Tax & Legal

In a most recent decision, the Supreme Tax Court held that great-grandchildren could also be potential beneficiaries of assets transferred to a family foundation for inheritance and gift tax purposes. They would be the „most distant beneficiary“ according to Section 15 para. 2 of the Inheritance and Gift Tax Act even if they have not yet been born at the time the foundation is established.

Are payments and contributions in kind from a foreign family foundation subject to German income tax? And what is the situation as regards the gift tax? Two tax court decisions shed some light. According to the Supreme Tax Court there is no gift tax liability for the beneficiary. The Regional Tax Court of Hamburg is of the opinion that a one-time payment from the foundation is subject to German income tax.