This is part IV of the explanations behind the Topics A-Z index, covering the entries from R to Z. The glossary is bilingual: the terms an American meets in cross-border asset planning, estate planning, the taxation of retirement and investment income, gift tax, the taxes that arise on death and the settlement of estates, in English and in German, in one alphabetical sequence. German entries carry an explanation in English and one in German.

Each term is treated from both sides, because in almost every case both tax systems have something to say and neither yields to the other automatically. The figures and rules stated are those in force on 15 September 2026. Nothing here is legal or tax advice, and no single entry can settle a case.

Part I. A to D · Part II. E to G · Part III. H to Q · Part IV. R to Z

A · B · C · D · E · F · G · H · I · J · K · L · M · N · O · P · Q · R · S · T · U · V · W · Z

R

Real estate in Germany

German land passes to the heirs at death but cannot be dealt with until they are registered in the Grundbuch,
which requires a certificate of inheritance or a notarial will with the record of its opening, and registration
within two years of death is free of the registry fee. Every sale requires a notarial deed. Real estate transfer
tax on a sale runs from 3.5 to 6.5 per cent depending on the Land, and is not charged on an acquisition by
inheritance or gift.

For tax, German real estate is German situs property, so it is within German inheritance and gift tax even
where nobody is resident in Germany. It is valued under the Valuation Act on figures that rose materially from
2023, subject to a 10 per cent discount for let residential property under section 13d ErbStG and to the family
home exemption. A gain on a sale within ten years of acquisition is taxable in Germany under section 23 EStG, and
a United States citizen owner is taxable on the same gain in the United States, computed in dollars, so exchange
rate movement alone can produce an American gain where there is no German one.

Real estate in the United States

American real property is United States situs property for estate tax whoever owns it, so a German-resident
owner faces United States estate tax against an exclusion of 60,000 dollars, or the treaty’s pro rata share of
15,000,000 dollars if claimed on Form 706-NA. A sale by a foreign person triggers FIRPTA withholding of 15 per
cent of the price. Under Article 6 of the income tax treaty rental income may be taxed by the United States, and
Germany exempts it while counting it for the rate under the Progressionsvorbehalt.

An American living in Germany who keeps a house in the United States is in a different position: not a
foreign person, so no FIRPTA, taxable in the United States on the rent and the gain, taxable in Germany on the
same gain if sold within ten years, and relying on the foreign tax credit. The former principal residence
exclusion of 250,000 or 500,000 dollars remains available on the American side if the occupancy test is met, and
has no German counterpart other than the separate owner-occupation exception in section 23 EStG.

Rechtswahl

The choice of the law that is to govern the succession, permitted by Article 22 of the European Succession
Regulation and confined to the law of a country of which the person is a national. For an American living in
Germany it is the most consequential clause available, because without it German succession law governs the
worldwide estate by reason of habitual residence, compulsory shares included. The choice must be express;
drafting in English on an American form is not enough. See Succession law, choice of.

Nach Art. 22 EuErbVO kann der Erblasser das Recht des Staates wählen, dem er im Zeitpunkt der Rechtswahl oder
des Todes angehört. Die Wahl muss ausdrücklich in einer Verfügung von Todes wegen erklärt werden; die bloße
Abfassung in englischer Sprache oder nach US-Muster genügt nicht. Ohne Rechtswahl gilt nach Art. 21 EuErbVO das
Recht des letzten gewöhnlichen Aufenthalts für den gesamten Nachlass.

Required minimum distributions

Withdrawals that must begin from traditional individual retirement accounts and employer plans once the
account holder reaches the applicable age, which is 73 in 2026 and rises to 75 for those born in 1960 or later,
first operative in 2033. The position of those born in 1959 remains unsettled: the final regulations reserved
the point and only a proposed rule states that the age is 73.

For an American in Germany the distribution is taxable in Germany under Article 18(1) of the treaty, at the
ordinary progressive rate, and remains taxable in the United States under the saving clause with a foreign tax
credit. A required distribution therefore arrives with a German tax charge attached whether or not the money is
needed, and where the account is large the forced timing can push German income into the 42 or 45 per cent bands
in years the taxpayer would not have chosen.

Rights of legatees

A legatee has a claim against the heirs for delivery of the thing left, enforceable in the civil courts, and
nothing more. There is no right to participate in the administration of the estate, no right to information
comparable to that of an heir or compulsory-share claimant, and no security over the asset in the meantime. If
the heirs delay, the legatee sues them.

The exposure is worse across a border. A legatee in the United States awaiting delivery of a German asset has
already incurred German inheritance tax at the date of death, may have an American reporting obligation on
receipt, and has no practical leverage over heirs resident in Germany other than litigation there. Where the
intended recipient lives abroad, appointing that person an heir to a fractional share is usually safer than
leaving a legacy.

Roth IRA and Roth 401(k)

Tax-free in the United States on qualified distribution, and not automatically tax-free in Germany. Germany
applies its own qualification, and the American label has no effect on it. The mainstream view is that because
Roth contributions were not relieved from tax, the rule introduced from 2025 taxing the whole of a distribution
funded with pre-tax contributions does not apply, so that only the earnings element is taxed under section 22
number 5 EStG. The argument for full exemption rests on the contributions having been made from taxed income and
the account not being a German favoured retirement contract.

There is no decision of the Federal Fiscal Court on Roth accounts, and practitioners report German tax
offices treating Roth withdrawals like traditional ones. Until that is resolved, a Roth conversion carried out
in contemplation of a move to Germany can be an expensive mistake: American tax is paid on the conversion in
exchange for an exemption the country of residence may not honour. Anyone relying on a Roth as the tax-free part
of a retirement plan should settle the German position before moving, not after.

Rückforderungsanspruch

A donor’s right to take a gift back. German law gives it where the donor becomes unable to maintain himself,
and where the recipient is guilty of gross ingratitude, and a lifetime transfer agreement will usually reserve
further grounds by contract: insolvency of the recipient, disposal of the property, death before the donor,
divorce. Reserving them expressly is the ordinary precaution on a transfer to the next generation, and it also
allows the gift tax to be recovered if the gift is reversed.

Gesetzliche Rückforderungsrechte bestehen nach § 528 BGB bei Verarmung des Schenkers und nach § 530 BGB bei
grobem Undank. In Übergabeverträgen werden darüber hinaus regelmäßig vertragliche Rückforderungsrechte
vereinbart, etwa für Insolvenz oder Vorversterben des Erwerbers, Weiterveräußerung oder Scheidung. Wird die
Schenkung aufgrund eines vorbehaltenen Rechts zurückgefordert, erlischt die Schenkungsteuer nach § 29 Abs. 1
Nr. 1 ErbStG rückwirkend.

