Anyone who inherits an account in Switzerland, a flat in Spain or a securities account with a foreign bank must at the same time observe a deadline in Germany: the inheritance tax duty to notify foreign assets requires the acquirer to report the inheritance to the competent tax office within three months. Unlike a purely domestic estate, this duty does not lapse for foreign assets even if a notarial will or a will opened by a court exists. This article explains who must notify, what the notification must contain, who informs the tax office in any event, how the notification affects the assessment period and where tax evasion begins.
When Foreign Assets Are Taxable in Germany at All
The duty to notify presupposes an acquisition that is taxable under Section 2 of the Inheritance and Gift Tax Act (Erbschaftsteuer- und Schenkungsteuergesetz, ErbStG). Unlimited tax liability covers the entire acquisition of assets, including assets abroad, if the deceased at the time of death or the acquirer at the time the tax arises is a resident (Inländer). Under Section 2 (1) no. 1 sentence 2 (a) ErbStG, residents are natural persons with a residence or habitual abode in Germany. Under letter (b), German nationals are also deemed residents if they have not been permanently abroad for more than five years without having a residence in Germany (extended unlimited tax liability). For the distinction, see the article on habitual abode in German tax law.
If neither the deceased nor the acquirer is a resident, that is, if they have neither a residence nor a habitual abode in Germany and, to the extent they are German nationals, have lived abroad for more than five years, only limited tax liability for certain domestic assets within the meaning of Section 121 of the Valuation Act (Bewertungsgesetz, BewG) comes into consideration; for foreign assets there is then, as a rule, no duty to notify in Germany under Section 30 ErbStG. For persons without German nationality, resident status already ends when they give up their residence and habitual abode in Germany. In addition, the extended limited tax liability under Section 4 of the Foreign Tax Act (Außensteuergesetz, AStG) may apply.
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| Constellation | Tax liability in Germany | Must foreign assets be notified? |
|---|---|---|
| Deceased lived abroad, heir lives in Germany | unlimited (acquirer is a resident) | yes |
| Deceased lived in Germany, heir lives abroad | unlimited (deceased was a resident) | yes |
| German deceased, abroad for three years without a residence in Germany, heir also abroad | unlimited under Section 2 (1) no. 1 sentence 2 (b) ErbStG | yes |
| Neither deceased nor heir a resident (Germans: abroad for over five years without a residence in Germany), no domestic assets | normally none (check the exception in Section 4 AStG) | no |
The duty to notify is linked not to an actual tax liability but to the taxable acquisition. Even someone who expects the personal allowance to be sufficient should therefore notify.
The Acquirer’s Duty to Notify under Section 30 ErbStG
Who Must Notify
Under Section 30 (1) ErbStG, every acquisition subject to inheritance tax must be notified by the acquirer, and in the case of a gift for a specific purpose by the person charged with it. Acquirers include, besides heirs, legatees, beneficiaries of a foreign life insurance policy and persons entitled to a compulsory portion as soon as they assert their claim. Each co-heir is personally obliged to notify; a joint notification should be coordinated. In the case of gifts, the donor is additionally obliged to notify under Section 30 (2) ErbStG.
Deadline: Three Months from Knowledge
The deadline is three months. It does not start on the date of death but when the acquirer obtains knowledge of the acquisition. Anyone who learns of a foreign account of the deceased only years later must notify within three months from that point. According to the prevailing view, knowledge requires reliable information about the acquisition; mere assumptions are generally not sufficient.
Form and Addressee
The notification must be made in writing to the tax office responsible for administering inheritance tax. In several federal states, inheritance tax is concentrated at individual tax offices. Local jurisdiction under Section 35 ErbStG is in principle determined by the deceased; if the deceased was not a resident, by the acquirer (Section 35 (2) no. 2 ErbStG).
Content of the Notification
Section 30 (4) ErbStG lists the information that the notification should contain:
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| No. | Information under Section 30 (4) ErbStG | Practical note for foreign assets |
|---|---|---|
| 1 | First name and surname, tax identification number, occupation, residence of the deceased and the acquirer | if there is no German identification number, state this |
| 2 | Date and place of death | have a foreign death certificate ready, with translation if necessary |
| 3 | Subject matter and value of the acquisition | account balance on the date of death, securities account statement, property description; convert values into euros and state the exchange rate |
| 4 | Legal basis (statutory succession, will, legacy) | foreign will and statement of which law governs the succession |
| 5 | Personal relationship to the deceased | determines the tax class and the allowance |
| 6 | Earlier gifts by type, value and date | gifts in the last ten years, including from abroad |
Exact values are not mandatory for the notification; it is a “should” provision (Sollvorschrift). If the value of a foreign property cannot be determined within three months, a notification with a provisional estimate and a note that details will follow is better than waiting.
