Intermediary beneficiary (Zwischenberechtigter)

§ 7 of the German Inheritance and Gift Tax Act refers to the person named as beneficiary of a foreign pool of assets (Vermögensmasse ausländischen Rechts) during the existence of such foreign pool of assets as "Zwischenberechtigter" (intermediary beneficiary). A beneficiary of a trust only may qualify as an intermediary beneficiary, if he has “rights to the assets and/or income of the trust independently of a distribution decision of the trustee”. See Decision of the Federal Fiscal Court dated June 25, file no. II R 31/19). Consequently, distributions from foreign pool of assets with the purpose to bind assets to a beneficieary are not subject to German gift tax, if the distribution is in the (unlimited) discretion of the trustee.