Back to the top of this part · Back to the index of words

S

Sachwert-, Ertragswert- und Vergleichswertverfahren

The three methods by which German real estate is valued for inheritance and gift tax. The comparison method
applies to condominiums and one and two family houses where comparable sales exist; the capitalised income
method to let residential, commercial and mixed use property; the asset value method where neither of the others
can be used. The reform effective from 2023 raised the results of all three materially, which is why proof of a
lower open market value is now so often worth making. See Bewertungsgesetz.

Das Vergleichswertverfahren nach den §§ 182 Abs. 2, 183 BewG gilt für Wohnungseigentum sowie Ein- und
Zweifamilienhäuser, das Ertragswertverfahren nach den §§ 184 ff. BewG für Mietwohn-, Geschäfts- und gemischt
genutzte Grundstücke, das Sachwertverfahren nach den §§ 189 ff. BewG hilfsweise. Das JStG 2022 hat mit der
Verlängerung der Gesamtnutzungsdauer auf 80 Jahre, abgesenkten Liegenschaftszinssätzen und einem Regionalfaktor
zu deutlich höheren Werten geführt.

Saving clause

Article 1(4)(a) of the income tax treaty preserves the right of the United States to tax its citizens and
residents as if the treaty had not come into force, and Article 1(4)(b) extends that to former citizens and
long-term residents for ten years. It is the reason a treaty that appears to assign income to Germany does not
relieve an American citizen living there of American tax on it.

Article 1(5)(a) lists the provisions that survive the clause even for citizens, and the list matters: it
includes Article 18(3), (4) and (5), Article 18A(1) and (5), and Articles 23, 24 and 25. Because Article 18(5)
is in the list, a United States citizen resident in Germany is not taxed by the United States on American social
security. Because Article 23 is in the list, the re-sourcing rule that makes the foreign tax credit work remains
available.

Schenkung

A gift: a transfer that enriches the recipient, made gratuitously and with the agreement of both. A promise
of a gift requires a notarial deed, though performance cures the defect. What matters for a German-American
family is not the civil law but the tax rule that goes with it: German gift tax applies to the whole worldwide
gift if either the donor or the recipient is resident in Germany, whatever the nationality of either and wherever
the assets are.

Die Schenkung nach § 516 BGB setzt eine unentgeltliche Zuwendung und die Einigung über die Unentgeltlichkeit
voraus; das Schenkungsversprechen bedarf nach § 518 BGB der notariellen Beurkundung, der Formmangel wird durch
Vollzug geheilt. Schenkungsteuerlich genügt nach § 2 Abs. 1 Nr. 1 ErbStG die Inländereigenschaft des Schenkers
oder des Erwerbers, um den gesamten Erwerb der deutschen Besteuerung zu unterwerfen.

Schenkungsteuer

German gift tax, which is the same tax as German inheritance tax, in the same statute, with the same
allowances, classes and rates, applied to lifetime transfers. The one structural difference is that parents
receiving a gift from a child fall into tax class II rather than class I. Donor and donee are jointly liable, and
both must notify the tax office within three months. See Gift taxes in Germany.

Die Schenkungsteuer ist im Erbschaftsteuer- und Schenkungsteuergesetz geregelt und folgt denselben
Freibeträgen, Steuerklassen und Sätzen wie die Erbschaftsteuer. Abweichend gehören Eltern bei Schenkungen zur
Steuerklasse II. Steuerschuldner sind nach § 20 Abs. 1 ErbStG Erwerber und Schenker als Gesamtschuldner; die
Anzeigepflicht nach § 30 ErbStG trifft beide.

Section 2801 tax

A tax of 40 per cent on gifts and bequests received from a covered expatriate, imposed on the United States
citizen or resident who receives them and not on the person who gives them. There is no time limit: a bequest
received decades after the expatriation is within it. The annual exclusion is 19,000 dollars for 2025 and 2026.
The final regulations took effect on 14 January 2025, Form 708 now exists in its December 2025 revision, and the
first returns, for amounts received in 2025, are due on 15 June 2027.

The practical significance is for families where one member has renounced American citizenship, which is a
live question for Americans who have settled permanently in Germany. Renunciation solves the renouncer’s filing
problem and transfers a substantial cost to any American children who later inherit.

Selbstanzeige

The German voluntary disclosure that removes criminal liability for an incomplete or false return. It works
only if it is complete for all relevant years, only if it is made before the matter is discovered or an audit
begins, and only if the tax and interest are paid within the period set. Partial disclosure fails entirely. For
an American in Germany it has to be coordinated with the American correction routes, because information flows
between the two authorities under FATCA and a filing on one side can close the window on the other.

Die Selbstanzeige nach § 371 AO führt zur Straffreiheit, wenn sie für alle unverjährten Steuerstraftaten einer
Steuerart vollständig erfolgt und kein Sperrgrund nach § 371 Abs. 2 AO vorliegt, insbesondere keine
Prüfungsanordnung bekannt gegeben und die Tat nicht entdeckt ist. Die hinterzogenen Steuern und die Zinsen sind
fristgerecht zu entrichten. Eine Teilselbstanzeige ist unwirksam.

Situs

Where an asset is treated as located for tax, which is a legal question and not a geographical one, and which
each system answers for itself. For United States estate tax, American real property, tangible property in the
United States and shares in American corporations are United States situs; bank deposits and portfolio debt
generally are not, and shares in a foreign corporation are not, whatever the company owns.

Germany uses a different list entirely, in section 121 of the Valuation Act, which includes German real
estate, German business assets and shareholdings of at least 10 per cent in German companies, and excludes German
bank accounts and portfolio securities. The two lists do not mirror one another, and an asset can be situs
property in both countries or in neither. Where it is in both, relief depends on the treaty, and where the
treaty does not reach it, section 21 ErbStG gives a credit only for foreign tax on assets Germany itself regards
as foreign property.

Social security benefits

Article 18(5) of the income tax treaty, as recast by the 2006 protocol, assigns social security and other
public pensions exclusively to the country of residence. American social security paid to a resident of Germany
is therefore taxable only in Germany, and not by the United States, which is the reverse of the American model
rule and the opposite of what is usually assumed. Because Article 18(5) is preserved by Article 1(5)(a), the
saving clause does not restore American taxation even for a citizen.

Germany taxes it as an annuity under section 22 number 1 EStG, with the taxable proportion fixed by the
cohort in which payments began. The Progressionsvorbehalt does not apply, because Germany is not exempting the
income but taxing it. German statutory pension paid to a resident of the United States is treated the other way
round under the same article, taxable only in the United States.

Solidaritätszuschlag

A surcharge of 5.5 per cent calculated on the income tax itself, not on income. Since 2021 it has been
abolished for most wage and income taxpayers by an exemption threshold, 20,350 euros of assessed income tax for a
single taxpayer for 2026, but it continues to apply in full to investment income taxed at the flat rate, which is
what produces the familiar combined figure of 26.375 per cent.

