{"id":8506,"date":"2023-06-29T12:55:00","date_gmt":"2023-06-29T10:55:00","guid":{"rendered":"https:\/\/honert.de\/?p=8506"},"modified":"2023-06-29T14:27:32","modified_gmt":"2023-06-29T12:27:32","slug":"bfh-bequest-concerning-a-domestic-property-is-not-subject-to-limited-inheritance-tax-liability","status":"publish","type":"post","link":"https:\/\/honert.de\/en\/bfh-bequest-concerning-a-domestic-property-is-not-subject-to-limited-inheritance-tax-liability\/","title":{"rendered":"BFH: BEQUEST CONCERNING A DOMESTIC PROPERTY IS NOT SUBJECT TO LIMITED INHERITANCE TAX LIABILITY"},"content":{"rendered":"\n<style type=\"text\/css\" data-created_by=\"avia_inline_auto\" id=\"style-css-av-gstdfq-e2959872b12266740f697ed65ba7911f\">\n.avia-section.av-gstdfq-e2959872b12266740f697ed65ba7911f{\nbackground-repeat:no-repeat;\nbackground-image:url(https:\/\/honert.de\/wp-content\/uploads\/3629.jpg);\nbackground-position:0% 0%;\nbackground-attachment:scroll;\n}\n<\/style>\n<div id='av_section_1'  class='avia-section av-gstdfq-e2959872b12266740f697ed65ba7911f main_color avia-section-default avia-no-shadow  avia-builder-el-0  el_before_av_section  avia-builder-el-first  hide_on_print avia-full-stretch avia-bg-style-scroll av-minimum-height av-minimum-height-40 av-height-40  container_wrap sidebar_right'  data-section-bg-repeat='stretch' data-av_minimum_height_pc='40' data-av_min_height_opt='40'><div class='container av-section-cont-open' ><main  role=\"main\" itemprop=\"mainContentOfPage\"  class='template-page content  av-content-small alpha units'><div class='post-entry post-entry-type-page post-entry-8506'><div class='entry-content-wrapper clearfix'>\n<\/div><\/div><\/main><!-- close content main element --><\/div><\/div><div id='av_section_2'  class='avia-section av-f71oly-a4ae71d44f01df099510228496469e67 main_color avia-section-default avia-no-shadow  avia-builder-el-1  el_after_av_section  avia-builder-el-last  avia-bg-style-scroll container_wrap sidebar_right'  ><div class='container av-section-cont-open' ><div class='template-page content  av-content-small alpha units'><div class='post-entry post-entry-type-page post-entry-8506'><div class='entry-content-wrapper clearfix'>\n\n<style type=\"text\/css\" data-created_by=\"avia_inline_auto\" id=\"style-css-av-dmti8m-ab8bb071cf97d8659995b53d92942e89\">\n.flex_column.av-dmti8m-ab8bb071cf97d8659995b53d92942e89{\nborder-radius:0px 0px 0px 0px;\npadding:0px 0px 0px 0px;\n}\n<\/style>\n<div  class='flex_column av-dmti8m-ab8bb071cf97d8659995b53d92942e89 av_two_third  avia-builder-el-2  el_before_av_two_third  avia-builder-el-first  first flex_column_div av-zero-column-padding  '     ><style type=\"text\/css\" data-created_by=\"avia_inline_auto\" id=\"style-css-av-ljh2dp2c-c77dae89f6e9f01d7f5bd77e800415e6\">\n#top .av-special-heading.av-ljh2dp2c-c77dae89f6e9f01d7f5bd77e800415e6{\npadding-bottom:10px;\n}\nbody .av-special-heading.av-ljh2dp2c-c77dae89f6e9f01d7f5bd77e800415e6 .av-special-heading-tag .heading-char{\nfont-size:25px;\n}\n.av-special-heading.av-ljh2dp2c-c77dae89f6e9f01d7f5bd77e800415e6 .av-subheading{\nfont-size:15px;\n}\n<\/style>\n<div  class='av-special-heading av-ljh2dp2c-c77dae89f6e9f01d7f5bd77e800415e6 av-special-heading-h1 blockquote modern-quote  avia-builder-el-3  avia-builder-el-no-sibling '><div class='av-subheading av-subheading_above'>29. June 2023\n<\/div><h1 class='av-special-heading-tag '  itemprop=\"headline\"  >BFH: BEQUEST CONCERNING A DOMESTIC PROPERTY IS NOT SUBJECT TO LIMITED INHERITANCE TAX LIABILITY<\/h1><div