German Federal Tax Court: Distributions of a US trust to beneficiaries domiciled in Germany are subject to German gift tax

German Federal Tax Court: Distributions of a US trust to beneficiaries domiciled in Germany are subject to German gift tax

The German Federal Tax Court (Bundesfinanzhof) has ruled on September 27th 2012, that distributions from a US trust to beneficiaries domiciled in Germany are subject to German gift tax ((reference: 2012 – II R 45/10) unless the beneficiary is the settlor himself.  The decision is apparently not surprising for US estate planners. However, what is often surprising for US tax planners, that Germany in many cases also taxes the transfer of property to many trusts and the final distribution to the beneficiaries.

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