German tax on inheritance lump sums from abroad

61 posts in this topic

 

So let's talk about offshore account. Is this really feasible? I heard that they report to my government if I am not a resident of their land.

You don't need to hear anymore spliff-fueled, socialist ramblings from Trotskyists like JE, you need straight talk. Do you plan on living the rest of your life in Germany? If you don't, it isn't really worth bringing capital here and you need to look at what your options are outside of this country. Just bear in mind that whatever you keep offshore, will probably have to stay offshore (banking secrecy still exists even in the EU, btw). However, don't make the mistake of thinking that you can bring in capital in small batches, regardless of where you end up settling down, and suddenly come up with the downpayment on a house without raising the taxman's eyebrows.

 

 

However the good thing about raising from death duties is that you are only hitting people on unexpected "winnings" that they may not have got for 10 years, 20 years, or ever at all.

That isn't necessarily true. If someone is actively managing and generating income through the interest generated by a family's estate, inheritance tax can be a devastating blow which can force you to completely restructure and take you down several notches financially.

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First time I have been labelled a commie!

 

 

If you don't, it isn't really worth bringing capital here

Fuck the politics for a minute. You are advocating this guy acts deliberately and illegally by evading the tax. Considering the rate applied is probably only 15% this is just plain dumb. Why the fuck risk a possible prison sentence for 15% of new money.

 

Or shall I put it this way...pay the tax, then stick the money into a sterling fixed rate bond earning 5.75%. After 3 years you are in the same position as if grandpa had lived another 3 years.

 

Tax avoidance I like, tax evasion I hate.

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Just calling a spade a spade with regards to your communist leanings! ;)

 

I am not advocating tax evasion, I am being realistic and pragmatic. The key, as the OP is a foreigner, is whether he plans on staying in Germany long-term or not. If he does, the chances are high that he will need to bring the capital in to make major investments (car, house, etc.) and therefore will ultimately have to find a legal way of bringing the money into the country. This is why I said that sneaking cash over the border can ultimately bite you in the ass, as you can basically do nothing with it except go on holidays and to the restaurant - any inheritance tax is a scandal, but I suppose that I would agree that 15% is not bad, at least it could be worse. If he does not plan on staying in Germany, I don't see why it would not be a good idea to keep it outside of the country that he is living in until he knows exactly what he is going to do with it. It isn't tax evasion until you choose not to declare what you have abroad...

 

By the way, if you can find me anything earning 5.75% interest net in this day and age (unless it's in Turkish Lira), the fair trade tofu is on me!

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Re the link posted by Allershausen, it looks like only the 8% rate would barely meet the JW after-tax rate of return for a German resident, and that is assuming that sterling does not decline against the euro (or any other relevant currency) and/or that there are no direct or indirect costs to exchange currencies.

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Christ this is hard work.

 

 

By the way, if you can find me anything earning 5.75% interest net in this day and age (unless it's in Turkish Lira), the fair trade tofu is on me!

First I said "stick the money into a sterling fixed rate bond earning 5.75%" specifically as an example as you CAN GET 5.75% on fixed rate bonds in sterling. For example here:

 

http://www.angloirishbank.co.uk/

 

Obviously at the moment it sounds like the peeps is getting the money in Argentinian Pesos or something weird, and just guessing he might prefer to keep it in something a little

more secure - but once he decides on doing the Foreign Exchange there is no reason he MUST switch it into €uros.

 

 

It isn't tax evasion until you choose not to declare what you have abroad...

And can we just PLEASE GOD get this straight. It is NOT tax evasion not to declare what assets you had abroad before moving to Germany. But in this case the inheritance is a newly acquired asset,

and the peeps lives in Germany and it is 100% cast iron damn well taxable. No ifs, not buts, no maybes. Anything less is TAX EVASION and fucking dumb when dealing with German authorities.

There is no grey area on this inheritance. Read the law. It is crystal clear.

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We're going a little OT, but why would he want to buy GBP taking into consideration what Conquistador said? Basically all this is moot until the OP tells us where he plans on living long-term and what he would like to do with his money, regardless of where he is.

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Basically all this is moot until the OP tells us where he plans on living long-term and what he would like to do with his money, regardless of where he is.

