German Inheritance Tax Cases
Last updated: 17 Oct 2025
BFH Key Cases — German Inheritance Tax
A curated overview of leading Bundesfinanzhof (BFH) decisions on German inheritance and gift tax with a US nexus, or involving foreign trusts and foreign (family) foundations. Each card summarizes the core holding and why it matters. References link to the official BFH pages.
Foreign trusts & foreign foundations
BFH, 25 Jun 2021 — II R 31/19 Trusts & Stiftungen
Holding: § 7(1) no. 9 sentence 2 ErbStG applies to foreign asset masses (incl. common-law trusts). A “Zwischenberechtigter” is one who holds rights to the assets/earnings independent of a specific distribution resolution.[1]
Why it matters: Aligns anglo-american trusts with foreign foundations for ErbSt purposes and refines the interim-beneficiary test, central for US trust payouts to German residents.[1]
BFH, 3 Jul 2019 — II R 6/16 Foreign foundation payout
Holding: Distributions from a foreign foundation are taxable as § 7(1) no. 1 ErbStG gifts only if they clearly violate the foundation’s purpose; otherwise, assess under § 7(1) no. 9 (interim beneficiary).[2]
Why it matters: Sets the modern test for routine payouts and the definition of “Zwischenberechtigter,” widely applied to US-trust fact patterns.[2]
BFH, 5 Dec 2018 — II R 9/15 Attribution of foundation assets
Holding: Assets effectively transferred to a legally independent, intransparent foreign foundation are no longer attributable to the settlor; death does not bring them back into the estate. Extensive retained powers may change attribution.[3]
Why it matters: Determines whether foundation assets fall into the German estate vs. only distributions being taxable.[3]
US nexus — treaty & credit mechanics
BFH, 15 Jun 2016 — II R 51/14 US tax credit
Holding: US Federal Income Tax Withheld on an insurance payout is not creditable against German ErbSt under § 21 ErbStG or the Germany–US estate/gift tax treaty; it may be deductible as a liability if it relates to previously untaxed income in the payout.[4]
Why it matters: Distinguishes creditable US estate/inheritance taxes from non-creditable US income taxes — a frequent cross-border pitfall.[4]
BFH, 27 Sep 2012 — II R 45/10 US trust distributions
Holding: The Germany–US estate/gift tax treaty does not prevent Germany from taxing distributions from a US trust under its inheritance/gift tax rules.[5]
Why it matters: Confirms that treaty coverage usually does not shield US trust payouts to German residents from ErbSt/SchenkSt.[5]
Limited liability & German real estate via legacy
BFH, 23 Nov 2022 — II R 37/19 Legacy of German real estate
Holding: A legacy (Vermächtnis) granting a claim to transfer a German property is not subject to limited German inheritance tax liability; the claim is not “German-situs property” under § 121 BewG.[6]
Why it matters: Key for foreign (incl. US-resident) legatees: limited liability hinges on direct acquisition of German-situs assets, not merely a claim to conveyance.[6]
Quick reference — what each case is used for
| Case | Topic | Use it to argue… |
|---|---|---|
| II R 31/19 (2021)[1] | Trusts/Foundations — § 7(1) no. 9; interim beneficiary | Trust payouts may be taxable; court must establish foreign law; “Zwischenberechtigter” needs substantive rights. |
| II R 6/16 (2019)[2] | Foreign foundation distributions | No § 7(1) no. 1 taxation unless clear purpose violation; otherwise apply § 7(1) no. 9. |
| II R 9/15 (2018)[3] | Attribution of foreign foundation assets | Properly endowed, intransparent foundation assets stay outside the settlor’s estate; watch retained powers. |
| II R 51/14 (2016)[4] | US taxes & German credit (§ 21; treaty) | US income tax withheld isn’t creditable; may be deductible as a liability depending on facts. |
| II R 45/10 (2012)[5] | Treaty doesn’t bar trust payout taxation | Germany can tax US trust distributions to German residents notwithstanding the treaty. |
| II R 37/19 (2022)[6] | Limited liability & legacies | Legacy of German real estate is not “German-situs” for limited ErbSt liability. |
References — official BFH pages
- BFH, Urteil v. 25.06.2021 — II R 31/19 (incl. PDF).
- BFH, Urteil v. 03.07.2019 — II R 6/16.
- BFH, Urteil v. 05.12.2018 — II R 9/15.
- BFH, Urteil v. 15.06.2016 — II R 51/14.
- BFH, Urteil v. 27.09.2012 — II R 45/10.
- BFH, Urteil v. 23.11.2022 — II R 37/19.
Note: This page lists BFH cases only. For lower-court developments, consult FG decisions and administrative guidance.