Are there any special regulations for inheritance tax if the inheritance goes abroad?
April 12, 2024 | 50,00 EUR | answered by Wilhelm Ackermann
Dear tax advisor,
My name is Paul Hemminger and I am facing a complex situation regarding inheritance tax. My uncle recently passed away and left me an inheritance consisting of assets both in Germany and abroad. I am unsure if there are specific regulations or differences in inheritance tax when the inheritance goes abroad.
As you may know, the German tax authority levies inheritance tax on assets located within the country. But what happens when parts of the inheritance are located abroad? Do they also need to be taxed, and are there possibly double taxation agreements that prevent this?
I am concerned that due to the international component of my inheritance, I may not only be faced with German inheritance tax but also with foreign inheritance tax. Are there ways to avoid or at least minimize this double taxation? How can I ensure that I do not encounter any legal issues with the tax authorities in Germany or abroad?
I would greatly appreciate it if you could inform me about specific regulations for inheritance tax on inheritances going abroad and provide me with possible solutions. Your expertise in this area would greatly help me clarify my tax matters regarding my uncle's inheritance.
Thank you in advance for your assistance.
Sincerely,
Paul Hemminger
Dear Mr. Hemminger,
Thank you for your inquiry regarding inheritance tax in relation to an inheritance that includes assets both in Germany and abroad. It is understandable that you are concerned about possible tax consequences, and I will do my best to answer your questions comprehensively.
In Germany, inheritance tax is generally levied on assets located within the country. If parts of the inheritance are located abroad, there may be a risk of double taxation, as the respective foreign country may also impose an inheritance tax. To avoid this, there are double taxation agreements between Germany and various other countries.
These agreements aim to prevent multiple taxation of the same income or assets in different countries. They regulate, for example, which country has the right to tax, to what extent taxes are levied, and how tax credits or exemptions can be applied. It is important to review the specific provisions of the double taxation agreement between Germany and the relevant country to understand how inheritance tax is regulated in your particular case.
If there is no double taxation agreement, or if it does not provide sufficient protection, there are still ways to avoid or minimize double taxation. These may include crediting taxes paid abroad against German inheritance tax or applying for exemptions or tax relief based on international agreements.
To ensure that you do not encounter legal issues with tax authorities in Germany or abroad, it is advisable to seek advice from an experienced tax advisor. An expert can help clarify your tax matters, develop the best strategies to minimize tax burden, and ensure compliance with all legal requirements.
I hope this information is helpful to you and I am available for further questions. Thank you for your trust and inquiry.
Sincerely,
Wilhelm Ackermann
