Erbschaftssteuer (Inheritance Tax) in Germany and Austria Simplified – 2026 Guide

What is Erbschaftssteuer and Who Has to Pay It?

Inheritance tax (Erbschaftssteuer) is a tax on the transfer of assets from a deceased person to their heirs. In Germany and Austria, the tax is levied on the heir (not the estate itself) and depends on the value of what you inherit, your relationship to the deceased, and where the deceased lived or where the assets are located. If you inherit money, property, or other valuables, you may need to file a tax return and possibly pay tax. This guide explains the basics in plain language, with the key differences between Germany and Austria, and what you need to do step by step.

Step-by-Step: What to Do When You Inherit

Step 1: Determine if You Need to File a Tax Return

In both Germany and Austria, you must file an inheritance tax return if the inheritance exceeds certain tax-free allowances (Freibeträge). Even if the value is below the allowance, you may still need to file if the tax office requests it. The deadline to file is generally three months after you learn of the inheritance, though extensions are possible.

Step 2: Calculate the Value of the Inheritance

You need to list all assets and debts of the deceased at the time of death. This includes real estate, bank accounts, stocks, life insurance, cars, jewelry, and business assets. Debts (like mortgages or loans) reduce the taxable value. In Germany, real estate is valued at its market value (Verkehrswert), while in Austria, it is valued at a special tax value (Einheitswert) for land, which is often much lower than market value.

Step 3: Apply Your Tax-Free Allowance

Each heir has a personal allowance based on their relationship to the deceased. The allowance is subtracted from the inherited amount, and only the excess is taxed. In Germany (as of 2026):

• Spouse or registered partner: €500,000
• Children (including stepchildren): €400,000
• Grandchildren: €200,000
• Parents and grandparents (in case of inheritance): €100,000
• Siblings, nieces, nephews: €20,000
• All others: €20,000

In Austria (as of 2026): Austria abolished inheritance tax in 2008. However, there is a gift tax (Schenkungssteuer) that also applies to inheritances from non-residents or certain assets. For Austrian residents, there is generally no inheritance tax on assets located in Austria. But if you inherit from a person who lived abroad, or if you inherit foreign assets, Austrian gift tax may apply. The tax-free allowance for gifts is €50,000 per person every five years for close relatives, and €15,000 for others.

Step 4: Determine the Tax Rate

In Germany, the tax rate depends on the tax class (Steuerklasse) based on your relationship to the deceased:

• Class I: Spouse, children, grandchildren – rates from 7% to 30%
• Class II: Parents, siblings, nieces, nephews – rates from 15% to 43%
• Class III: All others – rates from 30% to 50%

The rate increases with the value of the inheritance. For example, an inheritance of €75,000 for a child (Class I) would be taxed at 7% on the amount above €400,000? No – the allowance is €400,000, so €75,000 is below the allowance and no tax is due. The tax only applies to the amount exceeding the allowance.

In Austria, the gift tax rate is progressive: from 2.5% up to 25% for distant relatives or non-relatives, with the exact rate depending on the value and relationship. There is also a special real estate transfer tax (Grunderwerbsteuer) for property inheritances.

Step 5: File the Tax Return and Pay

You file the inheritance tax return with the local tax office (Finanzamt) in the district where the deceased lived. In Germany, you use form ErbSt-Erklärung. In Austria, you use the gift tax return (Schenkungsanzeige). Payment is due within one month of receiving the tax assessment. You can request installment payments if needed.

Key Differences Between Germany and Austria

The most important difference is that Austria has no general inheritance tax for residents inheriting domestic assets. Germany has a comprehensive inheritance tax system. However, Austria taxes gifts and inheritances from abroad, and has a real estate transfer tax on inherited property. Also, Austria's tax-free allowance for gifts (€50,000) is much lower than Germany's allowances for close relatives. If you inherit property in Austria, you may face a real estate transfer tax of 0.5% to 3.5% of the property value, depending on the relationship.

Another key difference: In Germany, business assets and family homes can be exempt from tax under certain conditions (e.g., if the heir continues the business for at least five years). Austria has similar reliefs but they are more limited.

Real Official Resources

For official information, consult the following sources:

• Germany: Federal Ministry of Finance – www.bundesfinanzministerium.de (search for “Erbschaftsteuer”)
• Germany: Tax office information – www.finanzamt.de
• Austria: Federal Ministry of Finance – www.bmf.gv.at (search for “Schenkungssteuer” or “Grunderwerbsteuer”)
• The legal basis in Germany is the Erbschaftsteuer- und Schenkungsteuergesetz (ErbStG). In Austria, the relevant law is the Schenkungsmeldegesetz and the Grunderwerbsteuergesetz.

Frequently Asked Questions

1. Do I have to pay inheritance tax if I inherit from my spouse in Germany?

If you inherit from your spouse in Germany, you have a tax-free allowance of €500,000. Anything above that is taxed at rates from 7% to 30%, depending on the amount. If the inheritance is below €500,000, no tax is due.

2. Is there inheritance tax in Austria for children?

No, Austria does not have a general inheritance tax for residents inheriting domestic assets. However, if you inherit from a non-resident or inherit foreign assets, you may be subject to gift tax. Also, inheriting real estate in Austria triggers a real estate transfer tax (Grunderwerbsteuer) of 0.5% for children, 2% for grandchildren, and 3.5% for others.

3. What happens if I inherit a house in Germany?

If you inherit a house in Germany, its market value is added to your inheritance. If the value exceeds your personal allowance, you pay tax on the excess. There are exemptions for the family home if the heir lives in it for at least 10 years (for children) or immediately (for spouse).

4. Do I need to report a small inheritance from a grandparent in Germany?

If the inheritance is below €200,000 (the allowance for grandchildren in Germany), you generally do not need to file a tax return unless the tax office specifically asks. But it is wise to report it if you are unsure, to avoid penalties.

5. Can I pay inheritance tax in installments?

Yes, in both Germany and Austria, you can request installment payments from the tax office if paying the full amount at once would cause hardship. Interest may apply.

6. What if I inherit from someone who lived in a different EU country?

Inheritance tax is generally levied by the country where the deceased was resident or where the assets are located. The EU has rules to avoid double taxation, but you may need to file returns in multiple countries. Consult a tax advisor if the inheritance involves cross-border assets.

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