No it's not. He has no frigging choices. There are no choices. It is not optional. He either pays the tax that is now due or EVADES the tax as a criminal. Nothing inbetween.

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Strangely, that does sound less risky. I have a sudden vision of sensible, hard headed men making prudent decisions with what they call "brass" before putting on their bicycle clips and feeding the pigeons. The kind of people you can rely on not to take your money and blow it all on cheesy wotsits and pantyhose.

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I never said that the OP should not pay tax, however I think that blindingly marching into Germany with that capital if he is not going to stay here would be a mistake. If that is tax evasion, well so be it.

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It is tax evasion. Fact. However you choose to write it.

 

I'm also not that interested in the moral high ground. I just wouldn't personally fuck with the krauts on tax, especially when in this case it is so black and white.

 

But hey, not our money, not our choice, just want the guy to be 100% aware that he is considering tax evasion, and I think that others encouraging people here to indulge in criminal

activity is kinda unwise/unfair.

 

As long as he understands the facts, then of course it his choice. He can dance with the devil if he likes.

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Without going through the whole of this thread, the relevant information is here under: Erbschaft- und Schenkungsteuer in Deutschland

 

To summarise, a grandchild is considered to be "Steuerklasse I" (nothing to do with your Lohnsteuerkarte...)

 

That means the first 51.200 € is not taxed at all. Any amount above that is taxed on a sliding scale from 7% to 30%.

IIRC this sliding scale has a "gotcha" in that if you fall into a higher bracket the whole amount (minus the 51.2k) is taxed

at the higher amount.

 

Most of the process as described within that Wikipedia page of course deal with the case that both the deceased and the person receiving the estate are in the same country (Germany).

Whereas the Finanzamt (of deceased), courts, Notar etc in Germany will report the case within Germany it is unlikely that such authorities in other countries (even the EU) will broadcast to every other country that so-and-so has passed away & his estate was worth so-much.

 

In UK its the other way around - simply put the estate is taxed (first 300K GBP tax-free then remainder at 40% ouch) and then distributed to the various recipients.

 

Theoretically within the EU & certain other countries being liable for tax twice on the inheritance should be avoided. Since the German Finanzamt has been known to ignore such things when it suits them...

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Hot topic this inheritance tax. But Buffet and Gates set up a trust and are generous with it and so are all the other 'rich people' who can afford tax lawyers.

I spent a lot of my hard earned money on my kids for their education so they won't have to worry about estate taxes which we don't have here. Actually we do have, but the level is so high that it won't affect the average person. What makes it bad with properties is, that the valuations over the last 30 years have gone so high, that all the increase makes one look rich when in fact one was just lucky when you bought when you did. With the capital gains tax they suck the sap out of the tree before it dies, not much need for inheritance tax.

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To those assuming that I am just a rich snob, I would like you to know that I am writing this response from my job, 43 past midnight. I am not royalty, and never have been. And even if I was, shame on you for acting as if it was a bad thing.

 

I don't want to do anything illegal, but I also don't want to just give money away, when perhaps there might be a way to go around it. If I am a selfish bastard for having that frame of mine, than read on, I promise to make you proud.

 

I have been poor, and I have pushed myself to the middle class. All here in Germany. I could've easily went back home and fall back on my family, but I wanted to make it on my own. I will Stay in Germany, I have a son here, I like it here, more than the states. And if I have to pay taxes to a government, I rather pay the German one.

 

I have to admit, some of the comments I read made me feel ashamed of myself. How is it that I am pondering the idea of tax evasion on money that I was never expecting anyways? This question sure does not make me feel comfortable in my own skin. How is it that just a few weeks ago I was arguing with my mom how I am proud to pay my taxes here in Germany because I see where the money goes, unlike in the US; and now when It is my turn to give back, I am reduced to crime?

 

You are right, my grandpa would not be proud of me right now.

 

I will do the right thing and pay my taxes.

 

Thank you all.

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Given that you sat back, read the comments, and made your decision, I guess grandpa probably would be proud of you!

 

That said, I must admit that although I haven't commented in this thread so far, I support JE's view.

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I would like you to know that I am writing this response from my job...

I don't want to do anything illegal...

Maybe you just did - does your employer know you surf privately at work? :)

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