German inheritance tax

Background

In October 2026, the German Federal Constitutional Court (Bundesverfassungsgericht) will hold two hearings on fundamental questions relating to inheritance and gift tax. As the outcome could affect the rules governing the inheritance and transfer of assets, we would like to keep you informed of the current status.

What the Cases Are About

The first case examines whether the current method of calculating inheritance tax – in particular the valuation of real estate, the personal tax-free allowances, and the tax rates – is still constitutional. At its core, the question is whether these figures have been adjusted sufficiently over the years to keep pace with general price developments.

The second case addresses whether it is justified that business assets receive substantially more favourable tax treatment when inherited than, for example, an inherited securities portfolio or a privately owned property. This question may be relevant to anyone planning to pass on or transfer assets.

Current Legal Position

Under current law, business assets can, under certain conditions, be transferred free of inheritance tax at a rate of 85 % or even 100 %. By contrast, the transfer of private assets, such as real estate, securities, or bank balances, is subject to the standard tax-free allowances and tax rates, without any comparable relief.

Status

Both cases are currently still pending. Until the relevant decisions are made, the current legal provisions will remain in effect without change.

What This Means for You

Even though the cases have not yet been decided, it may be worthwhile to take a look at your own estate or asset planning now, particularly if a transfer of assets is planned or expected in the foreseeable future. This allows you to review in good time what options the current legal framework offers and whether any action is advisable.

The topic may also be relevant for individuals resident in Luxembourg. German inheritance and gift tax law may also apply to cross-border gifts and inheritances if either the donor or deceased, or the recipient or heir, has a relevant tax nexus to Germany.

We would be happy to discuss with you in a personal meeting what this development means for your individual situation.

Please feel free to contact us – we are glad to advise you on your individual options.

As of 25 August 2026