A Guide for Families to lifetime giving between Germany and the United States: the allowance that renews every ten years; why a gift to a recipient in Germany is a German gift wherever it is made; the notification both sides owe; the reliefs that survive a lifetime transfer; and the American consequences that run in parallel.
German gift tax and German inheritance tax are the same tax, charged under the same statute at the same rates, with the same allowances. What differs is timing, and timing is the whole of the planning.
The German allowance is per transferor, per acquirer, and it renews every ten years. The American exclusion is one lifetime figure. A plan built for one system is rarely efficient in the other.
The mistake this page exists to prevent is waiting. German allowances that renew are forfeited by delay, and no provision in a will can recover a decade that was not used. A programme of gifts spaced beyond the aggregation window is the most effective tool German law offers, and it is available only while the transferor is alive.
The second point is that the German charge follows the recipient. A gift of American securities to a child living in Germany is a German gift although nothing crossed a border and no German asset was involved.
(1) German gift tax applies to the whole worldwide gift if either the donor or the recipient is resident in Germany.
(2) Allowances under section 16 ErbStG are per transferor and per acquirer: 500,000 euros for a spouse, 400,000 for a child, 200,000 for a grandchild, 20,000 for most others.
(3) Section 14 ErbStG aggregates acquisitions from the same person within ten years, so the allowance renews only once a decade and the spacing must be real.
(4) A child with two living parents has two allowances, each renewing on its own clock.
(5) Both donor and recipient owe a notification to the German tax office within three months of the gift under section 30 ErbStG.
(6) The family home may be transferred between spouses free of German gift tax without limit of value, size or holding period, which is the one unlimited relief in the system.
Part I. Why timing is the plan
The German allowance is not a lifetime figure. It is an amount each acquirer may receive from each transferor free of tax, and under section 14 ErbStG acquisitions from the same person within ten years are aggregated for the allowance and the rate scale. Once the decade passes, the allowance is available again in full.
A child receiving 400,000 euros from each parent every ten years therefore absorbs a substantial estate over two decades without German tax, where the same estate passing at death absorbs one allowance per parent and is taxed above it on a scale that reaches 30 per cent in class I. The arithmetic rewards starting early and spacing properly, and it punishes nothing so much as delay.
Part II. Which gifts Germany taxes
Residence on either side is enough. Where the donor or the recipient is an Inländer, the whole worldwide gift is within the German charge, whatever the nationality of either and wherever the assets are. A transfer of an American brokerage account to a daughter in Berlin is a German gift.
Where neither is resident, the charge is confined to German situs assets, which is a narrow list: German real estate, German business property, shareholdings of at least 10 per cent in German companies, German registered intellectual property and claims secured on German land. A German bank account is not on it.
A promise of a gift requires a notarial deed under German civil law, although performance cures the defect. What matters more in practice is the evidential point: a gift that cannot be dated cannot be shown to fall outside the ten-year window.
Part III. The two sides running in parallel
The American system does not mirror the German one and the two have to be planned together. The United States taxes the donor and runs a single lifetime exclusion with an annual exclusion alongside it; Germany taxes the recipient and renews. A transfer that is efficient against one can be wasteful against the other, and a gift to a recipient in Germany may be reportable in the United States and taxable in Germany at the same time.
Where the recipient is a United States person receiving from a foreign donor, the American obligation is generally one of reporting rather than tax, and the reporting penalties are measured against amounts rather than against tax.
| Feature | Germany | United States |
|---|---|---|
| Who is taxed | The recipient | The donor |
| Allowance | Per transferor and per acquirer | One lifetime exclusion for the donor |
| Renewal | Every ten years under section 14 ErbStG | No renewal of the lifetime exclusion |
| Trigger | Residence of donor or recipient, or German situs assets | United States citizenship or residence of the donor, or United States situs assets |
| Notification | Donor and recipient, within three months | Gift tax return for the donor where required |
Part IV. Practical steps
- Date and document every gift. The ten-year clock runs from each transfer, and a gift that cannot be dated cannot be shown to fall outside the window.
- Start the clock as early as the family is willing. A decade is the unit of planning, and no testamentary provision recovers one that was not used.
- Count the allowances available, not the estate. Two parents and three children is six separate allowances, each renewing on its own clock.
- Give the three-month notice on both sides of the transfer. The duty under section 30 ErbStG falls on the donor as well as the recipient in gift cases.
- Check the American consequence before transferring. The donor’s position and the recipient’s reporting obligations are separate from the German charge and are not relieved by it.
Conclusion
German gift tax and German inheritance tax are one tax separated by timing, and the German allowances renew while an American exclusion does not. A family that waits for death to transfer uses one allowance per transferor; a family that begins early and spaces properly uses one per decade.
Sections 1, 2(1) number 1, 7, 14, 15, 16 and 19 of the Inheritance and Gift Tax Act (ErbStG); section 30 ErbStG (notification, including by the donor); section 13(1) ErbStG (family home); section 121 of the Valuation Act (German situs assets); sections 516 and 518 of the German Civil Code (gift and the form of a promise to give). Figures and statuses are stated as of September 2026.
- 13 October 2026: page created.
- Schenkungsteuer, German gift tax
- Gift taxes in Germany
- Freibetrag, the German personal allowance
- The ten-year rules
- Anzeigepflicht, the duty to notify
- The donor’s liability for German gift tax
- Gift planning with adult children in Germany
- Vorweggenommene Erbfolge, anticipated succession
- Annual exclusion, United States gift tax
- The German family home exemption and the American heir
- German inheritance and gift tax for American families
- The ten-year rules that matter in German-American planning
Contact
A family with a member in Germany has a decade-based allowance it is probably not using. Ashford International Law PC advises families and their advisers on mapping the allowances available across transferors and recipients; structuring and documenting a programme of gifts across the ten-year window; the notification duties of donor and recipient; the German treatment of the family home and business property on a lifetime transfer; coordinating the German position with the American gift tax and reporting consequences, alongside the family’s existing advisers or leading the United States side end to end.
The firm is led by attorney Caroline Esche Ashford, PhD, JD. A graduate of Columbia University Law School, her practice focuses on international estate planning and the cross-border taxation and administration of estates and trusts, including lifetime giving between families in Germany and the United States. Dr. Ashford is also licensed to practice law in Germany. She advises in French and German as well as English.
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This guide is intended for general educational purposes and does not constitute legal or tax advice, nor does it create an attorney-client relationship. The matters described, German gift tax, the allowances under section 16 ErbStG, the ten-year aggregation rule in section 14 ErbStG, the notification duty under section 30 ErbStG and the family home relief, depend on the specific facts, assets, countries and states concerned and on the law in effect at the relevant time, and they change. Statuses and figures are stated as of September 2026 and must be confirmed before any decision. Nothing here is advice on any particular estate or transaction. A family in this situation should obtain advice from qualified counsel in each relevant country promptly, and before any transfer is made.
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