Inheritance tax for foreigners - heirs abroad

04-17  Source: Network gathering  Views:3 


Inheritance tax for foreigners - heirs abroad

When Testament in the EU may be required by German law of succession.

Heirs as a German or a nonresident

The finca, the apartment in London and a bank account in Switzerland - in the majority of countries is determined by the law of succession, the pedigree and principle of birthplace.

  • If you are not born there or not live a long time, apply for the inheritance of your home country. In Mallorca or Switzerland you are considered foreigners. They are not among the preferred partially residents. Some exceptions there anyway.
  • In some EU countries, you may have to pay inheritance tax already when there are parts of the estate. Neither the deceased nor the heir must have had a special relationship with that country. This would result in double taxation. Because in which EU country how much and which apply inheritance taxes, each Member State may specify.
  • France and Belgium are considered high-tax states, Bulgaria and Estonia as dumping control states. Then there are countries such as Latvia and Slovakia, which do not levy inheritance tax. In the United States, Thailand or Russia there again own national regulations.
  • To escape the inheritance of last habitual residence, it requires a personal control. As testator with German citizenship, you can choose in my will or an agreement that you wish the German law of succession within the EU.

When does a Transnational succession reference?

  • Leaves a testator a German citizen residing in Germany only assets, no inheritance is present with an international dimension. Different is the case, if he leaves wealth abroad, for example, a holiday home in Spain.
  • To an inheritance with a foreign element is also when his last residence was abroad or if a foreigner in Germany leaves assets. Finally, the testator may have built as a German disposition mortis causa, for example in France or in the United States.

Inheritance tax on domestic and foreign assets

General rules on personal tax liability, see the inheritance tax and gift tax act (ยง 2 ErbStG). There is talk of unlimited or limited tax liability. The Income Tax Act (ITA), this tax obligation has nothing to do.

  • If you acquire property or money from an inheritance, you usually subject to unlimited tax liability. This means that the testator or heir must be treated at the time of the succession as a tax resident. If the conditions are met for the assets is also a foreigner who resides in Germany, taxed in the event of death.
  • The German tax authorities want their share in inheritance, when assets of the deceased is abroad. Inheritance tax is generally payable if the deceased testator was a German citizen or had his last registered address in Germany and not permanently lived abroad more than five years.

Do testator and acquirer not the status of a tax-resident person, they are subject to the limited inheritance tax liability. Among them, however, only the assets fall in the estate, which is inherited in Germany.

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