German Inheritance and Gift Tax

The German government revised tax regulations on asset transfers during one’s lifetime and upon death with the 2016 inheritance tax reform. New rules were established for family businesses and so-called large acquisitions of business assets exceeding EUR 26 million.

Moreover, numerous other regulations must be adhered to when transferring assets. Alongside inheritance, gift, and income tax factors, corporate and inheritance law issues are also intertwined.

Our experienced team will assist you in all relevant areas and develop tailored solutions for your succession planning.

Early succession planning enables optimal utilization of tax structuring options and existing legal benefits. With the right tools, the tax case can be optimized, and undesired tax and company law consequences can be avoided. Possible tools include:

• Utilizing wills
• Selecting the correct legal form for inheriting company assets
• Precise drafting of partnership agreements
• Designing foundations (e.g. family foundations)

In cases of succession due to death, tax and legal advice from a consultant is also vital for a tax-efficient transfer. Here as well, we can devise a tax-optimized solution for you, such as by asserting claims for a compulsory portion or waiving an inheritance.

Gift and inheritance tax can become relevant even if you’re not yet contemplating succession, or even intending to implement it. Why? Many entrepreneurs strive to safeguard their assets from all potentialities during their lifetime. This includes:

• Divorce
• Insolvency
• Personal liability risks

With this so-called asset protection, it’s advisable to distribute assets across multiple units during asset structuring. This enables allowances, tax rate advantages, and protection mechanisms to be activated. The most beneficial way to establish such structures is via gift tax, whereby allowances and preferential provisions can concurrently ensure that no payment burden arises.