Last updated: November 12, 2026
An aunt in Hamburg leaves you her apartment, a grandmother in Bavaria leaves you savings. The first question is almost always: how much of it goes to the German tax office? The answer depends less on the amount than on how you were related to the deceased. A child keeps €400,000 tax free, a niece only €20,000. This overview shows the German allowances and rates and what changes when you live in Canada.
TL;DR
- German inheritance tax has three tax classes. Your relationship to the deceased decides the class, the tax-free allowance and the rate.
- Allowances: spouse €500,000, child €400,000, grandchild €200,000 (€400,000 if the parent has died), niece, nephew or sibling €20,000, everyone else €20,000.
- Rates range from 7 to 30 percent in class I, 15 to 43 percent in class II and 30 to 50 percent in class III.
- If the deceased lived in Germany, the whole inheritance is taxable in Germany, even if you live in Canada.
- Canada has no inheritance tax, and the Canada Germany tax agreement does not cover German inheritance tax.
How much inheritance is tax free in Germany?
Every heir has a personal allowance. Only the amount above it is taxed. The allowance applies per heir and per person they inherit from, so two siblings who each inherit from their mother each get €400,000.
| Relationship to the deceased | Tax class | Tax-free allowance |
|---|---|---|
| Spouse, registered partner | I | €500,000 |
| Child, stepchild | I | €400,000 |
| Grandchild whose parent (the deceased’s child) has died | I | €400,000 |
| Grandchild whose parent is alive | I | €200,000 |
| Great-grandchild | I | €100,000 |
| Parents and grandparents (inheritance) | I | €100,000 |
| Siblings, nieces, nephews, step-parents, children-in-law, parents-in-law, divorced spouse | II | €20,000 |
| Everyone else, e.g. cousins, friends, unmarried partners | III | €20,000 |
Spouses and children can also receive a pension allowance (Versorgungsfreibetrag): €256,000 for spouses and between €10,300 and €52,000 for children up to age 27, depending on age. It is reduced by tax-free pension benefits.
Aunt to niece, uncle to nephew and sibling to sibling are the classic cases where heirs are surprised by the bill. These heirs are in class II with only €20,000 tax free and rates starting at 15 percent.
German inheritance tax rates
The rate depends on the tax class and the taxable amount after deducting the allowance. The rate applies to the whole taxable amount, not only to the part above the threshold.
| Taxable amount up to | Class I | Class II | Class III |
|---|---|---|---|
| €75,000 | 7% | 15% | 30% |
| €300,000 | 11% | 20% | 30% |
| €600,000 | 15% | 25% | 30% |
| €6,000,000 | 19% | 30% | 30% |
| €13,000,000 | 23% | 35% | 50% |
| €26,000,000 | 27% | 40% | 50% |
| above €26,000,000 | 30% | 43% | 50% |
Just above a threshold, a hardship rule limits the extra tax so that a slightly larger inheritance does not lead to a disproportionately higher bill.
Examples: grandchild, niece, child
The examples assume that the deceased lived in Germany and ignore debts, funeral costs and other deductions.
- Grandchild: Your grandmother leaves you €300,000. Your mother is alive. €300,000 minus €200,000 leaves €100,000, taxed at 11 percent in class I: €11,000.
- Niece: Your aunt leaves you €150,000. €150,000 minus €20,000 leaves €130,000, taxed at 20 percent in class II: €26,000.
- Child: Your father leaves you €500,000. €500,000 minus €400,000 leaves €100,000, taxed at 11 percent: €11,000.
How to calculate the tax yourself
- Determine the value of what you inherit. For real estate, the tax value under German valuation law counts, not the price you hope to get.
- Deduct your share of the debts of the deceased and costs such as the funeral.
- Deduct your personal allowance from the table above.
- Round the remaining amount down to full hundreds of euros and apply the rate for your class.
Property you inherit may also qualify for relief, for example a family home used by a spouse or child. Whether that applies needs to be checked in each case.
What changes if you live in Canada
German inheritance tax does not depend on citizenship but on residence.
- The deceased lived in Germany: the whole inheritance is taxable in Germany, including assets abroad, wherever the heirs live. This is called unlimited tax liability.
- You live in Germany: same result, even if the deceased lived in Canada.
- Neither of you lived in Germany: only German domestic assets are taxed, mainly real estate in Germany and certain business assets. German bank balances are generally not among them. The allowance can be reduced if you also inherit assets that are not taxable in Germany.
- Five-year rule: German citizens who have lived abroad for no more than five years without keeping a residence in Germany are still treated as residents.
Canada does not levy inheritance tax. If the deceased lived in Canada, their capital property is treated as sold at market value immediately before death, and the gain is taxed in the final income tax return. The tax agreement between Canada and Germany covers taxes on income and capital, not German inheritance tax. Whether Canadian tax on that deemed gain can reduce German inheritance tax must be checked in each individual case. Richard Rummel, German lawyer in Calgary, reviews your situation. Call him at +1 587 349 3535 or book a consultation. Planning ahead is therefore worthwhile. More on this in our article on cross-border estate planning with assets in Canada and Germany.
The process for heirs in Canada, from the tax return to the certificate of inheritance, is explained in Inheritance in Germany: what to consider for tax purposes when living in Canada and in Inheritance tax: 6 important questions.
Gifts during lifetime
The same classes, allowances and rates apply to gifts. All gifts and inheritances from the same person within ten years are added together. After ten years the allowance is available again. Parents can, for example, give each child €400,000 every ten years without German gift tax, provided German tax applies at all.
Inheriting in Germany from Canada? Book a consultation with our German lawyers in Calgary or call us at +1 587 349 3535. We check the tax position and handle the certificate of inheritance.
Frequently asked questions
What amount of an inheritance stays tax free in Germany?
It depends on the relationship. Spouses have €500,000 tax free, children €400,000, grandchildren €200,000 or €400,000 if their parent has died, siblings, nieces and nephews €20,000 and unrelated heirs also €20,000. Spouses and children can also receive an additional pension allowance.
How much tax does a niece pay on an inheritance from her aunt in Germany?
A niece is in tax class II. She has an allowance of €20,000. The rest is taxed at 15 to 43 percent. Example: €150,000 inheritance minus €20,000 leaves €130,000, taxed at 20 percent, which is €26,000.
What is the inheritance tax allowance for grandchildren in Germany?
€200,000 if the grandchild’s parent is alive, €400,000 if the parent has died. Grandchildren are always in tax class I with rates of 7 to 30 percent.
Do I pay German inheritance tax if I live in Canada?
If the deceased lived in Germany, yes, on the whole inheritance. If neither of you lived in Germany, only certain German assets are taxed, mainly real estate and business assets. Special rules apply to German citizens who left Germany less than five years ago.
Is there an inheritance tax calculator for Germany?
You can do the calculation yourself in three steps: value of the inheritance minus debts and costs, minus the allowance, then apply the rate from the table. For real estate, the tax value under German valuation law is decisive, which often differs from the market price.
Does Canada tax my inheritance as well?
Canada has no inheritance tax. If the deceased lived in Canada, capital gains on their property are taxed in their final return as if sold at death. That tax is paid by the estate, not by the heir.
Sources
- Section 15 Inheritance Tax Act (ErbStG), tax classes
- Section 16 ErbStG, allowances
- Section 19 ErbStG, tax rates
- Section 2 ErbStG, personal tax liability
- Canada Revenue Agency: capital gains when someone died
This article is for general information only and does not replace individual legal or tax advice. Rocky Mountain German Law Ltd., Suite 201, 8989 Macleod Trail S.W., Calgary, AB.
