Inheritance tax question

36 posts in this topic

That's absolutely true. You need (or at least should) declare interest earned on savings held abroad to the German tax authorities, although the first 801€ (for a single person) is not taxable. Even with current lousy rates 150,000€ of investment will likely take you into the tax bracket, but not until the end of the year of course.

 

Not declaring this interest is risky if you would ever be likely to bring the money to Germany to use. While there is no tax liability on the inheritance, the Germans will want to know where it has been squirrelled away in the meantime and what, if any money you were earning on it prior to arriving in Germany.

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Sorry to hijack this thread but it seems there are a couple of knowledgeable people who could perhaps shed light on my tax problem.

Hubby works and is fiscally resident in Germany. I left Germany a couple of years ago and now live in France. Europe being one happy family and being from UK I need no residence permit to be here. Have international medical insurance through hubby. The French tax office does not know me yet since I have no job and no income to declare. Also in France if you are married you have to submit a joint tax declaration. You cannot do it for one half of a married couple only. My hubby is not fiscally resident in France so does not do a tax declaration in France but has been doing a joint declaration in Germany for years (cos that's the only one he knows how to fill out just copying the previous year...) including since I left.

 

Now the German tax office wants confirmation from the French tax office that I am fiscally resident in France. Which is fine except they have no record for me in France so they cannot confirm this for the German tax office. Catch 22?

 

Anyone else ever been in this situation?

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Can't you just show them your French residency registration? - although, like Germany, you no longer need a permit to live in France, like Germany, you do need to register your residence if you stay more than 3 months.

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I think her husband wants to be taxed as a married person in Germany, i.e. to have the first 16,008€ of his income be income tax free instead of only 8,004€, which is the default if the spouse lives outside Germany.

 

If that is the case then featherlight has to fill in the Bescheiningung EU/EWR (German/French version) and get it stamped by the French tax office (if they only want to fill it in if it's in French, page 3 is enough for the Finanzamt), and her husband then has to submit it to the Finanzamt.

 

With that form featherlight would apply for unlimited tax liability in Germany.

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Thanks so much for your answers. Hub went to the French tax office and got EU/EWR signed - although this did not seem kosher to me. You can be registered as living in France and still not actually be present... they just took his word for it. I still do not understand where I should be paying my taxes (if there was anything to pay) technically.

 

I do not understand what you mean by applying for unlimited tax liability in Germany. Am I fiscally resident in Germany??

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I do not understand what you mean by applying for unlimited tax liability in Germany. Am I fiscally resident in Germany??

 

As soon as you husband submits that form "Bescheinigung EU/EWR", you will be made fiscally resident in Germany retroactively for 2011.

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Thanks for clarifying that... but it opens up another can of worms at the bank in Germany who have got me down as non-resident. Oh boy.

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Hi all,

 

Sorry to bump an old thread, but I felt it better than starting another one on a similar subject!

 

Question is: If I inherit an asset as opposed to money and then sell the asset at a value of less than 400K, am I still considered to be within the tax-free threshold? Asset would be coming from a parent? This would potentially happen in Ireland and the money will be going into my Irish account, not my German one (if it makes any difference)?

 

Thanks for your help!

 

P.

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for taxation reasons the estimated value of the asset upon inheritance would be relevant - not at what price you later sell it. Thus you would have to show some proof for the estimated value for sure. But other than that, the tax free inheritance value of <400k does not regard the asset class at all, whether it is money/cash, stocks or real estate. For some inheritance in a parent's company, some special exceptions even apply (because an immideate inheritance tax could cause the end of an existing business).

 

Cheerio

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I am with *Old_Erdinger on the issue of hassle of filing a return. For about 4 years I paid a tax consultant around Euro 900 and each year ended up getting back around Euro 1,200, but it was so much hassle that I finally got it in writing from the Finanzamt that so long my circumstances did not change I did not need to file a tax return. So if I do it myslef I might get 1200 a year back but a lot more grey hairs. Life is too short.

