Inheritance Tax Deductions: These Flat Rates and Allowances You Should Use

TVS News AI, editorially supervised, presents Inheritance Tax Deductions: These Flat Rates and Allowances You Should Use.

When an inheritance case occurs, many people first think of grief and settling the estate – inheritance tax often takes a back seat. Yet the tax burden can be noticeably reduced with the right deductions. A ruling by the Bundesfinanzhof (BFH, Federal Fiscal Court) now expands the circle of those who can use an important flat rate. We show you which deductions heirs and legatees should know about.

The focus is on the estate case flat rate (Erbfallkostenpauschale). It is intended to cover typical costs that arise in connection with an inheritance case – for example, for a will, certificate of inheritance, or estate settlement. Until now, according to Handelsblatt, its application was limited to heirs. The BFH has now clarified this.

Not only heirs, but also legatees can reduce their inheritance tax with the estate case flat rate. The BFH has clarified this.

Who benefits from the BFH ruling?

The Federal Fiscal Court has ruled that not only heirs, but also legatees can use the estate case flat rate. Legatees are persons who have been allocated a specific asset advantage in the will without automatically becoming heirs. They too can reduce their inheritance tax if they claim the flat rate in their tax return.

Which allowance is often overlooked?

In addition to the estate case flat rate, according to Handelsblatt, there is another allowance that is frequently overlooked in connection with inheritance tax. Which allowance is meant in a specific case depends on your personal situation – for instance, on the degree of relationship, the type of acquisition, or certain items in the estate. When in doubt, it's worth taking a closer look at the tax return or seeking advice from a tax advisor so as not to miss any opportunity.

How to use the deductions correctly

If you are inheriting or are a legatee, it's worth checking the following points:

• Have you claimed the estate case flat rate in your inheritance tax return?
• Do you know all the relevant allowances you personally qualify for?
• Do you have evidence of the estate case costs (funeral, will, certificate of inheritance, etc.) at hand?
• Has the legacy claim been correctly recorded in the return?

A tax advisor or a specialist lawyer for inheritance law can help exhaust all deductions and not leave any opportunity unused. Especially with larger estates or complicated wills, the consulting effort often pays off quickly.

Conclusion

With the right knowledge of flat rates and allowances, inheritance tax can be noticeably reduced. The BFH ruling expressly expands the circle of those entitled to the estate case flat rate to include legatees. Check together with a tax advisor which deductions apply in your specific case – and which allowance has been overlooked in your situation so far.