Obligation to report

Inheritance tax is an issue that places a financial burden on heirs and is a major concern for people who want to settle their estate. Because: depending on the structure of the estate and the relationship between the heirs and the deceased person, the inheritance tax can significantly reduce an inheritance or force the heirs to sell family assets such as a family property.

Obligation to report = obligation to notify the tax office

The obligation to report the occurrence of an inheritance etc. is intended to ensure that the tax office can collect inheritance tax at all and, at best, correctly. In this respect, the obligation to report is a “normal” obligation to notify the tax office, as is the case with other tax-relevant matters (income tax, etc.).

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Even if the notification is generally possible informally, it should be as complete and comprehensive as possible (Section 30 Paragraph 4 of the Inheritance Tax and Gift Tax Act (ErbStG)) so that the matter can be concluded as quickly as possible. Should be stated:

• First name and last name, tax ID, profession and address of the testator and the purchaser
• Date and place of death of the testator
• Object and value of the acquisition
• Legal reason for the acquisition (e.g. will, legal succession, etc.)
• personal relationship between the purchaser and the testator (e.g. degree of relationship)
• If applicable, previous donations depending on the type, value and time of the individual donation, e.g. by way of anticipated inheritance.

Who has to file a report in the event of death?

In principle, heirs must report an acquisition upon death. But other people are also obliged to report a death (§ 30 ErbStG):

• Heirs, regardless of whether they are heirs based on legal succession, a will or an inheritance contract
• Legatee (legacy according to § 1939 BGB)
• Those entitled to a compulsory share, e.g. spouses or children (§§ 2307 ff. BGB)
• Contract concluded by the testator for the benefit of third parties (e.g. beneficiaries of a life insurance policy)

What is particularly important to know here is that even if a person does not have to pay inheritance tax later, for example because the allowances are high enough, there is an obligation to report.

3-month deadline for reporting to the tax office

The notification to the tax office about the acquisition due to death must be made within 3 months. The decisive factor for the start of the notification period is when the acquisition becomes known due to death. The period begins to run the moment a person learns that they are an heir, a legatee, etc. This means that the time of death of the testator is not automatically relevant.

The responsible tax office is then not your own tax office of residence. The tax office responsible for inheritance tax is responsible, i.e. basically the inheritance tax tax office in the area of ​​the testator.

In principle, the notification must be made in writing to the tax office.

Exceptions to the reporting requirement

However, there is also an exception to the obligation to report: If the acquisition on account of death is based on a will or inheritance contract that was opened by a German court or notary and from which the (family) relationship of the purchaser to the testator is clearly established, there is no obligation to report.

However, there is also an exception to the exception: if the inheritance or acquisition includes real estate, business assets, unlisted shares in a corporation (e.g. GmbH shares) or foreign assets (holiday properties, etc.), the exception to the reporting requirement does not apply.

No report: there is a risk of criminal liability for tax evasion!

Anyone who is subject to a reporting obligation but does not comply with the reporting obligation risks committing a criminal offense. If you do not comply with the obligation to report a purchase due to death, but know that the tax cannot then be assessed, the criminal offense of tax evasion by omission is usually in question.

This tax evasion through omission is ended by later filing an inheritance tax return. However, the inheritance tax return represents a voluntary declaration (Section 371 of the Tax Code (AO)). This means that the inheritance tax return must be complete when it is submitted.

Institutions are also obliged to report

It is important to know here: institutions also have to report deaths to the tax authorities.

• Registry offices must report all deaths to the tax office.
• Banks etc. must notify the tax office about the assets of a deceased customer within one month of becoming aware of the death.
• Notaries and probate courts are required to report the opening of a will or certificate of inheritance.
• Insurance companies must notify the tax office before, for example, life insurance assets are paid out.

In this respect, it is important not to risk anything and to comply with the obligation to report in order to avoid criminal consequences.

Be sure to comply with the reporting obligation – even retrospectively!

Heirs, co-heirs, legatees, but also those entitled to a compulsory share should definitely notify the tax office of an acquisition “due to death”. Anyone who has not reported an acquisition due to death in the past should definitely do so – ideally with legal support. A voluntary disclosure is only effective if it is complete and correct. If the voluntary disclosure is not made correctly, it does not exempt you from punishment.