The Exception for an Opened Will Does Not Apply to Foreign Assets
Under Section 30 (3) sentence 1 ErbStG, no notification is required if the acquisition is based on a disposition upon death opened by a German court, a German notary or a German consul and the relationship of the acquirer to the deceased is clear beyond doubt from it. This relief expressly does not apply if the acquisition includes real estate, business assets, certain shares in corporations or foreign assets. A notarial will alone is therefore not sufficient: what matters is that it was opened by a German authority, and for foreign assets the notification remains necessary.
Third-Party Reporting Duties: What the Tax Office Learns Anyway
Numerous bodies report inheritances to the tax office. This does not replace your own notification, but it explains why concealed assets are often discovered.
Banks, Custodians, Insurers (Section 33 ErbStG, ErbStDV)
Anyone who holds or manages third-party assets on a commercial basis must, under Section 33 (1) ErbStG, report the estate assets of a deceased person to the tax office, as a rule within one month of learning of the death. Under Section 1 (2) of the Inheritance Tax Implementing Ordinance (Erbschaftsteuer-Durchführungsverordnung, ErbStDV), this duty also applies if other persons besides the deceased are involved, for example in the case of joint accounts. For safe deposit boxes, a report of their existence is sufficient (Section 1 (3) ErbStDV); the report may be omitted, among other cases, for values up to 5,000 euros (Section 1 (4) ErbStDV). Insurers report before payment to third parties (Section 33 (3) ErbStG). Infringements are tax administrative offences under Section 33 (4) ErbStG.
Important for foreign assets: these duties apply to German institutions. However, the Federal Fiscal Court (Bundesfinanzhof, BFH) has ruled that a domestic credit institution must also report assets held at its branch abroad, even if a banking secrecy backed by criminal sanctions applies there (BFH, judgment of 16.11.2016, II R 29/13, following a preliminary ruling of the CJEU of 14.04.2016, C-522/14).
Courts, Notaries, Registry Offices and Consuls (Section 34 ErbStG)
Registry offices report deaths; courts, notaries and German consuls report, among other things, certificates of inheritance, European Certificates of Succession, opened dispositions upon death and notarised gifts (Section 34 (2) ErbStG). German certificate of inheritance proceedings (on jurisdiction, see probate court jurisdiction for a residence abroad) therefore regularly lead to a report.
International Exchange of Information
In addition, there is the automatic exchange of financial account information under the Common Reporting Standard. Foreign banks report accounts of persons resident in Germany via their authorities to the Federal Central Tax Office (Bundeszentralamt für Steuern). Details can be found in the article on CRS reporting obligations for foreign accounts. A foreign account transferred to the heir’s name may thus become known as early as the following year.
Tax Return under Section 31 ErbStG
The notification is not yet a tax return. Under Section 31 (1) ErbStG, the tax office may require any party involved to file an inheritance tax return, regardless of whether that party is itself liable to tax; the deadline must be at least one month. The return contains a list of the estate assets and all information on the subject matter and value of the acquisition (Section 31 (2) ErbStG). Co-heirs may file jointly (Section 31 (4) ErbStG); executors, estate administrators and estate curators are themselves obliged (Section 31 (5) and (6) ErbStG).
A duty to file a return therefore only arises on request, which the tax office decides on the basis of the notification. If the value is clearly below the allowance, it often refrains from doing so.
For foreign assets, increased duties to cooperate apply under Section 90 (2) of the Fiscal Code (Abgabenordnung, AO). The acquirer must obtain documents from abroad himself. The German valuation standard does not automatically correspond to the value in the state where the asset is located; questions about the administration of the estate there should be clarified with an adviser in that country.
Consequences for the Assessment Period: Section 170 AO
The regular assessment period (Festsetzungsfrist) for inheritance tax is four years (Section 169 (2) sentence 1 no. 2 AO). In inheritance cases with a foreign element, however, it often begins much later than the date of death.
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| Rule | Content | Effect |
|---|---|---|
| Section 170 (1) AO | Start at the end of the year in which the tax arose | basic rule |
| Section 170 (2) sentence 1 no. 1 AO | if a notification must be made, start at the end of the year in which it is submitted, at the latest at the end of the third calendar year after the tax arose | suspension of the start (Anlaufhemmung) of up to three years |
| Section 170 (5) no. 1 AO | for acquisitions upon death, not before the end of the year in which the acquirer obtained knowledge of the acquisition | late knowledge postpones the start further |
| Section 169 (2) sentence 2 AO | ten years in the case of evasion, five years in the case of reckless underpayment | extension of the period |
Example (fictitious): Lena lives in Munich. Her uncle Karl dies in Portugal in March 2026. Lena only learns of a securities account held by Karl in Luxembourg in February 2028. The three-month notification deadline begins in February 2028. Under Section 170 (5) no. 1 AO, the assessment period does not begin before the end of 2028. If Lena does not notify the acquisition, the suspension under Section 170 (2) sentence 1 no. 1 AO also applies. Four years after the date of death, the matter is therefore by no means closed.
