Costs arising from an inheritance – such as funeral expenses – are recognised as a lump sum up to a certain amount without requiring proof. This allowance is being increased.
What is changing
The lump-sum allowance for inheritance-related costs is being increased from EUR 10,300 to EUR 15,000.
Entry into force
Applies to acquisitions for which the tax arises from the month following the promulgation of the act onwards.
Estate liabilities in cases of limited tax liability
Estate liabilities are to be proportionally deductible in cases of limited tax liability.
What is changing
Following the ruling of the ECJ that the previous non-deductibility of compulsory portion liabilities under limited tax liability violates the free movement of capital, a proportional deductibility of estate liabilities is now being introduced for cases of limited tax liability.
This deductibility is available in proportion to the share of the acquired assets that is subject to German inheritance tax.
Entry into force
Applies to acquisitions for which the tax arises from the month following the promulgation of the act onwards.
Frequently asked questions
Frequently asked questions
What is the lump-sum allowance for estate-related costs after the increase?
The lump-sum allowance for estate-related costs (Erbfallkostenpauschbetrag) has been raised from EUR 10,300 to EUR 15,000. Up to this amount, costs related to the inheritance, such as funeral expenses, are recognised as a lump sum without the need for individual proof.
From when does the increased lump-sum allowance for inheritance costs of EUR 15,000 apply?
The increase applies to acquisitions for which the inheritance tax arises from the month following the promulgation of the law onward. The decisive factor is therefore the point in time when the tax arises, not the date of the inheritance event in general.
Are estate liabilities deductible under limited inheritance tax liability?
Yes, in cases of limited tax liability, estate liabilities will be deductible on a pro rata basis. The deduction corresponds to the share of the asset acquisition subject to German inheritance tax.
Why was the deductibility of estate liabilities under limited tax liability changed?
The European Court of Justice ruled that the previous non-deductibility of compulsory portion liabilities under limited tax liability violated the free movement of capital. In response, a proportional deductibility was enacted to ensure compliance with EU law.
How is the deductible portion of estate liabilities calculated under limited tax liability?
The deduction is granted on a pro rata basis, in the ratio of the asset acquisition subject to German inheritance tax to the total asset acquisition. Only this portion of the estate liabilities reduces the tax base.