Inheritances and gifts among living people are subject to inheritance tax according to the Inheritance and Gift Tax Act (ErbStG). It is between 7% and 50%, with the actual level of the tax rate depending on the total value of the acquisition. In addition, the tax class of the acquirer plays a role. We take a look at the basics of the ErbStG and show what inheritance and donation are in the tax sense.
The ErbStG links in many places to the provisions of the Civil Code (BGB). This applies in particular to the factual tax liability according to § 1 ErbStG. The regulation determines which legal transactions are subject to taxation. In particular, inheritance and donation (§ 1 (1) no. 1 and 2 ErbStG) are relevant.
The legislator treats both processes identically in almost all points. The background is the avoidance of tax avoidance through advance payments. As a father or mother, you could give your assets to your own children without a tax burden before your death. In the case of inheritance itself, there would then be no or only low assets, which may even fall below the allowance amounts.
In §§ 3 and 7 ErbStG, the terms “inheritance” and “gift” are defined in more detail. As a rule, the ErbStG refers to the BGB, which also makes processes subject to inheritance tax, which would not be immediately associated with it.
The material tax liability is finally regulated in §§ 3 to 8 ErbStG. It includes, in particular, inheritance and donation, but also claims on the basis of profit compensation as well as pre- and post-inheritances. So let's look at this.
This article does not replace tax or legal advice in an individual case. Facts, current law, jurisdiction, documentation and implementation remain decisive.