If the deceased held funds or owned property in Germany, the German Tax Office (Finanzamt) will find out about it and will – most likely – levy German inheritance tax, even if the deceased was not a German national and even if the deceased was not resident in Germany. We have explained the workings of the German Inheritance and Gift Tax Code (Erbschafts- und Schenkungssteuergesetz) here.
Executors are under the legal obligation to submit an inheritance tax declaration (Erbschaftssteuererklärung). The German IHT forms are available for download here.
But would the German tax office (Finanzamt) ever find out about the assets of the testator if the executor would – let’s say – forget to submit such a German IHT declaration? Yes, the tax authorities definitely will find out about such assets of the deceased. For numerous reasons: Continue reading →
When a British expat lives in Germany for some time, he or she will most probably have a German bank account and other German assets, maybe even have bought property over here. The majority of these British expats have never thought about the inheritance law implications of such foreign assets. They simply assume that UK law applies. This is, however, not always the case. Especially if German probate law and the German inheritance tax office consider the UK citizen to have been domiciled in Germany, then German law applies to the entire (global!) estate. But even if a UK citizen never sets foot on German soil but only invests here, i.e. buys property or company shares, then he / she may be in for some surprises. Or to be precise: their heirs might be.
Let us try to explain the basics of this rather complicated matter of British-German inheritance law cases, using the example of the hypothetical couple Mr and Mrs Liveabroad: Continue reading →
German inheritance law, including inheritance tax law, works very differently from the UK system (for German probate see here and here). While in the UK the estate as such is taxed (with one single nil-rate band of currently 325k GBP being available as tax relief) you find a completely different inheritance tax concept in Germany: Continue reading →
There exist, as we have explained here, fundamental differences between the inheritance law concepts of the UK and Germany. Since UK probate law requires a personal representative, many testators in the UK appoint an executor in their will. In Germany, however, where a “personal representative” is unknown due to the principle of universal succession, the inheritors come into ownership as well as into possession of the estate automatically and directly. Therefore, appointing an executor (Testamentsvollstrecker) is the exception in Germany, used only in cases where the testator expects the future inheritors to quarrel or where the testators will probably still be under age at the time of inheritance. Furthermore – since the concepts are different – the words “executor” and “Testamentsvollstrecker” are false friends, they have similar but not identical legal powers and obligations.
Now, when a British citizen had all or parts of his estate in Germany at the time of his death, there is the need for a German grant of probate (called “Erbschein”). The probate procedure is explained here and here.
How to get access to an Estate under German Inheritance Law
When a UK citizen dies while having possessions in Germany (bank accounts, deposits, shares, insurance claims or property), one must first determine whether the estate is governed by German hereditary law and thus falls into the competence of German probate courts: Continue reading →
According to German inheritance law, close relatives have a right to claim a portion of the estate, even if the testator did not want to leave them anything and has consequently disinherited them. This so called “Pflichtteil” is mostly translated with “statutory share“, “forced share” or “compulsory share“. However, it is difficult to find the correct English word, because this concept does not quite exist in the English or US common law systems. And even to many German heirs this concept comes as a surprise.
German inheritance law differs very much from UK law and there are many formal requirements which must be followed. A good starting point for basic information about the law of succession in Germany (or any other European country for that matter) is the official EU website “Successions in Europe“. It answers a few basic questions and contains helpful links for more detailed research.
In our CrossChannelLawyers blog we try to dig deeper in regard to many issues of British-German and US-German succession rules, inheritance tax, estate planning and international probate.
For starters, let us quickly explain some major differences between UK and German laws of succession: