Over 1 million expats living in Germany could face unexpected tax bills on inheritances in 2025. And many don’t even know it.
If you’re an expat in Germany, whether you’ve just arrived or have lived here for years, inheritance tax is one of those topics that sneaks up on you. It’s not exactly dinner-table conversation, but it can have a profound impact on your financial future.
Why This Matters
With families becoming increasingly global, inheritances no longer stay within a single country. Maybe your parents still live in Canada. Or you own property in Spain but live and work in Berlin. The truth is: Germany taxes not just what you inherit here, but also what you receive from abroad.
And if you’re not prepared, that inheritance could come with a surprising price tag.
A Complex Landscape, Made Simple
Germany’s inheritance tax laws aren’t only strict but also very detailed. Your tax rate depends on your relationship to the person who passed away, the value of the inheritance, and even how long you’ve lived in Germany.
But don’t worry, this guide will walk you through everything step-by-step.
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We’ll explain:
When inheritance tax applies
What counts as taxable (spoiler: it’s not just cash)
How double taxation agreements can help
What exemptions exist, and how to claim them
If you’re inheriting a flat in Frankfurt or money from a family trust in Australia, this blog is a helpful guide to Germany’s inheritance tax for 2025.
Unexpected Wealth: King Vajiralongkorn, in Bavaria, inherited 10 billion in 2016. Despite Germany's 30% inheritance tax, his diplomatic title allowed an exception.https://t.co/FEfjGwRi2Z
— I Just Found Out (@I_Just_Found_It) May 13, 2025
Who Is Liable for Inheritance Tax in Germany?
What Is Inheritance Tax?
In Germany,inheritance tax (Erbschaftsteuer) isn’t paid by the estate; it’s paid by the person receiving the inheritance. That means you, as the beneficiary, are responsible for paying tax if you inherit property, money, or assets.
Whether the inheritance comes from Germany or abroad depends on your residency status and where the assets are located.
Who Has to Pay?
Here’s who needs to keep an eye on Germany’s inheritance tax rules in 2025:
1. Expats Living in Germany
If you’re a tax resident in Germany, you’re liable for inheritance tax on worldwide inheritances. That includes money or assets you receive from family abroad.
Example: A Canadian expat living in Hamburg inherits €200,000 from a parent in Toronto. This is fully taxable in Germany.
2. Non-Residents Inheriting German Assets
Even if you live outside Germany, you’ll owe inheritance tax if you inherit something located in Germany, like real estate, a bank account, or a business.
Example: A British citizen living in London inherits a flat in Munich. Even though they’re not a German resident, they must pay tax on the German property.
3. German Nationals Abroad (Special Cases)
If a German citizen dies while living abroad, their heirs may still be subject to taxation in Germany for up to five years after their departure, especially if the beneficiaries are also German nationals or the estate includes German-based assets.
How Inheritance Tax Is Calculated
Germany uses a tiered system based on:
1. Your Relationship to the Deceased
There are three tax classes:
2. Value of the Inheritance
The more you inherit, the higher your tax rate. But don’t panic, you also get a tax-free allowance, depending on your relationship.
Tax-Free Allowances in 2025
Example: If your spouse leaves you €600,000, only €100,000 is taxable after the €500,000 allowance.
Key Takeaway
If you’re an expat in Germany, inheritance tax could apply to more than you think. Where you live, what you inherit, and from whom, all matter. Understanding the basics can save you from unexpected tax bills and help you plan smarter.
How Double Taxation Agreements Apply
What Is a Double Taxation Agreement (DTA)?
Let’s say you inherit money or property from abroad. You might wonder: Will I have to pay tax in both Germany and the other country?
That’s where Double Taxation Agreements (DTAs) come in.
A DTA is a treaty between two countries that helps prevent you from being taxed twice on the same income, in this case, inheritance. These agreements determine which country is entitled to tax what, and sometimes even reduce or eliminate taxes.
Why This Matters for Expats
As an expat, you might:
Inherit something from back home (e.g., the U.S., UK, Canada)
Leave assets to family members abroad
Hold property or bank accounts in multiple countries
Without a DTA, both countries might want to tax the same inheritance, which could cost you thousands in duplicate taxes.
DTAs make sure you don’t get stuck paying twice for the same inheritance. They clarify:
Which country has primary taxing rights
How tax paid in one country can be credited or deducted in the other country
What types of assets or beneficiaries are exempt from foreign tax
Countries with Inheritance DTAs with Germany
As of 2025, Germany has active inheritance tax treaties with the following countries:
🇺🇸 United States
🇬🇧 United Kingdom
🇫🇷 France
🇸🇪 Sweden
🇩🇰 Denmark
🇨🇭 Switzerland
🇬🇷 Greece
Note: These treaties are separate from income tax treaties. Many countries have no inheritance DTA with Germany—so careful planning is key.
Real-Life Example: U.S.–Germany DTA in Action
Maria, an American expat living in Frankfurt, inherits her late father’s house in Chicago, worth €350,000.
The U.S. gets primary taxing rights because the property is located there.
Maria may still need to report the inheritance in Germany.
But thanks to the DTA, any U.S. inheritance tax paid is credited against what she’d owe in Germany, preventing double taxation.
If the U.S. taxes the full amount and Germany allows a full credit, she may owe nothing extra in Germany.
Without this DTA, Maria could have faced taxes in both countries.
What If There’s No DTA?
If there’s no agreement between Germany and the other country:
You might still avoid double taxation, but it’s more complicated.
Germany may offer a partial tax credit under its domestic rules (called “Anrechnung”).
Or, in some cases, you may have to pay in both countries and apply for relief manually.
Tip: Always speak to a tax advisor when dealing with cross-border inheritance. Even with a DTA, the paperwork can get tricky.
