Inheritance tax

Inheritance tax (Erbschaftsteuer) is levied on the transfer of assets on death in Germany (§1 ErbStG). But it only affects approx. 10% of all inheritances – most stay below the generous allowances.

Allowances:

• Spouse: €500,000
• Children (per child): €400,000
• Grandchildren: €200,000
• Siblings, nephews, nieces: €20,000
• Everyone else: €20,000

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

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

Tax class III (distant relatives, friends): 30–50%!

Special rule for the family home:

• The owner-occupied home passes tax-free to the spouse (if lived in for 10 years)
• Tax-free to children up to 200 m² of living space

Gifts during your lifetime: the same allowances, but usable again every 10 years! Start early = transfer more tax-free.

Revenue: inheritance tax brings the state approx. 11 billion euros per year.