Der Solidaritätszuschlag beträgt 5,5 Prozent der festgesetzten Einkommen- oder Körperschaftsteuer. Seit 2021
entfällt er durch die Freigrenze des § 3 Abs. 3 SolZG für den überwiegenden Teil der Steuerpflichtigen; sie
beträgt 2026 für Alleinstehende 20.350 Euro festgesetzter Einkommensteuer. Auf die Abgeltungsteuer wird er
unabhängig von der Freigrenze erhoben, woraus sich der Satz von 26,375 Prozent ergibt.

Sonstige Einkünfte

The residual category of German income, which is where cross-border retirement money lands. Annuities and
pensions from foreign schemes, distributions from an American 401(k) or individual retirement account, and gains
on private disposals all fall here, and they are taxed at the ordinary progressive rate, up to 45 per cent, not
at the flat investment rate. See IRA and 401(k) distributions.

Die sonstigen Einkünfte des § 22 EStG umfassen Leibrenten und Leistungen aus Altersvorsorgeverträgen nach
§ 22 Nr. 1 und Nr. 5 EStG sowie private Veräußerungsgeschäfte nach § 23 EStG. Leistungen aus US-amerikanischen
401(k)-Plänen und IRAs werden nach § 22 Nr. 5 EStG erfasst und unterliegen dem progressiven Tarif, nicht der
Abgeltungsteuer.

Sparer-Pauschbetrag

The German allowance against investment income, 1,000 euros for a single taxpayer and 2,000 euros for a
jointly assessed couple. It is given against interest, dividends and securities gains before the flat tax
applies. Where the accounts are with a German bank it is claimed by an exemption instruction to the bank; where
they are with an American broker there is nobody to instruct, and the allowance is obtained in the assessment on
the Anlage KAP.

It is modest by American standards and it is the whole of the relief available. There is no German equivalent
of the American preferential rate on qualified dividends and long-term capital gains, and no equivalent of a tax
free savings account. The flat 26.375 per cent applies from the first euro above the allowance regardless of how
long the asset was held.

Der Sparer-Pauschbetrag nach § 20 Abs. 9 EStG beträgt 1.000 Euro, bei Zusammenveranlagung 2.000 Euro, und
wird anstelle der tatsächlichen Werbungskosten abgezogen. Bei inländischen Depots wird er über einen
Freistellungsauftrag berücksichtigt; bei ausländischen Depots erfolgt die Berücksichtigung erst in der
Veranlagung über die Anlage KAP. Ein Abzug tatsächlicher Werbungskosten ist ausgeschlossen.

Sperrvermerk

The notice an investor files with the Federal Central Tax Office to stop banks and brokers being told the
investor’s church affiliation, so that church tax is not withheld automatically on investment income. It does not
remove the tax; it moves it into the assessment, where the income must then be declared. Leaving the church
altogether is a separate step with effects beyond tax, taking effect prospectively.

Mit dem Sperrvermerk nach § 51a Abs. 2e EStG widerspricht der Steuerpflichtige der Übermittlung des
Kirchensteuerabzugsmerkmals an die Kreditinstitute. Der Abzug unterbleibt dann; die Kirchensteuer auf
Kapitalerträge ist stattdessen im Rahmen der Veranlagung zu erklären. Der Sperrvermerk ist bis zum 30. Juni für
das Folgejahr beim Bundeszentralamt für Steuern zu beantragen.

Split estate (Nachlassspaltung)

The situation in which different parts of one estate are governed by different succession laws. It arises
most often where an American dies habitually resident in the United States owning German real estate without
having chosen a governing law: Article 34 of the European Succession Regulation sends the question back through
American conflict rules, which refer immovables to the law of their location, so German succession law governs
the German property while American law governs the rest. German courts have so held for an estate with a New
York decedent and a Munich apartment.

The consequences are not academic. German compulsory-share rights attach to the German portion, the German
intestacy order applies to it if there is no effective will for it, and the estate has to be administered under
two legal systems at once. A single express choice of law in the will under Article 22 of the Regulation
prevents all of it.

Nachlassspaltung tritt ein, wenn auf Teile des Nachlasses verschiedene Erbstatute anzuwenden sind. Stirbt ein
US-Staatsangehöriger mit gewöhnlichem Aufenthalt in den Vereinigten Staaten ohne Rechtswahl und hinterlässt er
deutschen Grundbesitz, führt die Rück- und Weiterverweisung nach Art. 34 EuErbVO über das amerikanische
Kollisionsrecht zur Anwendung deutschen Erbrechts auf das Grundstück. Eine ausdrückliche Rechtswahl nach Art. 22
EuErbVO vermeidet dies.

Steuerbescheid

A German tax assessment. It becomes final if not appealed within one month of notification, and an assessment
that has become final is very difficult to reopen. The appeal is the Einspruch, filed with the office that made
it, and it costs nothing. For a taxpayer abroad the month is short and it runs from notification, which is
presumed to occur three days after posting within Germany and one month after posting abroad.

Der Steuerbescheid wird nach § 355 AO bestandskräftig, wenn nicht binnen eines Monats nach Bekanntgabe
Einspruch eingelegt wird. Die Bekanntgabe gilt nach § 122 Abs. 2 AO im Inland am dritten Tag, bei Übermittlung
ins Ausland einen Monat nach Aufgabe zur Post als bewirkt. Eine spätere Änderung ist nur unter den engen
Voraussetzungen der §§ 172 ff. AO möglich.

Steueridentifikationsnummer

The permanent eleven-digit number assigned to every person registered in Germany, used for income tax, wage
tax and the church tax query. It is not the same as the Steuernummer, which is issued by the local tax office for
a particular file and changes, nor the same as the VAT identification number. An American arriving in Germany
receives it automatically after registering at the residents’ office, and every German bank will ask for it.

Die Identifikationsnummer nach § 139b AO ist eine dauerhaft zugeteilte elfstellige Nummer, die jeder in
Deutschland gemeldeten Person nach der Anmeldung beim Einwohnermeldeamt vom Bundeszentralamt für Steuern
zugeteilt wird. Sie ist von der vom Finanzamt vergebenen Steuernummer und von der Umsatzsteuer-Identifikationsnummer
zu unterscheiden. Kreditinstitute benötigen sie für den Steuerabzug.

Steuerklassen (German tax classes)

German inheritance and gift tax fixes both the allowance and the rate by the relationship between the
transferor and the acquirer. Class I covers spouses and registered partners, children and stepchildren and their
descendants, and parents and grandparents inheriting on death, with rates from 7 per cent to 30 per cent. Class
II covers siblings, nephews and nieces, step-parents, in-laws, a divorced spouse, and parents receiving a gift,
with rates from 15 per cent to 43 per cent. Class III covers everyone else, at 30 per cent up to 6,000,000 euros
and 50 per cent above.

