Inheritance Tax in Germany: What Expats and Locals Need to Know in 2025

If you’re living in Germany — whether as an expat or a lifelong resident — understanding inheritance tax (Erbschaftsteuer) is essential. Whether you're inheriting money, property, or family assets, Germany has specific rules that determine how much tax you may owe and when you need to pay it.

Here’s a simplified breakdown of what you need to know about inheritance tax in Germany as of 2025:

Who Has to Pay Inheritance Tax in Germany?

Germany taxes worldwide inheritance if either the person giving or receiving the inheritance is a German resident. If neither party lives in Germany but the inheritance includes German-based assets, the tax may still apply.

So if you’re an expat inheriting a home, business, or money from a family member — even if you’re abroad — you might still have tax obligations in Germany.

Tax-Free Allowances: How Much Can You Inherit Without Paying Tax?

Germany offers generous tax-free allowances based on your relationship with the deceased:

Relationship	Tax-Free Amount (€)
Spouse or registered partner	€500,000
Children and stepchildren	€400,000
Grandchildren	€200,000
Parents and grandparents	€100,000
Siblings, nieces/nephews, others	€20,000

If your inheritance exceeds these amounts, only the excess is taxed, not the total value.

Tax Rates: How Much Will You Pay?

The tax rate depends on two things:

• How close your relationship is to the deceased (classified into tax classes I–III)

• How much you receive over the tax-free allowance

Here’s a general guide:

Tax Class	Relationship	Tax Rate Range
I	Spouse, children, grandchildren	7–30%
II	Parents, siblings, nieces, in-laws	15–43%
III	Distant relatives, friends, others	30–50%

The more you inherit, the higher the tax percentage on the amount above your allowance.

Special Exemptions and Deductions

Germany offers some important deductions:

• Family homes passed to spouses/children are often exempt from tax if they are used as a primary residence.

• Funeral costs, debts, and legal fees can also be deducted from the taxable estate.

When and How to File

If you receive an inheritance, you’re expected to inform the local tax office (Finanzamt) within 3 months. You’ll then receive a form to declare what you’ve inherited and calculate any taxes due.

Delays or non-reporting can lead to penalties — so it’s wise to seek legal or tax advice early.

Final Thoughts

Inheritance in Germany can be financially and emotionally complex — especially for expats. But with clear rules and generous allowances, many people can inherit without paying any tax at all.

Still, planning ahead and getting local tax advice can save time, money, and stress — whether you're giving or receiving.