class=\"special-heading-border\"><div class=\"special-heading-inner-border\"><\/div><\/div><\/div><\/div>\n<style type=\"text\/css\" data-created_by=\"avia_inline_auto\" id=\"style-css-av-c89sza-1a0dfe1f4f58c21cf4bcdcda77914a2b\">\n.flex_column.av-c89sza-1a0dfe1f4f58c21cf4bcdcda77914a2b{\nborder-radius:0px 0px 0px 0px;\npadding:0px 0px 0px 0px;\n}\n<\/style>\n<div  class='flex_column av-c89sza-1a0dfe1f4f58c21cf4bcdcda77914a2b av_two_third  avia-builder-el-4  el_after_av_two_third  el_before_av_two_third  first flex_column_div av-zero-column-padding  column-top-margin'     ><section  class='av_textblock_section av-ljh2e4gw-36d3efa62075dbedb909b4ce89ce6fff '   itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock'  itemprop=\"text\" ><p><strong>In its ruling of 23 November 2022 &#8211; II R 37\/19, the Federal Fiscal Court (<em>Bundesfinanzhof <\/em>&#8211; BFH) decided in favour of the foreign claimant that &#8211; unlike the direct acquisition of a domestic property &#8211; the bequest concerning the acquisition of a domestic property is not subject to limited inheritance tax liability.<\/strong><!--more--><\/p>\n<\/div><\/section><\/div>\n<style type=\"text\/css\" data-created_by=\"avia_inline_auto\" id=\"style-css-av-beaeye-03da6a1f14957415aeeda624eefed5d4\">\n.flex_column.av-beaeye-03da6a1f14957415aeeda624eefed5d4{\nborder-radius:0px 0px 0px 0px;\npadding:0px 0px 0px 0px;\n}\n<\/style>\n<div  class='flex_column av-beaeye-03da6a1f14957415aeeda624eefed5d4 av_two_third  avia-builder-el-6  el_after_av_two_third  el_before_av_one_third  first flex_column_div av-zero-column-padding  column-top-margin'     ><section  class='av_textblock_section av-ljh2gdbz-198c0af9a50e9c1d8c7a9855b2a81fd8 '   itemscope=\"itemscope\" itemtype=\"https:\/\/schema.org\/BlogPosting\" itemprop=\"blogPost\" ><div class='avia_textblock'  itemprop=\"text\" ><h2>I. Facts of the case<\/h2>\n<p>The BFH ruled on an acquisition due to death (<em>Erwerb von Todes wegen<\/em>) from 2013. The claimant is the niece of the decedent, who died in 2013. Neither the claimant nor the decedent had a domicile or habitual residence in Germany, so they were not subject to unlimited inheritance tax liability under \u00a7 2 para. 1 no. 1. In this case, foreign testators and heirs may be subject to limited tax liability pursuant to \u00a7 2 para. 1 no. 3 German Inheritance Tax Act (<em>Erbschaftsteuer- und Schenkungsteuergesetz<\/em> &#8211; ErbStG), provided that domestic assets within the meaning of \u00a7 121 German Valuation Act (<em>Bewertungsgesetz <\/em>&#8211; BewG) are inherited. Pursuant to \u00a7 121 no. 1 BewG, domestic assets include, in particular, domestic real property.<br \/>\nThe decedent bequeathed to the claimant a co-ownership share in a property located in Germany. The tax office then assessed inheritance tax against the claimant in a notice dated 2 March 2015. The claimant objected to the assessment on the grounds that she was not subject to limited tax liability in Germany and, in particular, that the bequest did not constitute domestic real estate.<br \/>\nThe claimant was initially unsuccessful on this ground. The Munich Tax Court dismissed the action. The acquisition of domestic real estate would also be deemed to have occurred if the real estate was (only) bequeathed, as the bequest provides the claimant with a co-ownership share in the real estate.