How German inheritance tax is actually assessed when you live abroad
Knowing the rates is one thing. Getting through the German tax office is another. Here is the procedure from start to finish, with the points that catch out heirs living outside Germany.
German inheritance tax is levied under clearly defined rules in the Inheritance and Gift Tax Act (ErbStG). For heirs living abroad, a number of special features change how the procedure runs in practice.
Important: your home country may tax the same inheritance
If inheritance tax is also levied where you live, you must declare the inheritance there as well — and you may end up paying in both countries. We can help you credit the German tax against the foreign one. For the declaration in your own country we can only assist indirectly, by liaising with your advisors at home and supplying the documents they need.
- 01
Establishing whether you are liable at all
Liability depends on where the deceased lived, where you live, and where the assets are.
- Unlimited liability: if either the deceased or the heir was resident or habitually resident in Germany, worldwide assets are taxed.
- Limited liability: if neither was resident in Germany, only German-situs assets are taxed — typically German real estate or shares in German companies.
In cross-border cases, an experienced advisor should clarify the scope of liability before anything is filed.
- 02
Notifying the tax office
The duty to notify is narrower for heirs abroad than most people assume.
- The three-month notification duty under § 30 ErbStG applies to persons resident in Germany who inherit assets abroad.
- Heirs living abroad do not have to report the inheritance within three months. The tax office is usually told by the probate court when a certificate of inheritance is applied for or a notarised will is opened (§ 34 ErbStG).
Even so, it is wise to approach the tax office proactively — through an advisor in Germany — to avoid queries and delays later.
- 03
Filing the inheritance tax return
The tax office requests the return. Heirs abroad usually have to supply:
- The death certificate
- The will or inheritance contract, with a certificate of inheritance where applicable
- A schedule of assets and liabilities
- Details of personal allowances and family relationships
Foreign documents often need a sworn translation. Getting the file complete and correct the first time saves months.
- 04
Valuation of the estate
The tax office values the estate under German rules.
- Real estate: market value under German valuation standards.
- Financial assets: accounts and securities at their nominal or market value.
- Foreign assets: taxable only where liability is unlimited — and often difficult to value, especially foreign property and shareholdings.
A well-prepared valuation presents the estate in full and heads off disputes with the tax office.
- 05
Calculating the tax
Allowances, the flat-rate expense allowance and the progressive rates are applied exactly as set out in our guide to the basics — and as modelled by our calculator.
- 06
Crediting foreign tax
If you also pay inheritance tax in another country, relief may be available.
- Germany has inheritance tax treaties with a small number of countries, including the USA.
- Without a treaty, tax paid abroad can in certain circumstances be credited against the German tax.
This is where advice pays for itself: relief is easy to lose through a badly sequenced filing.
- 07
The assessment notice
The tax office issues an assessment (Erbschaftsteuerbescheid) stating the tax due and the payment deadline.
- An appeal can be lodged against an incorrect assessment — but only within the deadline.
- As a rule the tax must be paid within one month of receipt of the notice.
Every assessment should be checked line by line before it is paid.
- 08
The particular problems of living abroad
Distance creates friction the German procedure does not allow for.
- Correspondence with the tax office is in German, in writing, and to a German address.
- International transfers take time and cost fees — deadlines are unforgiving.
- Errors and double taxation are best avoided by using a lawyer or tax advisor with cross-border experience.
In short
The procedure for heirs living abroad is manageable, but unforgiving of mistakes. The three-month notification duty applies to German residents, while the tax office generally learns of the estate from the probate court. Clarifying matters early through a competent advisor in Germany prevents delays and avoidable problems.
The result when we handle your estate: the net amount in your account
The estate settled in full, property sold if you wish, accounts closed and balances transferred to you, valuables realised and the proceeds paid out, the inheritance tax return filed, the tax office's assessment checked and the tax paid.