To what extent an incomplete notification ends the suspension of the start of the assessment period is only partly settled. The BFH has ruled that a notification which describes a known item of the acquisition incompletely or incorrectly is sufficient to end the suspension, unless it practically amounts to not submitting a notification at all (BFH, judgment of 23.05.2012, II R 56/10). Where, by contrast, an independent item such as a foreign account is missing entirely, there is no separate BFH decision on this. According to a widely held view, such a partial notification ends the suspension only if it puts the tax office in a position to pursue the proceedings. This transfers the general legal principle to a group of cases that is essentially unresolved and is not established case law.
It is also open how evasion by one co-heir affects the assessment period of the other co-heirs. Each co-heir owes inheritance tax on his own acquisition, so a separate period runs for each acquisition. Whether the extended period under Section 169 (2) sentences 2 and 3 AO also applies to a co-heir who has not concealed anything himself has not been conclusively settled by the highest courts and is discussed in the literature.
Tax Evasion by Failing to Notify
Failing to Act Is a Criminal Offence
Under Section 370 (1) no. 2 AO, anyone who, in breach of a duty, leaves the tax authorities unaware of facts relevant to taxation and thereby reduces taxes commits a criminal offence. The duty under Section 30 ErbStG is such a duty. Anyone who intentionally conceals an inherited foreign account can therefore evade inheritance tax without ever having signed anything false. Penalty: up to five years or a fine, in particularly serious cases such as a reduction on a large scale six months to ten years (Section 370 (3) AO). The Federal Court of Justice (Bundesgerichtshof, BGH) uniformly assumes a large scale from a reduction of 50,000 euros (BGH, judgment of 27.10.2015, 1 StR 373/15). Where the amounts evaded run into millions, according to case law (BGH, judgment of 02.12.2008, 1 StR 416/08) a suspended sentence is only possible if there are particularly weighty mitigating factors. Reckless conduct can be punished as an administrative offence under Section 378 AO.
For particularly serious cases under Section 370 (3) sentence 2 nos. 1 to 6 AO, the limitation period for criminal prosecution is 15 years (Section 376 (1) AO). It must be distinguished from the ten-year assessment period.
The Deceased’s Legacy Issues: Duty to Correct under Section 153 AO
If the deceased did not declare investment income or rental income from abroad, the duty to correct under Section 153 (1) sentence 2 AO also applies to the universal successor. If the heir recognises, before the assessment period has expired, that returns filed by the deceased were incorrect, he must notify this without undue delay and correct it. Without undue delay means without culpable hesitation; the law does not specify a fixed number of months. If the heir fails to make the correction, he may himself commit an offence under Section 370 (1) no. 2 AO. Typically, three levels must be considered: the inheritance tax, the open income tax years of the deceased including the year of death, and the heir’s own future income, for example rental income from a property abroad.
The estate liability arising from the deceased’s tax debts reduces the acquisition subject to inheritance tax. Co-heirs are jointly and severally liable (Sections 1967, 2058 of the German Civil Code, BGB). Disclaiming the inheritance does not automatically remove criminal liability that has already arisen for the heir personally.
Correction and Voluntary Disclosure
A missed notification should be made up for before the tax office starts investigating. If an intentional tax reduction has already occurred, a voluntary disclosure with exempting effect under Section 371 AO (strafbefreiende Selbstanzeige) may be considered. It must be complete for all tax offences of one type of tax that are not time-barred, at least for the last ten calendar years. If the tax reduced exceeds 25,000 euros per offence, there is no exemption from punishment (Section 371 (2) sentence 1 no. 3 AO); in that case, prosecution can be dispensed with under Section 398a AO if, in addition to the tax and interest, a surcharge of 10, 15 or 20 percent of the evaded tax is paid. Grounds for exclusion such as an announced audit or detection of the offence must be observed, and even an incomplete voluntary disclosure can cost the exemption from punishment altogether. Whether there is merely a late notification or already evasion depends on intent and on when the tax would have been assessed had the notification been made on time; this should be clarified before any declaration.
