What to Do If I Inherit Shares in a German Company?

1. Introduction
Inheriting shares in a German company can be both an opportunity and a challenge. Whether the company is privately held or publicly traded, managing inherited shares requires an understanding of legal, financial, and tax implications. This article outlines the key steps and considerations for heirs managing such inheritances, with a focus on international heirs, including Thai beneficiaries.

 
2. Understand the Nature of the Inherited Shares
2.1 Private vs. Public Shares

• Private Company Shares: Typically involve ownership in a family business or partnership, often with restrictions on transfer or sale.
  
• Publicly Traded Shares: Represent ownership in a company listed on the stock exchange, offering more liquidity.
  

2.2 Voting and Ownership Rights
Shares may come with rights such as voting in shareholder meetings or receiving dividends. Review the company’s bylaws or shareholder agreement to understand your rights.

2.3 Restrictions on Transfer
Some private companies may have clauses restricting the transfer or sale of shares to non-family members or external parties. Check the shareholder agreement for any limitations.

 
3. Legal Steps to Transfer Ownership
3.1 Notify the Company
Inform the company of the inheritance and provide necessary documentation, such as:

• Death certificate.
  
• Certificate of Inheritance (Erbschein) or other proof of your entitlement.
  
• Identification documents.
  

3.2 Register the Shares
For private companies, shares must be re-registered in your name. This is typically handled by the company’s legal team or notary.

3.3 Compliance With Articles of Association
Private companies often require board or shareholder approval for transferring shares. Ensure you meet these requirements.

 
4. Assess Your Options as an Heir
4.1 Retain the Shares
If you wish to keep the shares:

• Participate in shareholder meetings.
  
• Understand your rights and obligations.
  
• Engage in the company’s operations if required.
  

4.2 Sell the Shares
If you prefer liquidity, selling the shares may be an option:

Publicly traded shares can be sold on the stock exchange.
Private shares may require approval from other shareholders or compliance with pre-emption rights.

4.3 Gift or Transfer the Shares
In some cases, transferring the shares to another family member or business partner might be a viable solution.

 
5. Tax Implications of Inheriting Shares
5.1 Inheritance Tax
Shares inherited in Germany are subject to inheritance tax, which depends on:

• The heir’s relationship to the deceased.
  
• The value of the shares.
  
• Tax-free allowances (e.g., €500,000 for spouses, €20,000 for non-relatives).
  

5.2 Corporate Tax
Owning shares may make you liable for corporate taxes, particularly if the company distributes dividends.

5.3 Cross-Border Tax Considerations
Thai heirs should be aware of potential tax obligations in both Germany and Thailand. Consulting a tax advisor familiar with double taxation agreements is crucial.

 
6. Evaluate the Value of the Shares
6.1 Professional Appraisal
Hire a financial advisor or appraiser to determine the market value of private company shares.

6.2 Stock Market Analysis
For publicly traded shares, use the company’s current market price to estimate their value.

6.3 Consider Future Prospects
Evaluate the company’s financial health and growth potential to decide whether to hold or sell the shares.

 
7. Participate in Shareholder Decisions
7.1 Attend Meetings
As a shareholder, you may have voting rights in key decisions, such as mergers, acquisitions, or changes in leadership.

7.2 Understand Your Responsibilities
Owning shares may come with responsibilities, such as contributing to capital increases or fulfilling partnership obligations in private companies.

 
8. Practical Example
8.1 Scenario
A Thai widow inherits 25% of a family-owned business in Germany.

The company’s shareholder agreement restricts the sale of shares to non-family members.

She decides to retain the shares and participate in the company’s decision-making.

A professional appraisal values her shares at €500,000, and she consults a tax advisor to manage her inheritance tax liability.
 
9. Challenges for International Heirs
9.1 Language Barriers
German legal and financial documents may require translation. Consider hiring a bilingual advisor.

9.2 Cultural Differences
Understanding German corporate practices is essential for effective participation in the company.

9.3 Cross-Border Legalities
Navigating the legal and tax systems of both Germany and Thailand can be complex. Engaging local experts in both countries is recommended.

 
10. Conclusion
Inheriting shares in a German company can be a valuable asset, but it requires careful management and strategic decision-making. By understanding the nature of the shares, complying with legal requirements, and seeking professional advice, heirs can maximize the benefits of their inheritance while minimizing challenges. For Thai beneficiaries, addressing cross-border complexities is key to a successful outcome.