Two points catch American families. Parents move between classes according to whether they inherit or receive
a gift. And an unmarried partner, however long the relationship, is in class III with a 20,000 euro allowance
and a 30 per cent starting rate, which is the harshest treatment in the system and is entirely avoidable by
marriage or by structuring the transfer differently.

Zur Steuerklasse I gehören nach § 15 ErbStG Ehegatten und Lebenspartner, Kinder und Stiefkinder und deren
Abkömmlinge sowie Eltern und Voreltern beim Erwerb von Todes wegen; zur Steuerklasse II Eltern und Voreltern bei
Schenkungen, Geschwister, Nichten und Neffen, Stiefeltern, Schwiegerkinder und Schwiegereltern sowie der
geschiedene Ehegatte; zur Steuerklasse III alle übrigen Erwerber. Nichteheliche Lebensgefährten fallen in die
Steuerklasse III mit einem Freibetrag von 20.000 Euro und einem Eingangssatz von 30 Prozent.

Succession law, choice of

Article 22 of the European Succession Regulation allows a person to choose the law of a state of nationality
to govern the whole succession, made expressly in a disposition on death. For an American living in Germany this
is the single most important provision on the page, because without the choice Article 21 applies German law to
the worldwide estate by reason of habitual residence, bringing with it compulsory shares that no American will
can defeat.

The choice must be express. Making an American will, in English, on an American form, is not an implied
choice and German courts have said so. Where the person holds both American and German nationality either may be
chosen. Where the choice is made, Article 36 then decides which American state’s law applies. The choice governs
succession only; it does not affect German inheritance tax, which follows residence regardless.

Back to the top of this part · Back to the index of words

T

Tax residence

Germany treats a person as resident who keeps a dwelling in Germany in circumstances indicating it will be
retained and used, under section 8 of the Fiscal Code, or who has a habitual abode there under section 9, which a
continuous stay of more than six months always satisfies. Either produces liability to German tax on worldwide
income. The United States treats citizens as resident wherever they live, and others under the green card test or
the substantial presence test.

A person resident in both under domestic law is assigned to one by Article 4(2) of the income tax treaty:
permanent home, then centre of vital interests, then habitual abode, then nationality. The 183-day rule that
readers expect to find here is not part of that test; it governs employment income under Article 15. See
determining fiscal domicile under Article 4.

Tax treaties

Two are in force between the United States and Germany and they do different work. The convention on income
and capital of 29 August 1989, as amended by the protocol of 1 June 2006, allocates the taxing rights over
dividends, interest, gains, employment income, pensions and social security, contains the limitation on benefits
article and the saving clause, and provides the credit and exemption mechanisms in Article 23. The convention on
estates, inheritances and gifts of 3 December 1980, as amended by the protocol of 14 December 1998, determines
domicile, allocates the right to tax classes of property, and provides the pro rata exclusion and the additional
marital deduction in Article 10.

Neither treaty overrides Germany’s right to tax by reference to the residence of the acquirer, and neither
removes the American right to tax its citizens. What they do is prevent the same item being taxed twice without
relief, and they do that imperfectly, because they operate only where both countries are taxing the same thing
in the same period.

Taxes (which ones actually arise)

A German-American family with wealth on both sides is potentially within six separate charges, and they are
frequently confused with one another. United States federal estate tax falls on the estate at death. United
States gift tax falls on the donor during life. German inheritance and gift tax is a single tax falling on the
acquirer, in both cases. United States federal income tax falls on citizens wherever they live, and on others on
American source income. German income tax falls on residents on worldwide income, and on non-residents on German
source income. The generation-skipping transfer tax is a further American charge on transfers that skip a
generation.

They have different taxpayers, different bases, different years and different reliefs, and there is no single
credit that reconciles them. Two treaties exist, one for income and one for estates, inheritances and gifts, and
each relieves only within its own field. Most of the real cost in these cases arises where a charge in one
system has no counterpart in the other, so that the credit machinery has nothing to bite on.

Teilfreistellung

The partial exemption that offsets the German fund tax regime: 30 per cent of the income of an equity fund is
exempt for a private investor, 15 per cent for a mixed fund, 60 per cent for a real estate fund and 80 per cent
where the fund invests in foreign real estate. It applies to distributions, to the deemed minimum return and to
gains on disposal, and it applies to American funds held by a German resident as it does to German ones.

Die Teilfreistellung nach § 20 InvStG stellt beim Privatanleger 30 Prozent der Erträge eines Aktienfonds,
15 Prozent bei einem Mischfonds, 60 Prozent bei einem Immobilienfonds und 80 Prozent bei einem Auslands-Immobilienfonds
steuerfrei. Sie gilt für Ausschüttungen, die Vorabpauschale und Veräußerungsgewinne gleichermaßen und ist vom
Sitzstaat des Fonds unabhängig.

Ten-year rules

Several rules of ten years operate in this field and they are unrelated. German personal allowances renew
every ten years under section 14 ErbStG, so a programme of gifts spaced a decade apart multiplies the exemption.
Gifts are added back to a compulsory share for ten years under section 2325 of the Civil Code, on a sliding
scale. Gains on privately held German real estate escape German income tax after ten years under section 23
EStG. Article 4(3) of the estate tax treaty deems a person who was a national of one country and not of the
other, and who had been domiciled in the other for less than ten years, to have remained domiciled in the
country of nationality, which protects the estate of an American who dies within ten years of moving to Germany
and exposes a German national who emigrates to the United States for ten years rather than the five suggested by
section 2 ErbStG; it applies to single nationals and not to dual citizens. And Article 1(4)(b) of the income tax
treaty preserves American taxation of former citizens and long-term residents for ten years.

The one that most often decides a case is the treaty domicile rule, and it is worth noting that it protects
the decedent’s estate without protecting a German-resident heir, whom Germany may still tax under Article
11(1)(b) of the same treaty. See
the estates of American citizens who lived in Germany for less than ten years.

Testament

The German word for a will. German law recognises the holographic will, written and signed throughout in the
testator’s own hand with date and place, and the notarial will, declared to or handed to a notary. Spouses may
make a joint will, which binds the survivor. There are no witnesses and no attestation clause.

A will deposited with the probate court is registered in the central register of wills and is produced
automatically on death; a will kept at home may not be found. An American will is generally valid in form in
Germany under the Hague Convention of 1961, but form is not substance, and whether its dispositions take effect
depends on which country’s succession law governs. See types of testamentary
dispositions.

Das deutsche Recht kennt das eigenhändige Testament nach § 2247 BGB und das öffentliche Testament nach § 2232
BGB; Ehegatten können nach den §§ 2265 ff. BGB gemeinschaftlich testieren. Zeugen und eine Testierklausel sind
nicht erforderlich. In amtliche Verwahrung gegebene Testamente werden im Zentralen Testamentsregister erfasst
und im Sterbefall von Amts wegen eröffnet.

