pay inheritance tax

When you inherit, you have to pay inheritance tax.

The inheritance tax covers assets that individuals have acquired through inheritances. It is intended to contribute to a fairer distribution of wealth. The inheritance tax does not cover the entire estate of a deceased person, but rather the inheritance that the beneficiary receives. This is also known as the taxable acquisition.
 
So if you inherit wealth, you must report this to the tax office and pay taxes on it.

You must pay tax on any assets that you acquire by reason of death. These include:

• the acquisition
  • by inheritance  
  • by legacy, meaning an inheritance that the deceased person left via a will or inheritance contract
  • due to an asserted compulsory portion claim, which is a legally guaranteed minimum share, for example for children or spouses
  • by donation mortis causa, meaning a donation promised by the deceased during their lifetime
• the other acquisitions to which the provisions of civil law applicable to legacies apply
• the acquisition on the basis of a contract concluded by the testator which you acquire directly upon their death, for example a life insurance contract

The amount of tax depends on the taxable assets you inherit. The valuation of the assets transferred to you by the deceased person is carried out in accordance with the Valuation Act.

Of particular importance is the valuation of real estate. The locally competent tax office determines the real estate value in a separate procedure if necessary. The basis for this is the fair market value of the properties. Various valuation methods exist to determine the fair market value.

The following values can reduce the inheritance tax:

• Debts that have passed from the deceased female or male testator to the female or male heirs
• Legacies, conditions, and compulsory portion claims  
• the funeral costs, grave maintenance costs, and estate administration costs triggered by the inheritance; you can deduct a lump sum of EUR 10,300 to cover these costs without having to provide proof

In addition, the tax bracket is decisive for the amount of tax. The tax bracket affects the amount of your personal tax rate and allowance. As a general rule, the closer your relation to the deceased, the lower the inheritance tax will be.

The amount of tax further depends on whether substantive tax exemptions are to be taken into account. Allowances are monetary values that are not taxed.

From the catalog of exemptions, the following allowances are of particular importance:

• for household goods in the amount of EUR 41,000 for acquirers in tax bracket I
• for other movable physical objects in the amount of EUR 12,000 for acquirers in tax class I
• for household effects and other property together in the amount of EUR 12,000 for acquirers in tax classes II and III; the acquisition of a family home is also tax-exempt in many cases

Even if you acquire eligible business and equity assets as well as agricultural and forestry assets, the Inheritance Tax Act provides for various relief options.

3 months: You must report the inheritance within this deadline after learning of the inheritance.

1 month: The deadline applies to the payment of inheritance tax after you have received the inheritance tax assessment notice.