What Assets Are Taxable in Germany for Thai Beneficiaries?

1. Introduction
When Thai beneficiaries inherit assets from Germany, it’s essential to understand which assets are subject to German inheritance tax. Germany’s tax system applies to specific categories of assets, depending on their location and the heir’s relationship to the deceased. This article outlines the types of taxable assets and key considerations for Thai heirs.

 
2. Taxable Assets in German Inheritance
2.1 Real Estate
Real estate located in Germany is always taxable, regardless of the heir’s residency. This includes:

• Residential properties.
  
• Commercial buildings.
  
• Landholdings.
  

The property’s market value is used to calculate the taxable amount, and professional appraisals are often required.

2.2 Financial Assets
German-based financial accounts and investments, such as:

• Bank accounts.
  
• Stocks, bonds, and mutual funds.
  
• Certificates of deposit.
  

These assets are included in the taxable estate, and their value is determined as of the date of the deceased’s passing.

2.3 Business Interests
Shares in German companies or stakes in privately owned businesses are taxable. The valuation considers the business’s assets, debts, and profitability at the time of inheritance.

2.4 Personal Belongings
High-value personal items located in Germany, such as:

• Jewelry.
  
• Artwork.
  
• Vehicles.
  
• Collectibles (e.g., antiques, rare coins).
  

Ordinary household items are typically exempt unless they hold significant monetary value.

2.5 Insurance Payouts
Life insurance payouts are generally excluded from the taxable estate if directly assigned to a named beneficiary. However, if the payout is part of the estate, it becomes taxable.

2.6 Pensions and Retirement Accounts
German pension entitlements may be taxable if they form part of the deceased’s estate. Pensions directly paid to a named heir (e.g., a spouse or partner) are usually not included.

2.7 Digital Assets
Digital accounts or assets, such as cryptocurrency holdings, domain names, or intellectual property, are taxable if they are located in or tied to Germany.

 
3. Assets Typically Excluded From Tax
3.1 Foreign Assets
Assets located outside Germany, such as property or bank accounts in Thailand, are not subject to German inheritance tax if the deceased was not a German resident.

3.2 Life Insurance for Named Beneficiaries
Direct payouts to named beneficiaries are excluded, provided they are not routed through the estate.

3.3 Gifts Made More Than 10 Years Before Death
Gifts made outside the 10-year window before the deceased’s passing are exempt from inheritance tax.

 
4. Tax Calculation and Exemptions
4.1 Exemptions Based on Relationship
German inheritance tax law provides tax-free allowances based on the heir’s relationship to the deceased:

• Spouses: €500,000.
  
• Children: €400,000.
  
• Distant relatives and non-relatives (including Thai girlfriends): €20,000.
  

4.2 Tax Rates
Tax rates range from 7–50%, depending on the heir’s tax class and the taxable estate’s value. Thai beneficiaries typically fall under Tax Class III (30–50%).

 
5. Steps to Ensure Compliance
5.1 Valuation of Assets
All taxable assets must be accurately valued. Professional appraisers or financial advisors can help determine the market value of properties, investments, and personal belongings.

5.2 Filing With German Tax Authorities
Thai beneficiaries must report taxable assets to the German tax office (Finanzamt) within three months of accepting the inheritance.

5.3 Engaging a Tax Advisor
A German tax advisor experienced in international estates can ensure compliance, calculate liabilities, and identify any applicable deductions.

 
6. Practical Example
6.1 A Thai woman inherits the following assets from her German partner:

• Residential property valued at €300,000.
  
• A German bank account with €50,000.
  
• Jewelry worth €20,000.
  

6.2 Exemption: €20,000 (Tax Class III).
6.3 Taxable amount: €350,000.
6.4 Tax rate (30% for Tax Class III): €105,000.

 
7. Key Considerations for Thai Beneficiaries
7.1 Asset Location
Assets physically located in Germany are taxable, even if the heir resides in Thailand.

7.2 Documentation
Thai beneficiaries should maintain proper documentation, including appraisals, account statements, and any relevant agreements, to ensure accurate reporting.

7.3 Double Taxation Agreements
Germany and Thailand have a double taxation agreement, preventing the same asset from being taxed twice. Thai heirs should consult with tax advisors to benefit from these provisions.

 
8. Conclusion
Thai beneficiaries inheriting assets from Germany must carefully assess which assets are subject to German inheritance tax. From real estate and financial accounts to personal belongings and digital assets, understanding taxable categories ensures compliance and helps minimize tax liabilities. Seeking professional advice and maintaining accurate records are key to managing these obligations effectively.