Germany Inheritance & Gift Tax Guide (Erbschaft- und Schenkungsteuer)
A comprehensive guide to Germany's inheritance tax (Erbschaftsteuer) and gift tax (Schenkungsteuer), covering progressive rates from 7% to 50%, the three tax classes (Steuerklassen I–III), personal allowances by relationship, and the business succession exemption (Unternehmensvermögen) allowing up to 100% tax relief.
Germany imposes both inheritance tax (Erbschaftsteuer) and gift tax (Schenkungsteuer) under the Erbschaftsteuer- und Schenkungsteuergesetz (ErbStG). The tax is progressive and depends on the relationship between the deceased/donor and the recipient. Gifts are taxed at the same rates as inheritances, and all gifts received within 10 years of death are aggregated into the inheritance for calculation purposes. For related reading, see our Inheritance Tax Allowances Guide → and Estate Planning Guide →.
Tax-Free Allowances (Freibeträge) by Relationship
- Spouse / civil partner (Ehegatte): €500,000 tax-free allowance, plus a special pension allowance (Versorgungsfreibetrag) of €256,000.
- Children (Kinder): €400,000 per child, plus a pension allowance of €52,000.
- Grandchildren (Enkel): €200,000 per grandchild.
- Parents (Eltern): €100,000 per parent (in case of inheritance only; gift allowance is lower).
- Siblings (Geschwister): €20,000 per sibling.
- Non-relatives / others (Übrige): €20,000.
Tax Rates by Steuerklasse (Tax Class)
- Steuerklasse I (spouse, children, grandchildren, parents): 7% on the first €75,000, rising progressively to 30% on amounts above €26 million. This is the most favourable class with the lowest rates.
- Steuerklasse II (siblings, nieces/nephews, stepchildren, divorced spouse, parents-in-law): 15% on the first €75,000, rising to 43% above €26 million. Significantly higher than Class I.
- Steuerklasse III (all others, including non-relatives and friends): 30% on the first €75,000, rising to 50% above €26 million. The highest rates apply here.
Business Succession Exemption (Unternehmensvermögen)
- 85% exemption (Regelverschonung): If you inherit a business (Betriebsvermögen), 85% of the business value is tax-free. Requirements: (a) hold the business for at least 5 years (Behaltensfrist), (b) maintain the wage bill at 80% of the average over those 5 years, (c) the business must not exceed 90% administrative assets (Verwaltungsvermögen — e.g., cash, securities, real estate not used for operations).
- 100% exemption (Optionsverschonung): Full exemption from inheritance tax on the business value. Requirements: stricter — 7-year holding period, wage bill must be maintained at 100%, and the Verwaltungsvermögen threshold is lower.
- These exemptions make German business succession one of the most favourable in Europe, but strict compliance is required to avoid retroactive taxation.