GERMANY Trends and Developments Contributed by: Christian von Oertzen and Philipp Windeknecht, Flick Gocke Schaumburg
Since 31 December 2024, the relief has also applied to properties in non-EU/EEA countries that exchange inheritance and gift tax information with Germany. Inheritability of social media accounts The digital estate is an interplay of inheritance law, fundamental rights, privacy and business practices of service providers. In Germany, there are only a few judicial verdicts in relation to the digital estate, so many legal issues are still unclear and somewhat controversial. In 2018, the BGH decided that heirs are entitled to access the Facebook account of the deceased. The account would also be transferred to the heirs by way of universal succession. The court stated that neither the secrecy of telecommunications nor the post-mortem personal right to privacy stands in the way of inheritance. In 2025, the Higher Region - al Court of Oldenburg ruled that the contractual user relationship with its rights and obligations for social media accounts (in this case: Instagram) is transferred to the heirs by way of universal succession. The heirs may continue to actively use the account. Lifetime gifting of interests in corporations with reserve of usufruct A common estate planning structure is lifetime gift - ing with reserve of usufruct. The attribution rules regarding usufruct rights for income tax purposes have changed recently. Decisions of the BFH in 2022, 2024 and 2025, as well as publications by the BMF in 2025, have produced some uncertainty regarding the attribution of income for income tax purposes. The income is generally no longer attributed to the usu - fructuary but to the shareholder unless the usufructu - ary qualifies as the beneficial owner of the shares (ie, by having the voting rights and by benefiting from an increase in the value of the shares as well as taking the risk of a decrease in value). The recent decisions of the BFH are unfortunately not 100% cohesive so this uncertainty remains. Customary occasional gifts and their reference standard Customary occasional gifts are exempt from gift tax under Section 13 (1) No 14 ErbStG, without a fixed threshold; the qualification is based on an overall assessment of occasion, relationship, and the donor’s financial circumstances. The Fiscal Court of Rhine -
land-Palatinate held that a EUR20,000 cash gift for Easter does not qualify as a customary occasional gift and is therefore completely taxable. It rejected the previous relative approach focusing on the donor’s wealth and instead applied an objective standard based on general social practice, referring also to small-value exemption rules. This departs from estab - lished BFH case law as well as administrative practice and is rejected in legal scholarship. Potential changes in tax law and pending case before the Federal Constitutional Court concerning gift and inheritance tax The German transfer tax regime is currently in a stable phase. Germany elected a new federal parliament in 2025, with another “grand coalition” consisting of the Christian Democratic Union ( Christlich - Demokratische Union or CDU) and the Social Democratic Party ( Sozi- aldemokratische Partei Deutschlands or SPD), and led by the CDU. So far, no major changes in transfer taxes have been announced. Like many other countries, Germany is still facing the consequences of the war in Ukraine and lately in Iran; hence, changes might be expected. In order to close the growing fiscal budget gap, the SPD has publicly proposed an increase in income tax for high-income individuals as a possible (partial) solution. Moreover, it remains unclear if the current gift and inheritance tax exemptions for business assets are constitutional. It can be expected that within the next two years the German Federal Constitutional Court will render a decision in this regard. Exit Taxation “Passive” exit taxation under new double taxation treaty provisions The BFH held that a passive exit taxation event under Section 4 (1) sentence 3 EStG can arise solely from a change in law, in particular the entry into force of a new or amended double taxation agreement (DTA), and does not require any active conduct by the taxpayer. The case concerned a German partnership holding shares in a Spanish corporation with predominantly Spanish real estate. Under the 2011 Germany–Spain DTA, Spain obtained a new taxation right over gains from the disposal of such shares, thereby restricting Germany’s taxation right and triggering exit taxation
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