With inheritances or gifts, it is initially quite often not considered that tax authorities might also want their share of the acquisition. At this point, a possible joy about received assets is diminished again very quickly. But is a tax to be determined under the Inheritance Tax Act always due immediately?
With offices in Munich and Deggendorf, our tax consultancy supports our clients in the preparation of inheritance and gift tax declarations. Our tax consultants in Munich and Deggendorf advise, design, optimize and check in advance when preparing the corresponding tax return whether a deferral option is possible.
Acquisition of privileged assets according to §13b ErbStG
The legislature provides relief in the payment of gift or inheritance tax for certain types of acquisitions. § 28 ErbStG was initially only introduced to promote the acquisition of business assets or of agricultural and forestry assets by deferring the inheritance and gift tax that would then become due. From July 1st, 2016 on there is only the possibility of an application-dependent deferral of the applicable tax if you acquire privileged assets within the meaning of § 13b (2) ErbStG upon death.
The eligible assets include:
- The domestic economic part of the agricultural and forestry assets with the exception of allotment and self-cultivated land within the meaning of § 159 BewG as well as the corresponding agricultural and forestry assets that serve a permanent establishment in a member state of the European Union or in a state of the European Economic Area;
- Domestic business assets such as the acquisition of an entire commercial enterprise or part of a business, a stake in a partnership, a share of a personally liable partner in a limited partnership or a share in it, and corresponding business assets that serve a permanent establishment in a member state of the European Union or in a state of the European Economic Area ;
- Shares in a corporation if the corporation has its registered office or management in Germany or in a member state of the European Union or in a state of the European Economic Area at the time the tax arises and the testator directly held more than 25% of the nominal capital of this company.
The deferral of the tax on the acquisition of beneficiary assets requires a deferral application. This can be submitted when submitting the inheritance tax return. In order to avoid any late payment surcharges, this application should be made before the inheritance and gift tax is due. If personal and factual deferral requirements are met, there is a right to deferment. This can then take place for a period of up to 7 years.
Acquisition of real estate used for residential purposes
After the inheritance tax reform on December 24, 2008, another option for deferment was introduced effective January 1, 2009, § 28 (3) ErbStG. This covers the acquisition of real estate used for residential purposes.
This additional statutory deferral option was introduced to prevent politically undesirable distress sales of real estate in order to settle inheritance and gift taxes. The rule applies to both acquisitions through gifts or inheritance.
If the acquisition includes privileged assets within the meaning of § 13d ErbStG, formerly § 13c ErbStG, such as rented out land or a one- or two-family house or residential property that the giftee uses for his own residential purposes after the acquisition, the tax office can abandon payable inheritance or gift tax for up to 10 years.
A deferral does not take place automatically, but only on a corresponding request of the taxpayer. The tax office decides on this application at its best discretion.
As part of the preparation of the inheritance and gift tax return, our tax office with branches in Munich and Deggendorf checks whether a tax to be assessed can be suspended for payment through a deferral request.
This holistic view and approach in advance avoid unpleasant surprises with regard to the inheritance or gift tax to be determined. The tax burden can be calculated, tax payments can be planned.