date | theme

10.07.2020 | Perpetual Traveler: center of life and habitual residence as a criterion in taxation

13.07.2020 | Limited and unlimited tax liability in Germany

22.07.2020 | Functional relocation and functional doubling in International Tax Law

07.08.2020 | Tax haven check: Which country offers which advantages?

28.08.2020 | Avoid inheritance tax and gift tax abroad (this contribution)

Anyone who moves abroad in the long term naturally wants to be sure that he also leaves the tax liability towards Germany behind. However, this is often hardly possible with the inheritance tax and gift tax. If the property that is transferred is to be located in Germany or either the transferring or receiving person is taxable in Germany, then the German inheritance tax law also applies. This may lead to taxation in Germany as well as in other countries. Although only a number of countries impose such a tax, Germany has concluded a separate double taxation agreement with very few of them regarding inheritance tax and gift tax. Even if an inheritance tax exists in a specific country, it must be examined whether the territoriality principle is applied in taxation. If this is the case, it may be worthwhile exchanging foreign citizenship for German citizenship.

In the video we explain the connections to the inheritance tax and gift tax, which German emigrants should think of.

1.Inheritance tax and gift tax in general

Inheritance tax is a taxation of property transferred from one person to another by inheritance. Since this basically also applies to gifts, the gift tax is in many respects linked to the inheritance tax. Above all, the criterion of free transfer of assets is in the foreground.

Apart from these general criteria, there are also many other framework conditions that can be important in the taxation of capital transfers of this kind. This includes, among other things, the advantageous consideration of certain family relationships or the existence of any tax-free amounts as well as their amount or staggering. However, since these details would go far beyond the scope of our contribution, they remain out of touch here. Rather, the possible tax liability of persons who leave Germany permanently in the case of inheritance or donation is the focus of our article. In addition, we also explain some of the ways with which you can avoid this often hardly considered tax liability.

2. inheritance tax and gift tax in Germany

Inheritance tax and gift tax are applicable in Germany if at least one of the following conditions is met: