Notification obligation: What should I report to the tax office? (Anzeigepflicht)

There are some situations in life when one feels extremely happy at first, but soon enough you may find you don't exactly know whether you should celebrate or not. This tends to concern donations, gifts or profits. For example, let's say you win the lottery and have a lot of money, then ask yourself a short time later whether you should report it at all. Does the tax office even want to know about it?

What about when it comes to donations and inheritance? Do I have to give information? These questions can not always be answered with a simple "yes" or "no"; it depends on the circumstance. Here you'll find out what exactly you're required to report to the tax office.

Be ready for the unexpected

Not everyone has wealthy relatives or rich friends. But life has a tendency to write the craziest stories. If you inherit an amount you didn't expect, you may have to inform the tax office about it in case certain taxes are due. This may be the case even if the inheritance was handed over during their lifetime. Incidentally, this same law governs the amount of the tax to be paid in cases of inheritance and gifts. But when does the so-called inheritance tax (Erbschaftsteuer) or gift tax (Schenkungsteuer) take effect?

Inheritance and gift tax (Erbschaftsteuer und Schenkungsteuer)

Basically, inheritance tax is a tax that is charged if someone inherits something upon another person's death (Erbanfallsteuer). The tax is due as soon as the heir receives the estate. Heirs must notify the tax office within three months of receipt of the estate. If a gift is donated, both donor and recipient must notify the tax authorities.

Data to be transmitted:

  • Name, occupation and address of the deceased and the heir
  • Time of donation/death and place of death
  • Value of the inheritance or donation
  • Legal reason for acquisition
  • Relationship of parties to each other
  • Information about any benefits already received earlier

Relationship is decisive

The tax office has ways of checking whether there is any tax due on the inheritance at all, as well as when it becomes due. It's often the case, though, that no payment will need to be made because the allowances (Freibeträge) for relatives are very high in the first place.

Allowances are as follows:

  • Spouses - 500,000 euros
  • Children - 400,000 euros
  • Grandchildren - 200,000 euros

Incidentally, certain allowances also apply to donations. They can be given tax-free every ten years.

Declaration of estate (Erbschaftsteuererklärung)

If an existing allowance (Freibetrag) is exceeded, the inheritance tax (Erbschaftsteuer) will kick in and must be paid. In this case, information about the property along with assets belonging to the estate must be provided by means of an estate tax return.

If the duty of disclosure (Anzeigepflicht) is disregarded, the tax office will still learn about the inheritance, as registry offices are obliged to report deaths. Subsequently, notaries or courts will additionally report relevant certifications, which could possibly be of importance. Finally, the Treasury is also informed by banks and Co. about the death of a person.