<\/p>\n<h2>II. Decision<\/h2>\n<p>The BFH did not agree with this reasoning. Contrary to the assumption of the Fiscal Court, the &#8220;claim to transfer of the co-ownership share&#8221; in the domestic real estate acquired by bequest was not subject to the limited inheritance tax liability pursuant to \u00a7 2 para. 1 no. 3 sentence 1 ErbStG in conjunction with \u00a7 121 BewG.<br \/>\nAs always in inheritance tax law, the BFH uses the standards of civil law for its reasoning.<br \/>\nUnlike in the case of acquisition on death by inheritance, the legatee does not enter into the legal positions of the decedent upon inheritance. Due to the universal succession stipulated in \u00a7 1922 German Civil Code (<em>B\u00fcrgerliches Gesetzbuch<\/em> &#8211; BGB), the assets pass to the heir as a whole. Consequently, the heir assumes all the legal positions of the testator without any further intermediate steps. The legatee, on the other hand, merely receives a claim under the law of obligations against the heir for the provision of the legacy (\u00a7 1939 BGB).<br \/>\nAccording to \u00a7 3 I no. 1 ErbStG, acquisition by inheritance (\u00a7 1922 BGB) or by bequest (\u00a7\u00a7 2147 ff. BGB) is deemed to be acquisition due to death. In cases where there is no unlimited tax liability according to \u00a7 2 I no. 1 or no. 2 ErbStG, the tax liability arises according to \u00a7 2 I no. 3 p. 1 ErbStG for the acquisition of assets consisting of domestic assets within the meaning of \u00a7 121 BewG (limited tax liability). Domestic assets are exhaustively regulated in \u00a7 121 BewG. Pursuant to \u00a7 121 no. 2 BewG, this also includes domestic real estate.<br \/>\nHowever, with the bequest, the claimant only received a claim against the heir for the transfer of a co-ownership share at the time when the inheritance tax arose (pursuant to \u00a7 9 ErbStG at the time of the inheritance). In the opinion of the BFH, the mere claim under the law of obligations to the transfer of real property, which the bequest represents, is not covered by \u00a7 121 BewG, and as such does not represent domestic real property. An extended interpretation of \u00a7 121 BewG is out of the question, since the chosen legal formulations are conclusive. Overall, the real estate thus passes to a foreign heir completely free of inheritance tax, because the German heir can deduct the burden of the bequest from his enrichment pursuant to \u00a7 10 para. 2 no. 2 ErbStG.<\/p>\n<h2>III. Conclusion and further references<\/h2>\n<p>The BFH also applies the strict civil law demarcation of inheritance tax facts equally to the detriment of the taxpayer. Thus, in its ruling of 29 November 2017 &#8211; II R 14\/16, the BFH already rejected the tax exemption for family homes if only the right to obtain ownership is acquired: The acquisition due to death by the surviving spouse of a claim to procure ownership of a family home secured by a priority notice of conveyance is not exempt from inheritance tax under \u00a7 13 para. 1 no. 4b sentence 1 ErbStG.<br \/>\nFor the case discussed in this article, however, there is &#8211; at least until the legislator reacts to this case law &#8211; scope for structuring the acquisition due to death of domestic real property and foreign testators and beneficiaries. The acquisition of domestic real property is currently not subject to tax if<\/p>\n<ul>\n<li>both the testator and the beneficiary are not already subject to unlimited tax liability, and<\/li>\n<li>the beneficiary receives the domestic real property as a legatee, not as an heir.