If the testator has assigned benefits from a death benefit insurance policy to a funeral home during his lifetime the estate is increased by the heirs' claim for a benefit in kind towards the funeral home. The costs of the funeral are fully deductible as liability of the estate.
According to a decision of the Supreme Tax Court real estate located in Germany can be passed on tax-free if the testator grants the beneficiary the real estate by means of a foreign bequest (legacy). Provided, however, neither the testator nor the beneficiary is German citizen, and both live abroad.
According to the decision of the European Court of Justice (ECJ), the different inheritance tax allowances in the case of unlimited and limited tax liability is in line with EU law, specifically it is not in breach of the free movement of capital. However, the refusal of the German tax office to deduct liabilities linked to the inheritance in the case of limited tax liability is not compatible with EU law.
