Germany has concluded a “DBA inheritance tax” with various states, including the USA. The double taxation agreement regulates which state may tax inheritances and gifts and in which cases the taxation right is missing. In addition, the DTA, in the case of a fundamentally dual taxation law, standardizes the criteria according to which the taxation authority is assigned to only one of the two states.
So let’s take an exemplary look at the DBA inheritance tax with the USA and the individual regulations as well as their interaction with German law!
1. Scope and purpose of the DBA inheritance tax
In § 2 ErbStG, the German legislature regulates which persons are subject to unlimited inheritance tax liability. Insofar as there is no unlimited inheritance tax liability, only the acquisition of domestic assets (§ 121 BewG) is subject to taxation.
Depending on the state, however, the USA also collect inheritance tax and gift tax. If there is a residence or another tax residence in both countries, there may be double taxation. Both Germany and the United States would set inheritance tax or gift tax on the respective acquisition in these cases, which can lead to a tax burden of more than 70% in individual cases.
The purpose of the DBA inheritance tax is to avoid such double taxation. According to the income tax double taxation agreements, the international agreement regulates which state is entitled to taxation under which conditions. In these cases, the other State waives its right to tax or exercises it only to a limited extent. Thus, the DBA inheritance tax ensures that an acquisition is not unduly burdened with inheritance tax.
In the case of the DBA inheritance tax USA, the agreement applies to
This article does not replace tax or legal advice in an individual case. Facts, current law, jurisdiction, documentation and implementation remain decisive.