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the tax free inheritance value of <400k does not regard the asset class at all, whether it is money/cash, stocks or real estate.

 

Thanks for your help. Does the above hold true if you sell the asset at a later date?

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Question is: If I inherit an asset as opposed to money and then sell the asset at a value of less than 400K, am I still considered to be within the tax-free threshold? Asset would be coming from a parent?

 

My brother has fairly recently been executor for 3 estates in the UK. As part of the process the value of some assets (e.g. property) had to be debated & agreed with the Inland Revenue before the total value of the state was set & UK inheritance tax applied. Its the value on the date-of-death thats applicable. Then the remainder is distributed according to the terms of the will.

 

If he situation in Ireland is similar, you can produce the evaluation of the assets that had been agreed with the Irish equivalent of the UK IR. I would have thought that the Finanzamt would accept that - if not you'll have some fun.

 

Incidently - at least two (retired) German Finanzbeamter told me that on inheriting from the UK that was a matter for the UK & not here... Thei advice was to keep quiet here unless asked. I take no responsibility for passing this on.

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OK, my mother died 8 years ago.  I paid both UK and German tax on the inheritance.  NatWest have just discovered an 10K life insurance thingy they had overlooked.   Would this be taxed as if added to the original inheritance, ie at 40 percent?  At this stage I mean UK inheritance tax.  

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Interesting question, so I did a bit of g oogling.  IHT was not my area of expertise and is a complicated tax but I think, based on what you describe, that you may be off the hook, though I think you should disclose the discovery to HMRC, setting out the facts and seeking confirmation that no additional tax is payable.  That is, if the facts are as simple as you suggest, of course...

 

My reading of section 240 Inheritance Tax Act 1984 is that where an IHT account has been delivered and payment made and accepted in full satisfaction of the tax due, HMRC normally has 4 years in which to take action in relation potential underpayments, unless the loss of tax arises carelessly, deliberately, or through the use of tax avoidance arrangements, in which case the time limits increase to 6 or 20 years.  See section 240(2) Inheritance Tax Act 1984  Inheritance Tax Act 1984 (legislation.gov.uk) and CH56800 - Compliance Handbook - HMRC internal manual - GOV.UK (www.gov.uk).  As your mother died 8 years ago, I assume the 4 years has now passed since the IHT position was finalised.

 

It is because of the different time limits for different behaviours that you should not bury this, and make a voluntary, unprompted, disclosure to HMRC as soon as practical, setting out the circumstances in which the new asset was identified, that those administering the estate did not omit the asset carelessly or deliberately and that tax avoidance was not in point.  Ask HMRC to confirm that section 240 IHTA 1984 applies and no further IHT is due. (assuming of course that those factors are applicable to your circumstances).

 

This is my view on a first reading of the relevant statutory provision and there could be other regulations or HMRC guidance that qualify the above, so you may want to do some more research and/or seek professional advice as appropriate. 

 

Hope this helps move you forward.

 

Edit:  I say "you" but that would, I think, be the executor(s)/administrator(s) of the estate.

  

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Wow, many thanks for that.  You must be having an even more uneventful Friday night than I am.  I will post back HMRC respoonse, though it will be a while.  I guess they will want the 40 percent.  They need it for all the levelling up and Brexit stuff anyway.

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They may indeed relish the thought of having their slice of the 10K cake but if s240 is applicable and if there is nothing to push the time limits past the normal 4 years, or even the extended 6 years then they should refuse your kind offer to rid yourself of 40%, as it were.  But on a serious note, there are time limits of this sort scattered all across the tax laws, usually using the concepts of careless and deliberate behaviour, or avoidance, to describe which limit applies. If a particular time limit has passed, and there is no evidence of the other behaviour(s), then there is no legal cover to assess the tax in question...

 

Good luck.  

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