Does inheritance tax also apply to foreign assets?
September 13, 2023 | 40,00 EUR | answered by Alwin Widmann
Dear tax advisor,
I am contacting you with a question regarding inheritance tax. My name is Artur Lehmann and I am currently in the process of settling my estate. I have assets both in Germany and abroad, and I am wondering if inheritance tax also applies to foreign assets.
My current situation is as follows: I own a house in Germany, as well as a bank account in Switzerland. Additionally, I also have stocks in an American company. I am not sure how these foreign assets will be treated in terms of inheritance tax and what taxes may apply to them.
My concern is that my heirs could be faced with unexpectedly high tax payments if they inherit my foreign assets. Therefore, I am wondering if there are ways to minimize or avoid inheritance tax on foreign assets. Are there specific regulations or agreements between different countries that could apply in this case?
I would greatly appreciate it if you could provide me with information on this topic and suggest possible solutions. I want to ensure that my estate is optimally settled and that my heirs are not burdened with unexpected tax liabilities.
Thank you in advance for your assistance.
Sincerely,
Artur Lehmann
Dear Mr. Lehmann,
Thank you for your question regarding inheritance tax in relation to foreign assets. It is understandable that you are concerned about how your foreign assets will be taxed and whether your heirs could be faced with high tax payments. I will now provide you with detailed information on this topic.
In principle, foreign assets are also subject to inheritance tax in Germany. This means that both your house in Germany, your bank account in Switzerland, and your shares in a US company will be taken into account when calculating inheritance tax. The tax is calculated according to German regulations, regardless of where the assets are located.
However, there are ways to minimize or avoid inheritance tax on foreign assets. One option is to learn about existing double taxation agreements between Germany and the respective countries. These agreements can prevent assets from being taxed in both the country of origin and the destination country. It is therefore advisable to consult with a tax advisor who is knowledgeable about international tax matters.
Furthermore, there is the possibility to achieve tax benefits through timely and careful estate planning. By using exemptions, making lifetime gifts, or setting up trusts or foundations, taxes on foreign assets can be reduced. It is important to plan these measures early to minimize the tax burden for your heirs.
In any case, I recommend seeking professional support from an experienced tax advisor to analyze your individual situation and develop tailored solutions. This is the only way to ensure that your estate is optimally managed and your heirs are not faced with unexpected tax payments.
I hope this information is helpful to you and I am available to answer any further questions you may have.
Sincerely,
Alwin Widmann
