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In Germany, understanding the rules around inheritance tax is crucial for those who are about to inherit or donate wealth. Here's a breakdown of the key points to help you navigate this process.

Firstly, if you inherit wealth or a portion of an inheritance, you are required to notify the tax office within three months of becoming aware. However, there are exceptions. Notification is not required for gifts between living persons or charitable donations that are legally or notarially certified.

If a will is opened by a German court or a German notary and a regular kinship relationship exists, the notification to the tax office may be waived. It's important to note that the letter should explain the personal relationship between the heir and the deceased or donor, such as the degree of kinship.

The tax-free allowances for heirs and legatees depend on their relationship to the deceased. Spouses and registered partners have a tax-free allowance of 500,000 euros; children, adopted and stepchildren have 400,000 euros; grandchildren have 200,000 euros; great-grandchildren, parents, and grandparents (when inheriting) have 100,000 euros; other relatives in tax class II (e.g., siblings) have 20,000 euros. Additionally, spouses benefit from a 256,000 euro "Versorgungsfreibetrag" to mitigate economic consequences of the partner's death, which is added to their personal allowance.

It's worth mentioning that not every tax office in Germany has an inheritance and gift tax department. Those looking for the relevant tax office can find a nationwide directory on the website of the Federal Ministry of Finance.

An inheritance tax declaration is not always required; the tax office determines this based on the value of the inheritance or gift. If the tax office requests an inheritance tax declaration, the deadline for submission is at least one month, which can be extended by submitting a corresponding application before the deadline.

The tax office responsible is typically the one in the place where the deceased or the deceased's last residence was. Both the giver and recipient are obligated to report gifts made during the giver's lifetime to the tax office.

If the tax office issues an inheritance tax notice, an objection can be raised against this, but only within one month. If the tax office rejects the objection, the heirs have only one option: to file a lawsuit with the tax court.

It's important to note that the tax office always becomes aware of a death through the registry office, probate court, banks, and insurance companies. A letter to the tax office should include the given name and surname, occupation, and address of the deceased or donor, recipient, date of death or gift date, and nature and value of the inheritance or gift.

In summary, understanding the rules around inheritance tax in Germany is essential for those who are about to inherit or donate wealth. By being aware of the key points and following the necessary steps, you can ensure a smoother process.