Inheritance tax allowances

The allowances determine how much you can inherit or receive as a gift tax-free in Germany (§16 ErbStG).

Overview of allowances:

• Spouse / registered civil partner: €500,000
• Children (per child): €400,000
• Grandchildren: €200,000 (if the parent is still alive), €400,000 (if the parent has already died)
• Parents/grandparents (on inheritance): €100,000
• Siblings, nephews, nieces: €20,000
• Everyone else (including friends, unmarried partners): €20,000

Tax rates (tax class I: spouse, children, grandchildren):

• Up to €75,000 above the allowance: 7%
• Up to €300,000: 11%
• Up to €600,000: 15%
• Up to €6,000,000: 19%
• Up to €13,000,000: 23%
• Over €26,000,000: 30%

Tax class III (friends, distant relatives):

• 30–50% – much higher!

Important special rules:

• Family home: the owner-occupied home passes tax-free to the spouse (if lived in for 10 years) and to children (up to 200 m²)
• Maintenance allowance for spouses: an additional €256,000
• Maintenance allowance for children: €10,300–52,000 (depending on age)

Gifts during your lifetime:

• The same allowances as for inheritance
• Usable again every 10 years!
• So: start making gifts early = transfer more tax-free