Anyone who wants to pass on assets internationally by inheritance or as a gift quickly ends up in a web of differing tax rules. What matters is not just property or investment portfolios, but above all residence, timing and the question of which state is actually entitled to tax.
As soon as the deceased/donor or the heir/recipient lives abroad (or moves there), several countries may claim taxing rights at the same time. That can feel completely "unfair" - but it happens regularly because states apply different principles: some link to residence, others to where the asset is located (e.g. real estate), and others additionally rely on nationality or special trailing rules.
In practice, this leads to two typical problems:
Double taxation: two states want inheritance or gift tax - and there is not always a treaty that neatly "splits" the taxing rights.
Poor planning: families assume that moving away is enough. Or they "quickly" gift assets without realising that this triggers the less favourable tax liability.
If you structure things properly early on, a lot can be avoided. If you only react once the inheritance event has occurred, you have far less room for manoeuvre.
For German inheritance and gift tax, one point is central: Germany often taxes not only domestic assets but, in case of doubt, worldwide assets - namely when unlimited tax liability applies. This can arise if at least one party (the deceased/donor or the acquirer) has a residence or habitual abode in Germany.
Alongside this there is limited tax liability. Put simply, this becomes relevant when neither party is (any longer) "domestic", but Germany can still have a say because of certain assets. A classic trigger is German real estate or certain business connections.
Important: the term "domestic" is not merely a registration issue. It is not about whether someone has deregistered at the local registration office, but whether the actual circumstances create a residence/habitual abode or a trailing effect.
This is the most common "surprise candidate". Example: parents live in Germany, the child has lived for years in Dubai, Spain or Switzerland. Many believe Germany is then out of the picture. In reality it is often the other way round: if the deceased/donor is resident in Germany, Germany can tax the assets comprehensively - regardless of where the acquirer lives.
In practical terms that means:
German tax can apply even if the acquirer never sets foot in Germany.
The acquirer’s state of residence may additionally tax (depending on national law).
Without planning, there is a risk of double taxation or at least a lot of coordination work.
This situation is also underestimated: "Grandma has long lived in Austria, so Germany is out." Not necessarily. If the acquirer lives in Germany, Germany can also claim a right to tax. This is very typical, especially for families that have "spread out" internationally.
This often raises questions such as:
Does the heir have to file in Germany even though the assets are abroad?
Are foreign properties or investment portfolios included in Germany?
How does a credit work if tax is also due abroad?
The answers depend heavily on the individual case - and that is exactly why preparation is worthwhile.
Yes, that happens. Two reasons come up particularly often in practice:
Domestic assets: anyone who holds property in Germany often remains within the German tax net with those assets.
Trailing effect after leaving: in certain cases, Germany can treat people for a period after they move away as if they were still domestic for tax purposes. This particularly affects situations where someone has moved away, but the move is still "recent" or special rules apply.
Anyone who says in blanket terms "but I emigrated" is taking an unnecessary risk.
For income tax, double tax treaties (DTTs) are almost standard. For inheritance and gift tax, the coverage is unfortunately much thinner. This means that you often manage matters not through a clear treaty system, but through national crediting rules, definitions of "foreign assets" and the practical question: which tax is actually comparable?
This is exactly where the friction occurs in real life:
different valuation rules,
different valuation dates,
different "types" of tax (some countries tax the estate, others the recipient),
missing or limited crediting options.
This is not just theory. These are the cases that later cost time, nerves and often money.
Many families have a rough idea that allowances exist. What they underestimate is that allowances only help optimally if you plan them deliberately and document them properly.
Typical examples include:
Waiting too long and exceeding value thresholds.
Gifting everything "in one go" instead of transferring in stages.
Not using allowances in full, or at the wrong time.
Overlooking formal requirements, especially for property.
Especially with gifts, it is often possible to plan sensibly because gifts are controllable. Inheritances are not.
Gifts can be a very effective tool - but only if they fall into the right tax "world".
Two typical pitfalls:
Transitional periods when moving away
Anyone who makes a gift shortly before or shortly after moving abroad can unintentionally trigger exactly the tax liability they wanted to avoid. Not infrequently, the tax office later asks: where was the centre of life really? Was there still a usable flat in Germany? What did stays and ties look like?
Type of asset and location
With property, the rule almost everywhere is: the state where the property is located wants to tax it. With shareholdings in companies or investment portfolios, much depends on how things are structured, where assets are held in custody and how the relevant national rules operate.
An entrepreneur has recently moved to Portugal and wants to gift €600,000 to his son, who lives in Germany. In his mind it is clear: "I don’t live in Germany any more - so that won’t matter there."
In practice, Germany can still be relevant because the recipient is resident in Germany. In addition, the donor’s new state of residence checks (depending on its rules) whether there are also connecting factors there. Result: without classification and a sound structure, you quickly end up with a mix of reporting obligations, filings and potential tax burdens.
The decisive point is not the good intention but the system logic: an international situation is not automatically "tax-free" just because someone has moved.
If there is an international element, you should not plan on "hope" but on a short, pragmatic stocktake:
Where are the deceased/donor and the acquirer tax-resident? (not just registered - in reality)
Which assets are involved? (property, GmbH shares, portfolio, cash, art, business assets)
Where are the assets located legally? (location of property, registered seat/place of shareholdings, custodian)
Are there multiple potential tax claims? (Germany + state of residence + state of situs)
Which documents are available? (valuations, agreements, evidence, account records)
What is the goal? (reduce tax, avoid disputes, secure provision, retain control)
These questions seem simple, but they make the difference between "sorted properly" and "expensive fixes later".
"Deregistering is enough": giving up residence is confused with being tax-free.
"It’s just family": family arrangements are treated strictly for tax purposes.
"We’ll do it later": once the inheritance occurs, options are often heavily limited.
"We have a will": a will does not solve tax issues - it only governs distribution.
"It’s abroad, so it’s invisible": international transparency and data flows are increasing; moreover, connecting factors often arise through the parties involved, not through visibility.
Inheritances and gifts with an international element are no longer a niche topic - they are everyday reality. Anyone who structures their situation early not only reduces tax, but above all gains planning certainty for the family.
We help to classify the specific setup properly, identify double-taxation risks and develop a legally robust, practical solution.
