Private client—Germany—Q&A guide

The following Private Client practice note provides comprehensive and up to date legal information covering:

  • Private client—Germany—Q&A guide
  • 1. How does an individual become taxable in your jurisdiction?
  • 2. What, if any, taxes apply to an individual’s income?
  • 3. What, if any, taxes apply to an individual’s capital gains?
  • 4. What, if any, taxes apply if an individual makes lifetime gifts?
  • 5. What, if any, taxes apply to an individual’s transfers on death and to his or her estate following death?
  • 6. What, if any, taxes apply to an individual’s real property?
  • 7. What, if any, taxes apply on the import or export, for personal use and enjoyment, of assets other than cash by an individual to your jurisdiction?
  • 8. What, if any, other taxes may be particularly relevant to an individual?
  • 9. What, if any, taxes apply to trusts or other asset-holding vehicles in your jurisdiction, and how are such taxes imposed?
  • More...

Private client—Germany—Q&A guide

This Practice Note contains a jurisdiction-specific Q&A guide to private client in Germany published as part of the Lexology Getting the Deal Through series by Law Business Research (published: September 2020).

Authors: POELLATH—Andreas Richter; Katharina Hemmen

1. How does an individual become taxable in your jurisdiction?

Tax liability in Germany is determined by the concept of residence. An individual is a German resident for tax purposes if he or she has either a permanent home or a habitual abode in Germany. Tax residence is assessed using objective criteria. The concept of domicile is not recognised in Germany.

The worldwide income and assets of individuals whose tax residence is located in Germany (hereinafter referred to as residents) are subject to:

  1. income tax; and

  2. inheritance and gift tax (IGT).

2. What, if any, taxes apply to an individual’s income?

An individual's income is subject to income tax. Income tax covers income from seven sources, as follows:

  1. income from agriculture or forestry;

  2. income from trade or business;

  3. income from the self-employment;

  4. income from employment (salaries and wages);

  5. income from capital investments;

  6. income from letting property, especially real property or groups of assets; and

  7. other items of income, for example, income from leases of movable assets.

Income is generally taxed at a progressive tax rate, ranging from 14 to 45 per cent. In addition, a solidarity surcharge of 5.5 per cent of the

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