GermanY-USA Cross Border Inheritance/Estate Tax Guide
Last updated: 30 Sep 2025
Germany × USA: Inheritance & Gift Tax Treaty
Germany and the United States have a bilateral treaty on taxes on estates, inheritances, and gifts (Convention signed 1980; amended by Protocols incl. 1998/2006). It coordinates situs, provides a pro-rata US unified credit for German domiciliaries, and offers credit relief. The treaty does not bind US state estate/inheritance taxes.
For Germany’s domestic rules and calculators, see our German Inheritance Tax Guide, the page for US citizens inheriting from/to Germany, and the German Inheritance Tax Calculator.
At a glance
What the treaty does
- Allocates taxing rights via situs/domicile rules for estates, inheritances, and gifts.
- Grants a pro-rata US unified credit to estates of German domiciliaries.
- Enables foreign-tax credits to reduce double taxation (caps, documentation).
Key caveats
- US states are not party to the treaty.
- The treaty provides a limited marital deduction (not the full US unlimited marital deduction) under specific conditions from the 1998 Protocol.
- Relief hinges on actual tax paid on overlapping assets and correct filings.
Scope & relief mechanics
| Topic | How it works | Why it matters |
|---|---|---|
| Taxes covered | US federal estate & gift; German inheritance & gift (ErbSt/SchenkSt). State taxes are outside the treaty. | Frames where bilateral relief can be claimed. |
| Domicile & situs | Allocation rules determine which country taxes certain assets first (real property, stock, claims, etc.). | Drives primary liability and availability of credits. |
| Credit relief | Foreign-tax credits applied to avoid double taxation of the same item, subject to compute caps and documentation. | Prevents (some) double taxation; paperwork critical. |
| Administration | Claim relief in US estate/gift filings and German ErbSt/SchenkSt returns; keep valuations and situs evidence. | Timely filings and proofs unlock treaty benefits. |
Treaty situs & allocation (high level)
| Asset/driver | Primary taxing right (typical) | Notes |
|---|---|---|
| Immovable property (real estate) | Situs country | US or DE taxes real property located within its borders first. |
| Tangible movables | Situs where located at transfer/death | Evidence location at the key date. |
| Claims/Bank deposits/Insurance | Often by debtor’s residence | US bank claims typically US-situs; documentation needed. |
| Shares/Interests treated as stock | Place of incorporation/organization | US corporations → US-situs; German GmbH → German-situs. |
| Business intangibles | Where business is carried on | Fact-specific; maintain usage/exploitation proofs. |
Credits, pro-rata unified credit & marital deduction
- Pro-rata US unified credit: For a decedent domiciled in Germany, US federal estate tax grants a unified credit scaled by US-situs estate / worldwide estate, reducing or eliminating US federal estate tax on US-situs assets.
- Foreign-tax credits: Where both countries tax the same asset, the second-in-line jurisdiction typically allows a credit (subject to treaty caps and documentation). For Germany’s domestic relief mechanics in non-treaty constellations, see our explanation of the §21 ErbStG foreign tax credit (overview).
- Limited treaty marital deduction (Protocol 1998): A specific US marital deduction is available under conditions (domicile tests, election, and waiver provisions), but it is not the standard unlimited US marital deduction. QDOT planning may be considered separately under US domestic law if applicable.
Need a primer on German ErbSt classes, allowances and tariffs? Visit our German Inheritance Tax Guide or run scenarios with the German Inheritance Tax Calculator.
State estate/inheritance taxes (not covered)
The treaty does not bind US states. Real/tangible property in a state with an estate/inheritance tax can trigger state-level liabilities even if federal exposure is reduced by the treaty. Many states don’t tax non-residents’ intangibles, but rules vary—check state law for situs and thresholds. For broader US concepts and cross-border topics, see our US Estate Tax Hub.
Planning checklist (no legal/tax advice)
- Inventory & classify assets by situs and type (real, tangibles, stock, claims, intangibles).
- Model treaty relief: pro-rata unified credit; expected foreign-tax credits; any marital-deduction election.
- State layer: test exposure for real/tangible property and domicile ties (see US Hub).
- Documentation: valuations at death, situs evidence, copies of foreign returns and assessments for credits.
- Sequencing: coordinate lifetime gifts vs. estate; beware aggregation/look-back under German law (see DE Guide + Calculator).
FAQ
Is there a Germany–USA inheritance/gift tax treaty?
Yes. The convention (1980) as amended (incl. 1998/2006) coordinates estates, inheritances, and gifts and provides credit and pro-rata unified credit relief.
Does the treaty cover US state estate/inheritance taxes?
No. It applies at the federal level only. State taxes must be analyzed separately (see our US Estate Tax Hub).
What is the pro-rata unified credit?
For a German-domiciled decedent with US-situs assets, the US basic exclusion is applied proportionally to the ratio US-situs / worldwide, potentially reducing federal US estate tax to zero.
Is there an unlimited US marital deduction under the treaty?
No. The 1998 Protocol provides a limited marital deduction subject to conditions and elections. Domestic QDOT planning may be relevant. For German side rules and allowances, see our German Guide.
Talk to us & downloads
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