by Dr. Peter K.-D. Barandt, Attorney at Law (New York), Attorney at Law (Rechtsanwalt) (Frankfurt), Bar-Approved Specialist in Tax Law (Frankfurt), M.B.A. (U. of Cologne), LL.M. (SMU, Dallas, Texas)

Dr. Peter K.-D. Barandt

Dr. Peter K.-D. Barandt

Rechtsanwalt (Frankfurt)
Attorney at Law (New York)

An den Pappeln 14
60388 Frankfurt / Germany

Phone (from U.S.)
011 49 6109 33081
Fax (from U.S.)
011 49 6109 31552

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German Federal Inheritance Tax (Estate Tax) rules favor a Decedent’s (“Erblasser”) surviving spouse, registered same-sex life partner (“Eingetragener Lebenspartner”), and lineal descendant, such as a surviving child, stepchild and grandchild, as well as a surviving lineal ancestor (limited to parents and grandparents), whereas all other recipients, including but not limited to siblings, nieces, nephews, divorced spouses, parents-in-law and children-in-law, are taxed at a considerably higher Federal Inheritance Tax rate of up to 50 percent with lower personal exemption amounts (“Persönliche Freibeträge”).

For Class One (“Steuerklasse I”) recipients, i.e. surviving spouses, registered same-sex life partners (“Eingetragene Lebenspartner”), surviving children, stepchildren and grandchildren, surviving parents and grandparents, the federal exemption amounts (“Persönliche Freibeträge”) are 500,000.00 Euros + 256,000.00 Euros in the case of a surviving spouse or a registered same-sex life partner, 400,000.00 Euros in the case a surviving child, a stepchild or a grandchild (parents predeceased), 200,000.00 Euros in the case of a surviving grandchild (parents surviving), and 100,000.00 Euros in the case of parents and grandparents.

For Class Two (“Steuerklasse II”) recipients, i.e. siblings, nieces, nephews, divorced spouses, step parents, parents-in-law and children-in-law, the personal exemption amount (“Persönlicher Freibetrag”) is 20,000.00 Euros.

Class Three (“Steuerklasse III”) is the “catch-all” class of inheritance (estate) taxpayers covering all other recipients at a personal exemption amount (“Persönlicher Freibetrag”) of 20,000.00 Euros and at inheritance tax rates ranging from 30 through 50 percent.

The application of the aforementioned personal exemption amounts (“Persönliche Freibeträge”) is dependent on that either the decedent or the beneficiary has had a residence in Germany at the time of decedent’s death.

Otherwise, the foregoing personal exemption amounts (“Persönliche Freibeträge”) of 500,000.00 Euros + 256,000.00 Euros, 400,000.00 Euros, 200,000.00 Euros, 100,000.00 Euros and 20,000.00 Euros will be granted on a pro rata basis only, namely in the ratio of the net worth of the German estate assets versus the net worth of the total worldwide estate assets.

In the latter case, however, of both the decedent and the beneficiary being non-residents in Germany, German inheritance tax will be imposed only on certain listed qualified assets located in Germany, such as business assets, real property, etc.

For better optical reference, all foregoing remarks will be summarized in a synopsis and diagram format below:

Tax Class
Relationship of Heir/Beneficiary/
Recipient with Decedent
Personal Exemption Amount
in Euros
One Spouse, registered same-sex life partner
Child, stepchild, grandchild
(if parents predeceased)
500,000 + 256,000

Parents and grandparents
(if inheritance, not gift)
200,000 (grandchild)
100,000 (parents and grandparents)
Two Parents and grandparents
(if gift, not inheritance),
sibling, niece/nephew,
divorced spouse, stepparents,
Three All other 20,000
All Tax Classes Decedent and beneficiary with no German residence at time of decedent´s death The foregoing exemption amounts in the percentage of German assets vs. total worldwide assets

All personal exemption amounts (“Persönliche Freibeträge”) except as stated otherwise above are unified both for German Federal Inheritance (Estate) Tax (“Erbschaftsteuer”) and for German Federal Gift Tax (“Schenkungsteuer”).

Net Worth of Inheritance
(exceeding personal exemption amount)
up to and including
Inheritance Tax Rate in Percent
Class One
Class Two
Class Three
75,000 Euros
7 15 30
300,000 Euros
11 20 30
600,000 Euros
15 25 30
6 million Euros
19 30 30
13 millionEuros
23 35 50
26 million Euros
27 40 50
over 26 million Euros
30 43 50