Testamentsvollstrecker (German executor)

An executor appointed by the will, not by a court, whose powers are those the will confers. Appointment is
optional, and comparatively rare. Where appointed, the executor takes the estate out of the heirs’ control for
the purposes given, may be directed to administer for a period of up to thirty years, and is responsible under
section 31(5) ErbStG for filing the inheritance tax return.

In an estate with heirs in the United States an appointment is often worth making precisely because the
alternative is a community of heirs in which every decision requires every signature. It is not, however, the
same office as an American executor: there are no letters, no court supervision and no bond, and the authority
is proved by a certificate of appointment from the probate court, which American institutions will not
recognise.

Der Testamentsvollstrecker wird nach § 2197 BGB durch Verfügung von Todes wegen ernannt, nicht durch das
Gericht; seine Befugnisse ergeben sich aus der Verfügung und den §§ 2203 ff. BGB. Eine Dauervollstreckung ist
nach § 2209 BGB bis zu dreißig Jahren zulässig. Das Nachlassgericht erteilt ein Testamentsvollstreckerzeugnis
nach § 2368 BGB. Nach § 31 Abs. 5 ErbStG hat der Testamentsvollstrecker die Erbschaftsteuererklärung
abzugeben.

Testierfähigkeit

Capacity to make a will. In Germany full capacity is reached at eighteen; a minor of sixteen may make a will,
but only before a notary. Capacity is lost where the testator cannot understand the significance of the
disposition, and the burden of proving incapacity lies on the person alleging it. Where capacity may later be
questioned, a notarial will is worth the cost, because the notary records an assessment at the time.

Testierfähig ist nach § 2229 BGB, wer das 18. Lebensjahr vollendet hat; Minderjährige ab 16 Jahren können nach
§ 2233 BGB nur vor einem Notar testieren. Testierunfähig ist, wer wegen krankhafter Störung der Geistestätigkeit
die Bedeutung der Erklärung nicht einsehen kann; die Beweislast trägt, wer sich darauf beruft. Bei absehbaren
Zweifeln empfiehlt sich das öffentliche Testament, weil der Notar seine Wahrnehmungen nach § 28 BeurkG
festhält.

Transfer certificate

See IRS transfer certificate. The point of practical importance is that an American bank or broker will generally freeze the
account of a decedent who was not a United States citizen or resident until the certificate is produced, that
obtaining it takes many months, and that the estate will usually need to file Form 706-NA first.

Transparenzregister

The German register of beneficial owners. Since 2022 every German company, partnership and foundation must be
recorded in it, and foreign companies acquiring German real estate must register as well. It is separate from the
American beneficial ownership regime, which since FinCEN’s rule of August 2026 no longer applies to United States
companies, so an American family that was relieved of reporting at home may still face it in Germany.

Das Transparenzregister nach den §§ 18 ff. GwG erfasst die wirtschaftlich Berechtigten. Seit dem
Transparenzregister- und Finanzinformationsgesetz von 2021 ist es ein Vollregister; die Mitteilungsfiktion für
im Handelsregister eingetragene Gesellschaften ist entfallen. Auch ausländische Gesellschaften, die inländischen
Grundbesitz erwerben, sind nach § 20 Abs. 1 GwG mitteilungspflichtig. Die Pflicht besteht unabhängig von der
US-amerikanischen Rechtslage.

Trusts

Germany does not recognise trusts. It is not a party to the Hague Trusts Convention, and a German court or
tax office confronted with one will characterise the arrangement under German categories rather than give effect
to the separation of legal and beneficial ownership. For tax the treatment is set out in the Inheritance and
Gift Tax Act: funding a foreign asset-holding vehicle is a taxable transfer under section 7(1) number 8, taxed in
class III at 30 or 50 per cent against an allowance of 20,000 euros, while distributions during its existence and
on its dissolution are taxable under section 7(1) number 9 in the hands of a German-resident recipient.

Two refinements matter. Section 15(2) sentence 2 ErbStG classes a distribution by reference to the
beneficiary’s relationship to the settlor, so a distribution from an American parent’s trust to a
German-resident child is in class I with a 400,000 euro allowance, even though the funding was in class III. And
the Federal Fiscal Court held in II R 31/19 of 25 June 2021 that a person is an interim beneficiary, taxable on
distributions of capital as well as income, if that person has any legal or contractual entitlement, the burden
being on the recipient to prove the trustees had genuine discretion. Separately, section 15 of the Foreign Tax
Act attributes the income of a foreign family foundation or trust to a German-resident settlor or beneficiaries
whether or not anything is distributed, and the Federal Fiscal Court held on 3 December 2024, in IX R 32/22,
that the escape clause confined to European entities must be extended to third countries where information
exchange exists. A draft ministerial revision of that provision was published on 18 November 2025 and has not
been enacted.

Back to the top of this part · Back to the index of words

U

Übergabevertrag

The German lifetime handover: a notarial contract by which a farm, a business or a house passes to the next
generation during the transferor’s life, against reserved rights, a usufruct, a right of residence, maintenance
and care, and usually against a compulsory share waiver by the other children and rights to take the property
back if things go wrong. It is the central instrument of German succession planning and has no American
counterpart; the nearest American equivalents produce quite different tax results on both sides.

Der Übergabevertrag überträgt Vermögen im Wege der vorweggenommenen Erbfolge gegen Versorgungsleistungen,
Nießbrauch oder Wohnrecht und regelmäßig gegen Pflichtteilsverzichte der weichenden Geschwister. Er bedarf bei
Grundbesitz der notariellen Beurkundung. Die vorbehaltenen Rechte mindern nach dem Bewertungsgesetz die
schenkungsteuerliche Bereicherung; vertragliche Rückforderungsrechte sichern den Übergeber ab.

Unbedenklichkeitsbescheinigung

The clearance certificate a German tax office issues confirming that the real estate transfer tax on a
purchase has been paid or secured. The land registry will not register the buyer without it, so it sits on the
critical path of every German property sale. An estate selling German property will meet it, and it is a common
source of delay where the parties have not allowed for it in the timetable.

Die Unbedenklichkeitsbescheinigung nach § 22 GrEStG bestätigt, dass der Grunderwerbsteuer keine Bedenken gegen
die Eintragung entgegenstehen. Ohne sie darf das Grundbuchamt den Erwerber nicht eintragen. Sie wird vom
Finanzamt nach Zahlung oder Sicherstellung der Steuer erteilt und ist in der Praxis der zeitbestimmende Schritt
zwischen Beurkundung und Eigentumsumschreibung.

Unbeschränkte Steuerpflicht (unlimited German tax liability)

For German inheritance and gift tax, section 2(1) number 1 ErbStG imposes tax on the whole worldwide
acquisition where the decedent at death, or the donor when the gift is made, or the acquirer when the tax
arises, is an Inländer. That means a person with a dwelling or habitual abode in Germany, a German national who
has not been permanently abroad for more than five years, a German national in German public service abroad, or
a corporation managed or seated in Germany.

