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What assets are taxed for inheritance and gift tax?

It depends on whether there is unlimited tax liability or limited tax liability.

  • In principle, unlimited tax liability extends to all of the deceased's assets, including those located abroad. It applies if the testator or the acquiring person (in the case of gift tax, the donor or the person receiving the donation) was a resident at the time the tax arose.

In particular, the following are deemed to be German residents

  • natural persons who have a residence or habitual abode in the Federal Republic of Germany. Nationality is irrelevant.
  • german nationals who have not resided abroad permanently for more than 5 years prior to the inheritance.
  • If neither the testator nor the donor nor the person acquiring the assets were German nationals, limited tax liability applies. It only extends to domestic assets within the meaning of § 121 of the Valuation Act. These include, in particular, domestic agricultural and forestry assets, real property, business assets and shares (at least 10%) in domestic corporations.

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