What tax regulations apply in the case of double taxation of inheritances?
April 20, 2024 | 110,00 EUR | answered by Albrecht Schneider
Dear Tax Advisor,
My name is Felix Neumann and I am currently facing a tax challenge where I urgently need your help. My father recently passed away and left me a substantial inheritance. However, I am concerned about the potential double taxation of this inheritance and would like to learn more about the tax regulations in this regard.
I am currently in an unclear situation as I do not know exactly how the taxation of inheritances works in Germany and what regulations apply to double taxation. My concern is that I may have to pay taxes on the inherited assets twice, thus losing a significant portion of my inheritance.
Therefore, I would like to ask you to provide me with more information on the tax regulations regarding the double taxation of inheritances. Are there specific tax-free amounts or tax rates that I need to consider? What options are available to avoid or at least minimize double taxation? What tax planning opportunities are available to me to manage my inheritance optimally?
I would greatly appreciate it if you could provide me with your expertise in this area so that I can better assess my tax situation and take appropriate measures. Thank you in advance for your support.
Sincerely,
Felix Neumann
Dear Mr. Neumann,
first of all, I would like to offer my sincere condolences on the loss of your father. It is understandable that you also need to take care of tax matters during this difficult time. I am happy to offer you my expertise and knowledge on the topic of double taxation of inheritances.
In Germany, inheritances are generally subject to inheritance tax. There are certain tax-free allowances, which vary depending on the relationship between the deceased and the heirs. As a direct descendant (i.e. a child), you usually have a higher tax-free allowance than more distant relatives or non-relatives. These allowances allow for a certain portion of the inheritance to be received tax-free.
It is important to note that inheritance tax is a federal tax and is uniformly regulated nationwide. Double taxation occurs when taxes are levied on the same inheritance in both Germany and another country. In such cases, international double taxation agreements can be used to avoid or at least reduce double taxation.
To minimize double taxation, it is advisable to examine all relevant tax aspects and potentially use tax planning opportunities. This can include utilizing tax-free allowances, distributing the inheritance among different heirs, or timely planning and structuring of assets.
It is recommended to consult a tax advisor early on to analyze your individual tax situation and take appropriate measures. Together, we can work on optimizing your tax situation and ensure that you are not unnecessarily affected by double taxation.
I am available for a personal consultation and look forward to supporting you in dealing with your tax challenges.
Best regards,
Albrecht Schneider
Tax Advisor
