How is inheritance tax calculated?
May 20, 2022 | 50,00 EUR | answered by Ella König
Dear tax consultant,
My name is Christiane Eckstein and I am facing a complex situation regarding inheritance tax. My father recently passed away and left me a significant inheritance. I have already found out that inheritance tax varies from state to state and depends on the relationship with the deceased and the value of the inheritance. Now, my question is how exactly inheritance tax is calculated and what steps I need to take to correctly determine and pay it.
My father left me cash, real estate, securities, and jewelry, the value of which I cannot accurately estimate. Therefore, I am unsure how to properly calculate the inheritance tax for the entire estate. Additionally, I am concerned that I may make errors in the calculation and thus encounter unnecessary problems with the tax authorities.
Can you please explain to me the criteria for calculating inheritance tax and how I can accurately determine the value of the inheritance? Are there specific tax-free allowances that I need to consider to minimize the tax burden? What documents do I need for the calculation and are there deadlines that I need to adhere to?
I thank you in advance for your support and expertise in this matter.
Sincerely,
Christiane Eckstein
Dear Mrs. Eckstein,
I would like to assist you with your concerns regarding inheritance tax and provide you with the necessary information for calculating and paying the tax.
In Germany, inheritance tax is calculated based on the relationship between the deceased and the heirs, as well as the value of the inheritance. The closer the relationship, the lower the tax rate usually is. There are three tax classes: Class I for spouses, children, and grandchildren; Class II for parents, grandparents, siblings; and Class III for all other heirs.
The amount of inheritance tax is calculated based on the taxable acquisition, which is the value of the entire inherited assets minus the tax-free allowances. The tax-free allowances depend on the relationship to the deceased and are €500,000 for spouses, €400,000 for children, and €200,000 for grandchildren. Lower allowances apply to more distant relatives.
To accurately determine the value of the inheritance, it is advisable to create a detailed inventory list listing all assets with their respective values. This includes cash, real estate, securities, jewelry, and other assets. It may be useful to consult an appraiser to estimate the value of real estate or valuable items.
In addition to the inventory list, you will need the inheritance certificate, the will if available, and all relevant documents regarding the assets for calculating inheritance tax. It is important to declare and pay the inheritance tax within three months of the inheritance, or else late payment interest and penalties may apply.
I hope this information helps you and that you can now correctly calculate and pay the inheritance tax. If you have any further questions or need assistance, please feel free to contact me.
Sincerely,
Ella König
