German Inheritance Tax: Federal Tax Court judgment on double (inheritance) taxation

On 19.6.2013 the German Federal Tax Court held that the guarantee of property does not require Germany to credit foreign inheritance tax levied by a foreign country on a claim due from a foreign bank against domestic inheritance tax payable on that claim.

Surprisingly, the German Federal Tax Court also held that the foreign inheritance tax cannot be deducted from the taxable estate.


Double Taxation is generally avoided by crediting the foreign inheritance tax. However, if the foreign Country taxes because of the situs, and the deceased had a fiscal residence in Germany, this credit is not granted unless there a double Taxation Agreement stipulates otherwise.

Currently, there are only double Taxation Agreements in the field of estate and inheritance taxes in force with the U.S., France, Switzerland, Denmark and Sweden.

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