The feature that surprises Americans is the third limb: the acquirer’s residence alone is enough. A wholly
American estate passing to a beneficiary who happens to live in Germany is within German inheritance tax on the
whole of that beneficiary’s share. For income tax the parallel concept is in section 1 EStG, triggered by
residence or habitual abode under sections 8 and 9 of the Fiscal Code, and it produces liability on worldwide
income.

Unbeschränkte Erbschaftsteuerpflicht besteht nach § 2 Abs. 1 Nr. 1 ErbStG für den gesamten Vermögensanfall,
wenn der Erblasser zur Zeit des Todes, der Schenker zur Zeit der Ausführung oder der Erwerber zur Zeit der
Entstehung der Steuer Inländer ist. Inländer sind natürliche Personen mit Wohnsitz oder gewöhnlichem Aufenthalt
im Inland sowie deutsche Staatsangehörige, die sich nicht länger als fünf Jahre dauernd im Ausland aufgehalten
haben. Für die Einkommensteuer folgt die unbeschränkte Steuerpflicht aus § 1 EStG.

United States situs assets

The assets that bring a non-domiciled decedent within United States estate tax: American real property,
tangible personal property located in the United States, and shares in United States corporations, wherever the
certificates are held and whatever broker holds them. Bank deposits not connected with a United States trade or
business, portfolio debt obligations, and the proceeds of life insurance on the decedent’s life are outside.
Shares in a foreign corporation are outside, whatever that corporation owns.

The classification is by the asset, not by where it is administered, so a German resident who holds Apple
shares through a German bank holds United States situs property, and a German resident who holds a German
company that owns a house in Florida does not. Against that base the exclusion is 60,000 dollars unless the
treaty’s pro rata figure is claimed, and the top rate is 40 per cent, which is why a modest American share
portfolio in German hands is one of the most commonly overlooked exposures in this field.

Back to the top of this part · Back to the index of words

V

Veräußerungsgewinn

A gain on disposal. Germany treats gains on securities held privately as investment income, taxed at the flat
rate with no holding period exemption, and gains on other private assets under the private disposal rules, where
real estate escapes tax after ten years and other assets after one. A United States citizen resident in Germany
is taxed by both countries on the same gain and relies on the foreign tax credit, and because the American gain
is computed in dollars, exchange rate movement alone can produce an American gain where there is no German
one.

Gewinne aus der Veräußerung von Wertpapieren im Privatvermögen gehören nach § 20 Abs. 2 EStG zu den Einkünften
aus Kapitalvermögen und unterliegen der Abgeltungsteuer; eine Haltefrist besteht nicht. Gewinne aus der
Veräußerung anderer privater Wirtschaftsgüter erfasst § 23 EStG innerhalb der Fristen von zehn Jahren bei
Grundstücken und einem Jahr bei sonstigen Gegenständen. Nach Art. 13 Abs. 5 DBA-USA steht das Besteuerungsrecht
für Gewinne aus Anteilsveräußerungen dem Ansässigkeitsstaat zu.

Vermächtnis

A legacy: a direction in a will that a particular person receive a particular asset or sum. The recipient is
not an heir, takes no share of the estate, bears no liability for its debts, and acquires only a claim against
the heirs for delivery. Title does not pass on death; it passes when the heirs perform, and for land that means
a notarial transfer and registration. German inheritance tax nevertheless charges the legatee at the date of
death. See Legacies.

Das Vermächtnis nach § 1939 BGB begründet nach § 2174 BGB einen schuldrechtlichen Anspruch des Bedachten gegen
den Beschwerten auf Leistung des vermachten Gegenstands. Der Vermächtnisnehmer wird nicht Erbe und haftet nicht
für Nachlassverbindlichkeiten. Bei Grundstücken bedarf die Erfüllung der Auflassung und Eintragung.
Erbschaftsteuerlich entsteht die Steuer nach § 9 Abs. 1 Nr. 1 ErbStG bereits mit dem Tod des Erblassers.

Verschonungsabschlag

The exemption granted to qualifying German business property: 85 per cent as of right, or 100 per cent by
irrevocable election, subject to holding periods of five or seven years and to payroll tests. Above 26 million
euros per acquirer it either melts away on a sliding scale or is replaced by a means test under which the tax is
remitted only so far as it cannot be paid out of half the acquirer’s other assets. See Betriebsvermögen.

Der Verschonungsabschlag beträgt nach § 13a Abs. 1 ErbStG 85 Prozent, bei Ausübung der Option nach § 13a
Abs. 10 ErbStG 100 Prozent des begünstigten Vermögens. Er setzt Behaltensfristen von fünf beziehungsweise sieben
Jahren und die Einhaltung der Mindestlohnsumme voraus. Oberhalb von 26 Millionen Euro je Erwerber greifen das
Abschmelzmodell des § 13c ErbStG oder die Verschonungsbedarfsprüfung des § 28a ErbStG.

Versorgungsfreibetrag

A further German allowance, given in addition to the personal allowance, to a surviving spouse and to
children. The spouse’s is 256,000 euros. A child’s depends on age at the death: 52,000 euros up to five years,
41,000 euros to ten, 30,700 euros to fifteen, 20,500 euros to twenty, and 10,300 euros to the completion of the
twenty-seventh year.

It is reduced by the capitalised value of survivor’s pension entitlements that are not themselves subject to
inheritance tax, which in many German cases removes it entirely. For an American family whose pension provision
is in American retirement accounts rather than a German statutory or occupational pension, the reduction often
does not bite, and the allowance survives in full. It is worth checking rather than assuming.

Der Versorgungsfreibetrag nach § 17 ErbStG beträgt für den überlebenden Ehegatten 256.000 Euro und für Kinder
je nach Alter beim Erbfall zwischen 52.000 Euro bis zum vollendeten fünften Lebensjahr und 10.300 Euro bis zur
Vollendung des 27. Lebensjahres. Er wird um den Kapitalwert nicht der Erbschaftsteuer unterliegender
Versorgungsbezüge gekürzt, was ihn bei deutschen Hinterbliebenenrenten häufig aufzehrt. Bei überwiegend
amerikanischer Altersversorgung bleibt er regelmäßig erhalten.

Verwaltungsvermögen

Administrative assets: the categories excluded from German business property relief, essentially third party
letting, shareholdings of 25 per cent or less, art and securities held as investments, and financial assets above
15 per cent of the value of the business. Up to 10 per cent of the net value is nevertheless treated as
qualifying. Where administrative assets reach 90 per cent of the value, relief is denied altogether, which
catches the family holding company that is in substance a securities portfolio.

