Calculate German inheritance tax based on the value inherited and the relationship to the deceased.
How does German inheritance tax work?
German inheritance tax (Erbschaftsteuer) is based on the relationship between the deceased and the heir, which determines both the personal allowance (Freibetrag) and the tax class. Spouses receive EUR 500,000 allowance, children EUR 400,000, grandchildren EUR 200,000, and more distant relatives or unrelated persons EUR 20,000. Unlike income tax, the rate applies to the entire taxable amount, not progressively.
What are the three tax classes for inheritance tax?
Tax Class I (7-30%): spouses, children, grandchildren, and parents (on inheritance). Tax Class II (15-43%): siblings, nieces, nephews, step-parents, in-laws. Tax Class III (30-50%): all unrelated persons and non-registered partners. The rates within each class depend on the taxable amount.
Are there special rules for inheriting a family home?
Yes. If a spouse or child inherits the family home and continues to live there for at least 10 years, the property is completely exempt from inheritance tax. For children, the exemption is limited to 200 sqm of living space. If the heir moves out before 10 years, the exemption is retroactively revoked.
Disclaimer: These calculations are estimates based on 2025 German tax rules and should not be considered professional tax advice. Consult a Steuerberater for your specific situation.
Tax-free allowances, rates by relationship, and how inherited property is valued
How much can you inherit tax-free?
The tax-free allowance depends on your relationship to the deceased. Spouses: €500,000. Children: €400,000. Grandchildren: €200,000. Siblings: €20,000. Unrelated persons: €20,000. The surviving spouse also gets a special Versorgungsfreibetrag of up to €256,000. These allowances apply per inheritance, not per year.
What are the inheritance tax rates?
Rates depend on the amount above the allowance and your tax class. Tax class I (spouse, children): 7% to 30%. Tax class II (siblings, parents inheriting): 15% to 43%. Tax class III (unrelated): 30% to 50%. A child inheriting €600,000 pays tax on €200,000 at 11% = €22,000.
Is the family home exempt from inheritance tax?
Yes, the surviving spouse can inherit the family home completely tax-free if they continue to live in it for at least 10 years. Children can inherit it tax-free if the home is up to 200 m² and they live in it for 10 years. If they move out before 10 years, the tax becomes due retroactively. The home must be in Germany or the EU.
How are business assets treated?
Business assets can receive up to 85% or 100% tax relief under certain conditions. You must continue the business for at least 5 or 7 years and maintain payroll levels. An 85% relief on a €1 million business means only €150,000 is taxable. This Betriebsvermögensbefreiung is one of the most generous business inheritance rules in Europe.
Can inheritance tax be paid in instalments?
Yes, in hardship cases the Finanzamt can grant Stundung (deferral) for up to 10 years. This is common when the inheritance includes property that cannot easily be sold. You may need to pay interest on deferred amounts. For inherited businesses, tax can be deferred interest-free for 7 years if the business continues.
What happens if you inherit from abroad?
If either the deceased or the heir is resident in Germany, German inheritance tax applies to the worldwide estate. Foreign inheritance tax is credited against the German tax to avoid double taxation. If you inherit €500,000 from a US relative and paid $50,000 US estate tax, this is offset against your German inheritance tax bill.
Bundesfinanzministerium-Aligned: Based on 2025 Bundesfinanzministerium rates and thresholds. For personal advice, speak to a qualified Steuerberater (tax adviser).
Disclaimer: This calculator provides estimates based on current German tax rates and thresholds for the 2025 tax year. It does not constitute professional tax, financial, or legal advice. Your actual liability may differ depending on your individual circumstances. Always consult a qualified tax adviser before making financial decisions. Read our terms
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