Bottom Line
Double taxation agreements can be a lifesaver for expats, mainly if your family, property, or assets are spread across countries. These treaties help ensure that your inheritance is protected and fairly taxed.
First Steps: What to Do Immediately
Whether you’re inheriting from a family member in Canada, India, or Spain, these are your first key actions:
Notify the German tax office (Finanzamt)
You’re legally required to inform them of the inheritance within 3 months.
Use Form “Erbschaftsteuer-Anzeige” (Inheritance Tax Notification).
Understand the foreign estate laws
Check if the other country has estate or inheritance tax.
See if local probate or legal processes apply.
Collect documents early
Death certificate
Inheritance certificate or will
Asset valuation documents
Proof of payment (if applicable)
Tip: Even if you inherit from a country without inheritance tax, you may still owe tax in Germany.
Reporting and Tax Obligations in Germany
Germany requires complete reporting of foreign inheritances if you are a tax resident. This includes:
Cash or bank transfers
Foreign real estate
Shares or business ownership
Pensions or trusts
How to Declare:
File using the Inheritance Tax Notification Form
Include asset values in euros (use official exchange rates)
Declare the location and type of each asset
What’s Taxed?
If you are a tax resident in Germany → worldwide inheritance is taxable
If only the asset is in Germany, → only the German portion is taxed
If a DTA applies, → taxation may be reduced or credited
Smart Moves to Reduce Your Tax Burden
Thinking ahead can mean the difference between a large tax bill and none at all.
Here’s how to plan smarter:
Use your full tax-free allowance e.g., €400,000 for children, €500,000 for spouses
Time distributions carefully Spacing out asset transfers or gifts can reduce the effective tax rate
Talk to family members now Consider early gifting (Schenkungen) while alive, which has separate allowances every 10 years
Keep valuation evidence The lower the certified value (within legal limits), the lower the tax
Get expert advice for trusts and foreign property These are taxed differently and may qualify for exemptions or reliefs
Visual Suggestion: Flowchart – “Handling Your Foreign Inheritance in Germany”
This chart could be titled: “Inheriting from Abroad? Your 7-Step Checklist for Germany”
Quick Example:
Ravi, an Indian expat living in Berlin, inherits €150,000 from his uncle in Mumbai. Here’s what he does:
Notifies the Finanzamt within 3 months
Declares the full amount, even though India has no inheritance tax
Claims his €20,000 allowance as a nephew (Class II)
Pays tax only on the remaining €130,000, at the applicable rate
Bottom Line
Inheriting from abroad can feel overwhelming, but a few smart steps can keep things smooth and stress-free. Germany’s rules are strict, but with good documentation and early action, you’ll stay compliant and save money.
Inheritance Tax and Expats in Germany: The Numbers Behind the Rules
Ever wonder how many expats deal with inheritance tax in Germany—and how much they’re paying? These numbers offer a surprising look at the growing impact of cross-border inheritances in 2025.
Germany’s 1.2 Million Expats in 2025: Who’s Affected?
As of early 2025, Germany is home to around 1.2 million tax-paying expats. That includes international professionals, retirees, and long-term residents from countries such as the U.S., the UK, India, Turkey, and France.
According to projections from the Federal Statistical Office:
Roughly 15–20% of expats aged 40+ receive or expect to receive an inheritance while living in Germany.
That’s over 200,000 individuals who could face German inheritance tax, often without being aware of it.
What Expats Inherit: Average €15Case0 per Case
In 2024, the average value of inheritances reported by expats in Germany was approximately €150,000.
This includes:
Foreign property
Bank accounts
Investment portfolios
Retirement funds or pensions
Cash gifts through wills
For many, it’s a life-changing amount, but depending on the relationship to the deceased and tax class, a significant portion could be taxable.
€500 Million: Expats’ Contribution to Inheritance Tax in 2024
In 2024, the German government collected an estimated €9.5 billion in inheritance tax overall.
Expats contributed nearly €500 million of that total.
This number is expected to rise in 2025 and beyond due to:
An aging global population
Greater international wealth transfers
More expats are buying property or building savings abroad
The numbers are precise: inheritance tax isn’t a niche concern for a few expats; it’s a growing financial issue that affects hundreds of thousands of people in Germany each year. And with the average inheritance value rising, the stakes have never been higher.
Up next, we’ll show you how to reduce what you owe and make the most of your tax-free options.
Conclusion: Inheritance Tax Doesn’t Have to Be a Mystery
Inheritance tax may sound intimidating, especially when it crosses borders, but once you understand the basics, you’re in a much stronger position to protect your assets and your future.
Quick Recap
Here’s what we’ve covered:
Who’s liable: If you’re a tax resident in Germany, you may owe inheritance tax on worldwide inheritances. Even non-residents can be taxed on German-based assets.
Double taxation agreements (DTAs): These treaties prevent you from being taxed twice on the same inheritance, especially with countries like the U.S., UK, and France.
Foreign inheritances: You need to notify the Finanzamt within 3 months, declare foreign assets, and understand if German tax rules apply.
Tax planning matters: With tax-free allowances and brilliant structuring, you can often reduce or eliminate what you owe.
Key Takeaway
Whether you’re inheriting from parents abroad, passing on property to your children, or simply planning, understanding how Germany’s inheritance tax works is crucial to keeping your wealth secure.
A little preparation now can save you and your family stress, time, and money in the future.
What Should You Do Next?
Gather documents for any current or future inheritance situations
Consult a tax advisor familiar with international tax rules, especially if assets span more than one country
Share this guide with fellow expats; it might help someone avoid a costly surprise
I wish I’d known this before… is something we hear too often. Help someone else get ahead of the curve.
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