<\/li>\n<\/ul>\n<p>However, it should be ensured that the foreign inheritance law statute has the same legal consequence for legacies as the legacy under German inheritance law. The decisive factor is that the beneficiary does not take over the legal position of the decedent at the time of the inheritance (<em>Universalsukzession<\/em>), but merely receives a claim under the law of obligations for the provision of a legacy against the heir.<\/p>\n<\/div><\/section><\/div>\n<style type=\"text\/css\" data-created_by=\"avia_inline_auto\" id=\"style-css-av-927sme-b2f09d3ba85df6b5bcc4487735aecb32\">\n.flex_column.av-927sme-b2f09d3ba85df6b5bcc4487735aecb32{\nborder-radius:0px 0px 0px 0px;\npadding:7px 0px 0px 0px;\n}\n<\/style>\n<div  class='flex_column av-927sme-b2f09d3ba85df6b5bcc4487735aecb32 av_one_third  avia-builder-el-8  el_after_av_two_third  avia-builder-el-last  sy-only-desktop hide_on_print flex_column_div  column-top-margin'     ><p><div  class='avia-builder-widget-area clearfix  avia-builder-el-9  el_before_av_textblock  avia-builder-el-first '><section id=\"categories-3\" class=\"widget clearfix widget_categories\"><h3 class=\"widgettitle\">Newsletter 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onclick=\"window.print();return false\">Print<\/a><br \/>\n\n\n\n\t<div class=\"dkpdf-button-container\" style=\" text-align:left \">\n\n\t\t<a class=\"dkpdf-button\" href=\"\/en\/wp-json\/wp\/v2\/posts\/8506?pdf=8506\" target=\"_blank\"><span class=\"dkpdf-button-icon\"><i class=\"fa fa-file-pdf-o\"><\/i><\/span> Download (PDF)<\/a>\n\n\t<\/div>\n\n\n\n\n\n<\/p>\n<\/div><\/section><\/p><\/div><\/div><\/div><\/div><!-- close content main div --><\/div><\/div><div id='after_section_2'  class='main_color av_default_container_wrap container_wrap sidebar_right'  ><div class='container av-section-cont-open' ><div class='template-page content  av-content-small alpha units'><div class='post-entry post-entry-type-page post-entry-8506'><div class='entry-content-wrapper clearfix'>\n","protected":false},"excerpt":{"rendered":"<p>In its ruling of 23 November 2022 &#8211; II R 37\/19, the Federal Fiscal Court (Bundesfinanzhof &#8211; BFH) decided in favour of the foreign claimant that &#8211; unlike the direct acquisition of a domestic property &#8211; the bequest concerning the acquisition of a domestic property is not subject to limited inheritance tax liability.<\/p>\n","protected":false},"author":26,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"mc4wp_mailchimp_campaign":[],"footnotes":""},"categories":[208],"tags":[],"class_list":["post-8506","post","type-post","status-publish","format-standard","hentry","category-2023-q2-en"],"acf":[],"_links":{"self":[{"href":"https:\/\/honert.de\/en\/wp-json\/wp\/v2\/posts\/8506","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/honert.de\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/honert.de\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/honert.de\/en\/wp-json\/wp\/v2\/users\/26"}],"replies":[{"embeddable":true,"href":"https:\/\/honert.de\/en\/wp-json\/wp\/v2\/comments?post=8506"}],"version-history":[{"count":7,"href":"https:\/\/honert.de\/en\/wp-json\/wp\/v2\/posts\/8506\/revisions"}],"predecessor-version":[{"id":8515,"href":"https:\/\/honert.de\/en\/wp-json\/wp\/v2\/posts\/8506\/revisions\/8515"}],"wp:attachment":[{"href":"https:\/\/honert.de\/en\/wp-json\/wp\/v2\/media?parent=8506"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/honert.de\/en\/wp-json\/wp\/v2\/categories?post=8506"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/honert.de\/en\/wp-json\/wp\/v2\/tags?post=8506"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}