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German Inheritance Tax

Dr. Stefan Königer

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Federal Finance Court (I R 50/16) – December 12, 2016

The acquisition mortis causa by a care facility (legal entity: corporation) is subject to Corporate Income Tax as an operational profit even if it is also subject to Inheritance Tax.

According to the Federal Finance Court, the corporation’s income includes all of its income. Consequently, an increase in assets based on an acquisition without consideration is also part of its income. The corporation’s profit is not to be reduced similar to a contribution since the deceased was no shareholder of the care facility.

The acquisition of the care facility is subject to Inheritance Tax according to § 3 para. 1 no. 1 Inheritance and Gift Tax Act (IGTA) since the deceased’s will clearly aimed at the care facility’s increase of assets. The decision explicitly mentions that the double taxation of Inheritance Tax and Corporate Income Tax is not unconstitutional.

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