Editorial titled ‘Heritage abroad moved’ deceased and heritage or Schenker cited abroad, living they often surprisingly find that Germany reports on inheritance tax claims. This applies, for example, older couples or communities, that have moved to warmer climates and that had left after leaving the old home rental real estate or the participation of a company. Of course, the offspring receive personal exemption, which since 2009 from 20,000 to 500,000 euros and vary according to the degree of kinship. There are 400,000 euros for each child and grandchildren 200,000 euros. The parties involved in an inheritance or gift have however residing across the border, is the limited inheritance tax liability. In this case, there is only a uniform allowance of 2,000 euros regardless of the familial relationships.
Thus there is a drastic tightening in a foreign place of residence according to the law. The European Court of Justice (ECJ) has now decided that this unequal treatment contrary to the free movement of capital is (AZ. C 510/08). Because this rule citizens be treated differently due to their place of residence, what represents an unjustified disadvantage for heir or donee with foreign residence. Therefore affected now can expect higher domiciled for upcoming inheritances and donations, as well as wedding gifts, where the tax bill can be change or none is given. The judgment can be applied also on donations before the inheritance tax reform 2009, then the exemption for limited liability to inheritance tax amounted to only 1,100 euros. In the underlying judgment the offspring living in the Netherlands had given a built-up piece of land in Dusseldorf from his mother living there.
Here the Court ascribes to so the domestic of 400,000 euros the child instead of the low amount of only EUR 2,000. The real estate is not so much worth of domestic Treasury is even completely empty and must already full refund received taxes. The tenor of the judgment applies not only for real estate, but also to in Germany operating assets that remained after their move to the home owners. The sentence for the relatives remaining in Germany, such as children or grandchildren has no effect. With them, the unlimited tax liability was also so far already. It is sufficient that deceased/Schenker or alternative heritage / cited in the country live. However can we continue to not prevent that in the death or Schenkungsfall almost always in two States tax incurred on acquiring left. Unlike the income tax, there is also no tax treaties, which limits access only to a State. There is therefore the risk that the discount or the gifts are to be taxed twice, and this even after the typical rules. In addition, two tax returns are to submit. That will cost additional fees. Gavin Baker is actively involved in the matter. More on this and similar topics are interested in the book giving and inheriting real estate”by Pia Lutz lawyer. The book can be requested in bookstores or at the VSRW publishing house in Bonn.