Typical Foreign Assets in the Notification
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| Type of asset | What must be stated | Typical mistake |
|---|---|---|
| Current account, fixed deposit, savings account | Bank, country, account holder, balance on the date of death in euros | naming only the account the heir knows about and forgetting sub-accounts |
| Securities account | Statement as at the date of death, market values, foreign currency | valuation at the time of transfer instead of on the date of death |
| Real estate | Location, type, size, share, provisional value | reporting the value only after an expert opinion and missing the three-month deadline |
| Foreign life insurance | Insurer, beneficiary designation, amount paid out | not notifying it as “outside the estate”, even though it is a taxable acquisition |
| Interest in a foreign company | Company, share, balance sheet values | overlooking that business assets have their own valuation rules |
If account details are still missing because the foreign bank first requires proof of inheritance, the notification can include a note on the ongoing clarification.
Foreign Inheritance Tax: Credit under Section 21 ErbStG and Treaties
Germany has concluded inheritance and gift tax treaties with only a few states, namely Denmark, France, Greece, Sweden, Switzerland and the USA. Details of these treaties can be found in the article Inheritance tax and double taxation treaties. Outside the treaties, Section 21 ErbStG helps: in the case of unlimited tax liability, the foreign tax that has been assessed, is attributable to the acquirer, has been paid and is not subject to any claim for reduction is credited on application, to the extent that it relates to foreign assets. The credit is limited to the part of the German tax proportionately attributable to the foreign assets. The German tax must have arisen within five years of the foreign tax arising. The acquirer provides proof by means of documents; the tax office may require a certified translation (Section 21 (3) ErbStG).
If the deceased was a resident, only assets of the type listed in Section 121 BewG that are attributable to a foreign state count under Section 21 (2) no. 1 ErbStG. Capital claims such as a balance with a foreign bank are not included. The BFH has ruled that, without a treaty, the foreign tax on such claims can neither be credited nor deducted as an estate liability (BFH, judgment of 19.06.2013, II R 10/12); at most, an equitable measure under Sections 163, 227 AO may be considered. The credit requires an application; deducting foreign tax from the acquisition on one’s own initiative is not the right way.
Particular Points for Emigrants and Heirs Abroad
For heirs abroad: a deceased resident in Germany triggers unlimited tax liability, even if the heir left Germany decades ago. The same applies if the deceased, as a German national, had lived abroad for less than five years. Additional duties in the heir’s own state of residence should be clarified with an adviser in that country. Civil law questions, such as which succession law applies, are covered in the article on international succession law when emigrating, and the enforcement of claims across borders in the article on compulsory portion rights and foreign assets.
If the legal position is unclear, for example on the question of whether a residence in Germany continues to exist, a binding ruling from the tax office under Section 89 (2) AO (verbindliche Auskunft) can be applied for before any arrangement is made; where there is a foreign element, a ruling in the other state may also need to be obtained. Timely notification is not a substitute for this.
Conclusion
The duty to notify under Section 30 ErbStG is the central first step where foreign assets are involved. It applies within three months of knowledge and, for foreign assets, does not lapse even if a German authority has opened the will. A missed notification postpones the start of the assessment period and, if intentional, may constitute tax evasion by omission. Anyone who notifies early, completely and, if necessary, with provisional values keeps control of the proceedings and can have foreign tax taken into account via Section 21 ErbStG or a treaty.
Frequently Asked Questions
Do I have to notify an inherited foreign account even if my allowance is not exceeded?
The duty to notify is linked to the taxable acquisition, not to an actual tax liability. A foreign account must therefore in principle be notified. The tax office then decides whether to request a return.
When does the three-month deadline start for foreign assets?
When the acquirer obtains knowledge of the acquisition, not on the date of death. If the acquirer only learns of a foreign account or property later, the deadline runs from that point.
Is it sufficient that the notary sent the will to the tax office?
Not for foreign assets. Section 30 (3) ErbStG expressly excludes real estate, business assets, certain shares in corporations and foreign assets from the exemption.
Does a German bank also have to report accounts at its foreign branch?
According to the judgment of the Federal Fiscal Court of 16.11.2016 (II R 29/13), yes, even if banking secrecy applies there.
What happens if I forgot to notify?
The notification should be made without undue delay. If an intentional tax reduction has already occurred, it must be examined whether a complete voluntary disclosure under Section 371 AO is required and whether there are grounds for exclusion. In the case of evasion, the assessment period is extended to ten years.
Attorney Dr. Johannes Fiala and the Munich-based firm, which focuses on international succession law, tax law and asset protection, advise heirs and emigrants on inheritances involving foreign assets, from timely notification under Section 30 ErbStG and the inheritance tax return and crediting of foreign tax to correcting the deceased’s legacy issues. Dr. Fiala has published extensively on questions of emigration and asset protection. Please get in touch with the firm without obligation to discuss your individual situation in an initial consultation.
