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Any acquisition subject to inheritance tax must be reported by the acquirer to the competent tax office within three months of becoming aware of it. The notification is informal. The minimum requirements for the notification of acquisition are regulated by Section 30 (4) of the Inheritance Tax Act.
According to Section 31 of the Inheritance Tax Act, a person who acquires assets by reason of death is only obliged to submit an inheritance tax return if requested to do so by the competent tax office. This is to be expected if, due to the amount of the inherited assets, inheritance tax is likely to be assessed because, for example, possible allowances have been exceeded by the acquisition.
The purpose of the acquisition notification is to enable the tax office to find out about inheritance tax cases and, if a tax liability is to be expected, to request the persons concerned to submit an inheritance tax return.
In the case of inheritances abroad in particular, the tax office is unlikely to obtain information about the acquisition from other sources, which means that there could be a considerable enforcement deficit in such cases.
The notification period is three months. The period begins at the point in time at which the acquirer becomes aware of the acquisition triggered by the respective reason for acquisition.
According to Section 30 (4) of the Inheritance Tax Act, the acquisition notification must contain at least the following information:
By failing to report in accordance with Section 30 of the Inheritance Tax Act, the acquirer may, under certain conditions, be guilty of reckless tax evasion in accordance with Section 377 of the Tax Code or tax evasion in accordance with Section 370 of the Tax Code. This is always a risk if the tax is not assessed or is assessed at an incorrect amount due to the failure to report. However, a late payment surcharge pursuant to Section 152 of the German Fiscal Code cannot be imposed, as this provision only applies to tax returns.
In cases where no inheritance tax is payable, failure to submit a declaration of acquisition is not punishable. However, if inheritance tax is reduced as a result of a failure to report, late reporting or incomplete reporting of an acquisition, this may constitute a tax offence. In such cases, the acquirer may obtain immunity from prosecution by means of a voluntary disclosure under the conditions set out in Sections 371 and 378 of the German Fiscal Code.
If the acquirer fails to comply with their notification obligation under Section 30 of the Inheritance Tax Act, the limitation period for the assessment of inheritance tax may be extended because the start of the limitation period is suspended for up to three years under Section 170(2) No. 1 of the German Fiscal Code.
The notification of acquisition pursuant to Section 30 of the Inheritance Tax Act also applies in cases of gifts. The period is also three months. Pursuant to Section 30(2) of the Inheritance Tax Act, both the recipient of the gift and the donor are required to notify the authorities. In the case of gifts, the assessment period for the tax pursuant to Section 170 (5) No. 2 of the German Fiscal Code does not begin before the end of the calendar year in which the donor died or the tax authority became aware of the gift. Failure to report acquisitions therefore not only carries the risk of criminal tax consequences. In many cases, the statute of limitations is also largely suspended.