Der Katalog des § 13b Abs. 4 ErbStG erfasst insbesondere an Dritte überlassene Grundstücke, Beteiligungen von
25 Prozent oder weniger, Kunstgegenstände und Wertpapiere sowie Finanzmittel, soweit sie 15 Prozent des gemeinen
Werts übersteigen. Unschädliches Verwaltungsvermögen bis zu 10 Prozent des Nettowerts gilt nach § 13b Abs. 7
ErbStG als begünstigt. Erreicht das Verwaltungsvermögen 90 Prozent, ist die Verschonung nach § 13b Abs. 2 Satz 2
ErbStG insgesamt ausgeschlossen.

Vor- und Nacherbschaft

The German device by which one person takes the estate first and another takes it afterwards, on the death of
the first or on another event. The prior heir is restricted in dealing with the property unless released, and the
subsequent heir has a protected expectancy noted in the land register. It does the work an American family would
do with a trust, and Germany recognises it where it does not recognise the trust. For tax, each transfer is
taxed separately, the subsequent heir being taxed on the relationship to the prior heir unless an election is
made.

Bei der Vor- und Nacherbschaft nach den §§ 2100 ff. BGB fällt der Nachlass zunächst dem Vorerben und beim
Eintritt des Nacherbfalls dem Nacherben an. Der nicht befreite Vorerbe unterliegt den Verfügungsbeschränkungen
der §§ 2113 ff. BGB; der Nacherbe wird durch einen Nacherbenvermerk im Grundbuch geschützt. Erbschaftsteuerlich
gilt der Vorerbe nach § 6 Abs. 1 ErbStG als Erbe; beim Nacherbfall ist das Verhältnis zum Vorerben maßgebend,
soweit nicht nach § 6 Abs. 2 ErbStG die Versteuerung nach dem Verhältnis zum Erblasser beantragt wird.

Vorabpauschale

See Investment funds and the German Investment Tax Act. In short, Germany taxes the holder of fund units each year on a deemed minimum return,
computed as 70 per cent of a published base rate applied to the value at the start of the year, reduced by any
distributions and capped at the actual increase in value. The base rate was 2.53 per cent for 2025, taxable in
2026, and 3.20 per cent for 2026, taxable in 2027.

It applies to American funds and exchange-traded funds held by a German resident exactly as to German ones,
and it is charged whether or not anything has been sold or distributed. For an American in Germany this produces
German tax in years with no corresponding American tax, and therefore no American liability against which the
German tax can be credited.

Die Vorabpauschale nach § 18 InvStG ist der Basisertrag, also 70 Prozent des Basiszinses bezogen auf den
Rücknahmepreis zu Jahresbeginn, gemindert um Ausschüttungen und begrenzt auf die tatsächliche Wertsteigerung des
Kalenderjahres. Der Basiszins betrug zum 2. Januar 2025 2,53 Prozent und zum 2. Januar 2026 3,20 Prozent. Sie
gilt am ersten Werktag des Folgejahres als zugeflossen und wird um die Teilfreistellung nach § 20 InvStG
gemindert.

Vorsorgevollmacht

A German power of attorney authorising another person to act in financial, medical and personal matters if
capacity is lost, which avoids the appointment of a court supervised carer. It is usually combined with an
advance healthcare directive. An American durable power of attorney will generally not be accepted by a German
bank or the land registry, so a person with assets in both countries should hold matching instruments in each,
drafted so that neither revokes the other. See Powers of attorney.

Mit der Vorsorgevollmacht bevollmächtigt der Vollmachtgeber eine Vertrauensperson für den Fall der eigenen
Handlungsunfähigkeit und vermeidet damit die Bestellung eines Betreuers nach § 1814 BGB. Für Grundstücksgeschäfte
ist die notarielle Beglaubigung nach § 29 GBO erforderlich, für Bankgeschäfte verlangen Kreditinstitute in der
Regel eigene Formulare. Eine US-amerikanische durable power of attorney wird von deutschen Stellen regelmäßig
nicht akzeptiert.

Vorweggenommene Erbfolge

Anticipated succession: transferring assets to the next generation during life rather than at death. In
Germany it is the central planning technique, because the allowances renew every ten years, so a couple with two
children can move 1.6 million euros each decade free of tax, and because it starts the ten year clock that
removes gifts from the compulsory share. Timing matters more than amount. For an American donor the same transfer
is measured against an entirely different American system, and the two have to be planned together.

Die vorweggenommene Erbfolge überträgt Vermögen zu Lebzeiten, regelmäßig gegen Vorbehalt von Nießbrauch,
Wohnrecht oder Versorgungsleistungen. Steuerlich nutzt sie die Zehnjahresfrist des § 14 ErbStG, nach deren Ablauf
die persönlichen Freibeträge erneut zur Verfügung stehen, und die Abschmelzung des Pflichtteilsergänzungsanspruchs
nach § 2325 Abs. 3 BGB. Der Zeitpunkt der Übertragung ist daher wichtiger als ihre Höhe.

Back to the top of this part · Back to the index of words

W

Wegzugsbesteuerung

See Exit tax, German. The German exit tax treats a departure from German residence as a sale of any shareholding of
at least 1 per cent in a company, and since 1 January 2025 also of substantial investment fund holdings. It is
the reason an American who has spent several years in Germany holding a closely held company, or a single large
fund position, should price the cost of leaving before deciding to leave.

Widerruf eines Testaments

A German will can be revoked by a later will, by a revoking declaration in the form of a will, by destroying
the document or altering it so as to show the intention to revoke, and a will deposited with the court is revoked
by taking it back. None of these is available for dispositions that have become binding under a joint will after
the first death or under a contract of inheritance. A testator who has made a joint will and later wants to
change it usually cannot.

Der Widerruf erfolgt nach den §§ 2253 ff. BGB durch ein späteres Testament, durch Widerrufstestament, durch
Vernichtung oder Veränderung der Urkunde mit Aufhebungswillen oder nach § 2256 BGB durch Rücknahme aus der
amtlichen Verwahrung. Bei wechselbezüglichen Verfügungen ist der Widerruf zu Lebzeiten beider Ehegatten nur nach
§ 2271 Abs. 1 BGB in notarieller Form gegenüber dem anderen möglich, nach dem ersten Erbfall grundsätzlich gar
nicht mehr.

Will

The instrument that decides who takes, subject to whatever the governing law will not allow to be overridden.
For an American with any connection to Germany the two questions are separate and both must be answered: is the
will valid in form, and which country’s succession law governs. Form is usually satisfied by the Hague
Convention of 1961 on the form of testamentary dispositions, which Germany applies whether or not the other
country is a party. The governing law is decided by the European Succession Regulation, under which habitual
residence applies unless the testator has expressly chosen the law of a state of nationality under Article
22.

