will have to pay taxes on the inherited wealth both in Germany and abroad. I am aware that there are double taxation agreements, but I am unsure of how they work exactly and if they also apply to inheritances.
My grandfather had his wealth invested both in Germany and abroad, so I am not sure how double taxation will affect the inheritance. I fear that I will have to give up a large portion of the inherited wealth in taxes and be financially burdened as a result. I would like to understand how double taxation specifically works in the case of an inheritance and if there are ways to avoid or at least minimize it.
Could you please explain to me how double taxation is regulated in the case of inheritances and what measures I can take to save on taxes? Are there specific tax-free allowances or regulations that can help me reduce the tax burden? I am grateful for any assistance and look forward to your professional advice.
Thank you in advance.
Kind regards,
Adele Otremka
Dear Mrs. Otremka,
Thank you for your inquiry regarding double taxation in connection with inheritances. It is understandable that you are concerned about having to pay taxes on the inherited wealth both in Germany and abroad. In such cases, it is important to know the exact regulations and take possible measures to minimize the tax burden.
First of all, it is important to know that there are indeed double taxation agreements between Germany and many other countries to avoid double taxation. These agreements regulate which country has the right to tax the inherited wealth and how double taxation can be avoided. Generally, the right to tax will be where the deceased had their residence at the time of their death.
In the case of an inheritance from abroad, you should check if a double taxation agreement exists between Germany and the relevant country. If such an agreement exists, certain provisions are usually made to avoid double taxation. For example, taxes already paid abroad may be credited against the tax owed in Germany.
There are also exemptions and regulations that can help reduce the tax burden when inheriting. In Germany, for example, there are exemptions for inheritances that vary depending on the degree of relationship. It may also be advisable to seek tax advice early on to explore possible tax-saving opportunities.
Overall, it is important to address the issue of double taxation in inheritances early on and, if necessary, seek professional help to minimize the tax burden. I am happy to assist you in assessing your individual situation and working together to develop measures to save on taxes.
Sincerely,
Guido Hoffmann
Tax Advisor
