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Cross-border gifts and inheritance
If German citizens plan to make a gift to persons living abroad, they should keep in mind that the recipient is also liable to German gift and inheritance tax.
Avoidance of German inheritance tax – not at all simple
A person who lives in Germany and receives or inherits something from a person living abroad must declare it in Germany. Thus, there is no use in the father moving to Austria (where the inheritance tax is no longer levied, as is generally known) in order to avoid inheritance tax, and naming his son, who lives in Germany, as the sole heir. The son also would have had to move out of Germany for this tax evasion model to work.
Avoid double taxation in two countries
In a worst case scenario, both the country of domicile of the donor as well as the country of domicile of the donee impose inheritance tax. As a result, German and foreign inheritance taxes are levied and can consume over 70% of the assets. Thus, persons abroad are well advised to consult an advisor experienced in international inheritance tax law such as Benefitax, before a will, a bequest or a prenuptial agreement is signed. Oliver Biernat has published an article on the topic “Avoid double taxation”.
How can Benefitax help you?
We help you in the preliminary stages and can make a provisional calculation of the gift or inheritance tax. On the basis of individual specifications of our clients, we provide recommendations for re-structuring the will, relocating your domicile, etc., which help in reducing the inheritance tax burden. Thus, your loved ones can keep more assets as fewer taxes are paid. If applicable, we calculate the asset value as per the principles of inheritance tax law and prepare German gift and inheritance tax returns for you or your heirs. If disputes with the tax authorities arise, we clarify the same on your behalf. If gift and inheritance tax returns must be filed abroad, we recommend competent experts in the respective country and can also establish communication with them upon request.