What is the tax-free allowance for inheritance tax?
January 27, 2022 | 50,00 EUR | answered by Wilhelm Ackermann
Dear Tax Advisor,
I am reaching out to you because I have some questions regarding inheritance tax and I hope that you can assist me. My name is Lucas Ackermann and recently my father passed away. He has left me an inheritance that I now need to deal with. However, I am unsure about the amount of the tax-free allowance for inheritance tax and whether I need to pay this tax at all.
My father has left me a substantial amount of wealth that exceeds the statutory tax-free allowance. I am concerned that I may have to pay high taxes and that the inheritance will be significantly reduced as a result. I would like to learn more about how inheritance tax is calculated and if there are ways to minimize it.
Could you please explain to me in more detail what the tax-free allowance for inheritance tax is and how the tax amount is calculated? Are there legal ways to reduce or avoid the tax burden? I would greatly appreciate it if you could provide me with detailed information on this matter so that I can plan and manage my inheritance accordingly.
Thank you in advance for your assistance.
Kind regards,
Lucas Ackermann
Dear Mr. Lucas Ackermann,
First of all, my heartfelt condolences on the loss of your father. I understand that this difficult time can be even more challenging if you now also have to deal with questions regarding inheritance tax. I am here to support you and will try to provide you with all the information you need to clarify this matter.
Regarding inheritance tax: The tax-free allowance for inheritance tax depends on your relationship to the deceased. For children, the tax-free allowance is currently 400,000 euros. Anything above this amount is subject to inheritance tax. For spouses, the tax-free allowance is 500,000 euros. Siblings have a tax-free allowance of 20,000 euros, grandchildren of 200,000 euros, and great-grandchildren of 100,000 euros. Unrelated individuals do not have a tax-free allowance and are taxed at the highest tax rate.
Inheritance tax itself is calculated progressively, meaning the higher the inherited amount, the higher the tax rate. In Germany, there are different tax brackets ranging from 7% to 50%. The inherited wealth is added up and then the corresponding tax rate is applied after deducting the tax-free allowance.
However, there are legal ways to reduce or avoid inheritance tax. These include using tax-free allowances, distributing the inheritance among multiple individuals, making lifetime gifts, or utilizing tax exemptions for specific assets such as business assets. It is advisable to seek advice from an experienced tax advisor to find the best solution for your individual situation.
I hope that this information has been helpful to you and I am available for any further questions you may have. Please do not hesitate to contact me if you need further assistance.
Best regards,
Wilhelm Ackermann
