How inheritance tax works in Germany
Germany levies both inheritance tax and gift tax. The tax can apply to lifetime gifts and transfers on death, and the exact result depends on the relationship between the parties, the value transferred and whether reliefs for business assets or the family home apply.
Personal allowances are generous for close family and are generally refreshed every ten years. Spouses or registered partners can receive EUR 500,000 tax-free, children EUR 400,000 and grandchildren EUR 200,000 in the common cases.
If no one involved is German tax resident, Germany can still tax domestic assets such as German real estate and certain business interests.
Tax rates at a glance
- Tax class I
- 7% - 30%Close family
- Tax class II
- 15% - 43%
- Tax class III
- 30% - 50%
- Tax-free allowances
- EUR 20,000 - EUR 500,000
Who benefits most
These profiles tend to benefit most when the rules match their real residence, payroll and business setup.
FamiliesInvestorsHigh earnersExpatsFamily offices
Watch out for
- The 10-year rule matters. Many personal allowances can only be used once every ten years for the same donor or decedent.
- Family-home and business-asset reliefs can materially reduce the bill, but the conditions are strict.
- The SPD floated a 2026 reform concept for inheritance tax, including a new lifetime allowance idea, but it is only a proposal at this stage.
- Cross-border estates often depend on situs rules, residence status and treaty position, not just the German headline rate.
Frequently asked questions
Does Germany have inheritance tax?
Yes. Germany taxes inheritances and lifetime gifts, with rates and allowances that depend on the relationship and value transferred.
What is the inheritance tax allowance in Germany?
Common allowances include EUR 500,000 for spouses or registered partners and EUR 400,000 for children, with lower allowances for other recipients.
Are gifts taxed in Germany?
Yes. Lifetime gifts are generally taxed under the same framework as inheritances.