Beyond that, the drafting itself has to work in both systems. A revocable trust will not do in Germany what
it does in the United States. A residuary clause leaving everything to a spouse wastes German allowances. A
legacy to a person abroad creates a tax charge before delivery. Separate, coordinated wills in each jurisdiction,
each expressly limited to that jurisdiction’s assets and each drafted in awareness of the other, are usually
better than one document trying to do everything.

Withholding tax on United States source income

The United States withholds at a statutory 30 per cent on fixed or determinable annual or periodical income
paid to a non-resident alien, under sections 871 and 1441. The treaty reduces that to 15 per cent for portfolio
dividends and to nil for interest, and the portfolio interest exemption reaches most interest in any event. The
reduction is obtained only by lodging a valid Form W-8BEN with the payer before payment; recovering
over-withheld tax afterwards means filing Form 1040-NR and waiting.

Two adjacent charges are worth naming. Backup withholding of 24 per cent applies where a United States person
has not certified a taxpayer identification number on Form W-9. And FIRPTA withholding of 15 per cent applies to
the gross proceeds, not the gain, on a foreign person’s sale of American real property. The reported amounts
appear on Form 1042-S for foreign recipients and on the 1099 series for United States persons, and the German
return requires the figures from whichever applies.

Wohnsitz

Residence in the German tax sense. A person has one where a dwelling is kept in circumstances indicating it
will be retained and used, and there is no minimum number of days at all. Either this or habitual abode produces
unlimited German tax liability on worldwide income. An American who keeps an apartment in Germany while spending
most of the year in the United States can therefore be a German tax resident without approaching any day count,
and will depend on the treaty tie-breakers rather than on a headcount of nights. See Habitual abode.

Einen Wohnsitz hat nach § 8 AO, wer eine Wohnung unter Umständen innehat, die darauf schließen lassen, dass er
sie beibehalten und benutzen wird. Auf eine Mindestaufenthaltsdauer kommt es nicht an; auch eine jederzeit
verfügbare Ferienwohnung kann genügen. Wohnsitz oder gewöhnlicher Aufenthalt begründen nach § 1 EStG die
unbeschränkte Steuerpflicht; die Zuordnung bei doppelter Ansässigkeit richtet sich nach Art. 4 Abs. 2 DBA-USA.

Back to the top of this part · Back to the index of words

Z

Zentrales Testamentsregister

The central German register of wills, kept by the Federal Chamber of Notaries. Notarial wills and contracts
of inheritance, and handwritten wills deposited with a court, are recorded in it, and the registry office
notifies the register on every death, so the probate court is told automatically that a will exists and where it
is. A will kept in a drawer at home is in no register and may never be found, which is an argument for official
custody wherever the family is spread across two countries.

Das Zentrale Testamentsregister wird von der Bundesnotarkammer geführt und erfasst notarielle Testamente und
Erbverträge sowie in amtliche Verwahrung gegebene eigenhändige Testamente. Im Sterbefall benachrichtigt das
Standesamt das Register, das seinerseits das Nachlassgericht und die Verwahrstelle unterrichtet. Zu Hause
verwahrte Testamente sind nicht registriert und werden unter Umständen nicht aufgefunden.

Zugewinnausgleich

The equalisation of accrued gains at the end of a marriage under the German statutory regime: the spouse
whose assets grew less during the marriage has a money claim for half the difference. On death it is not
computed; the law substitutes a flat increase of one quarter in the surviving spouse’s intestate share. The
equalisation claim is exempt from German inheritance tax, and in a long marriage with substantial growth that
exemption is often the largest single relief available. See Zugewinngemeinschaft.

Der Zugewinnausgleich nach den §§ 1372 ff. BGB gibt dem Ehegatten mit dem geringeren Zugewinn eine
Ausgleichsforderung in Höhe der Hälfte des Überschusses. Beim Tod eines Ehegatten wird er nach § 1371 Abs. 1 BGB
pauschal durch Erhöhung des gesetzlichen Erbteils um ein Viertel verwirklicht. Die fiktive Ausgleichsforderung
bleibt nach § 5 ErbStG erbschaftsteuerfrei; bei langer Ehe ist dies häufig die größte Einzelentlastung.

Zugewinngemeinschaft

The statutory German matrimonial property regime. Property stays separate during the marriage, and when the
marriage ends the spouse whose assets grew less has a money claim for half the difference in the growth. On
death the claim is not computed: section 1371 of the Civil Code substitutes a flat increase of one quarter in
the surviving spouse’s intestate share, giving one half alongside children. A spouse who does not become heir
may instead claim the actual equalisation together with a compulsory share calculated on the unincreased
quarter.

The regime carries a substantial tax advantage. Section 5 ErbStG exempts the equalisation claim from German
inheritance tax, so that the notional half of the accrued gain passes free of tax, and in a long marriage with
substantial growth that can be the largest single relief available. It is available only where the regime
applies, which for an American couple who married in the United States depends on the conflict rules and on any
marital agreement, and it is one of the reasons those questions should be settled well before a death.

Die Zugewinngemeinschaft ist nach § 1363 BGB der gesetzliche Güterstand. Die Vermögen bleiben getrennt; bei
Beendigung findet der Zugewinnausgleich statt. Beim Tod eines Ehegatten wird er nach § 1371 Abs. 1 BGB pauschal
durch Erhöhung des gesetzlichen Erbteils um ein Viertel verwirklicht, sodass der überlebende Ehegatte neben
Abkömmlingen zur Hälfte erbt. Die fiktive Ausgleichsforderung bleibt nach § 5 ErbStG erbschaftsteuerfrei.

Zwischenberechtigter

The German tax category into which a beneficiary of a foreign trust falls. Distributions to a person with any
legal or contractual entitlement in the assets or income of a foreign asset-holding vehicle are taxable in
Germany under section 7(1) number 9 of the Inheritance and Gift Tax Act, whether of capital or of income. The
Federal Fiscal Court held in II R 31/19 that the burden is on the recipient to show that the trustees had genuine
discretion and that no entitlement existed. See Trusts.

Zwischenberechtigter im Sinne des § 7 Abs. 1 Nr. 9 Satz 2 ErbStG ist, wer während des Bestehens einer
Vermögensmasse ausländischen Rechts dingliche Rechte oder schuldrechtliche Ansprüche an deren Vermögen oder
Erträgen hat. Der BFH hat mit Urteil vom 25. Juni 2021, II R 31/19, entschieden, dass es auf eine konkrete
Ausschüttungsentscheidung nicht ankommt und der Empfänger das Fehlen einer Berechtigung darzulegen hat. Erfasst
werden Ausschüttungen aus Substanz und Ertrag.

Back to the top of this part · Back to the index of words

The other parts

Part I. A to D · Part II. E to G · Part III. H to Q · Part IV. R to Z

The firm’s longer treatments of these subjects are collected on the Articles and Guides page, and worked examples on the Case Studies page.