German trust laws amended in favour of offering special inheritance tax rate

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Germany’s Lower Tax Court based in Düsseldorf has made a ruling in the taxpayer’s favour regarding Germans living overseas to be entitled to receive a special exemption from German gift and inheritance tax.
In the Hunnebeck case, the plaintiff is a German national who has been living in the UK for over a decade. She wanted to donate her property to her daughters, who were also of German nationality however also residing in the UK.

Germany’s Inheritance and Gift Tax Act allows specific exemptions in certain circumstances depending on the relationship between the Donor and the Beneficiary. The concession is extremely valuable for these types of trusts; with the exemption being approximately €400,000 for a gift from parent to offspring. However, if both parties to the trust are not residing in Germany, the allowance is only €2,000 regardless of relationship.