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Federal court of finance explains that income tax for the death year of the departed is deductable
Federal court of finance explains that income tax for the death year of the departed is deductable
The ruling of the German Federal Finance Court (BFH) from the 04.07.2012 (AZ: II R 15/11) clearly stated that the income tax debt for the year of death of the departed is deductable
Cologne,
Nordrhein-Westfalen,
Germany
(prbd.net)
10/09/2012
http://www.grprainer.com/en/Law-of-Succession.html The ruling of the German Federal Finance Court (BFH) from the 04.07.2012 (AZ: II R 15/11) clearly stated that the income tax debt for the year of death of the departed is deductable. This means that in the future the debts of the departed, including church taxes and the solidarity surcharges, can be deducted before the taxation office is allowed to calculate the inheritance tax.
GRP Rainer Lawyers Tax Advisors, Cologne, Berlin, Bonn, Düsseldorf, Hamburg, Munich, Stuttgart, Frankfurt www.grprainer.com elaborate: It is clear that the heir, according to §1967 para. 1 of the German Civil Code, is responsible and liable for the debts that the departed left behind and that any unpaid income tax is considered part of this debt. Such debts can, according to § 10 para. 5 nr. 1 of the Inheritance tax law, be deducted from the net worth of the inheritance before the inheritance tax can be calculated. The financial authority of northern Germany (Niedersachsen) decided that because income tax only accrues at the end of the calender year, that this shouldn't be valid if the tax debts originated from the death year of the departed.
The German Federal Court of finance takes the position that the abatement of taxes does not just include taxes from the time of death legally accrued, but also the tax obligations that the departed, as a tax payer, has declared through the realization of legal tax deduction claims that accrue at the end of the year of death. Therefore, according to the BFH, it depends whether the departed had claimed valid tax deductions during the year in question. On the other hand, it does not matter that the taxes accrue at the end of the year, essentially after the death of the individual. This doesn't stand against the deadline principle (§§ 9, 11 of the inheritance tax law) of the inheritance tax.
In this case, this was important to the heir, because after the deduction of the income tax debts for the death year of the departed, the heir had to pay significantly less inheritance tax. It is advisable for heirs, who were denied the deduction of tax debts in the calculation of the inheritance tax, to have an inheritance tax law lawyer check if their case has similarities and if it is advisable to employ judicial steps.
When in doubt you should, as a heir, consult an experienced lawyer, who will clarify your legal tax advantages and will help you avoid double taxation, so that you can claim your inheritance to its fullest.
http://www.grprainer.com/en/Law-of-Succession.html
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Lawyers and tax advisors GRP Rainer http://www.grprainer.com/en/ international German law firm counsels on business law, commercial law, corporate and distribution law. The firm advises companies, corporations and mid-sized businesses from offices in Berlin Bonn Cologne Duesseldorf Frankfurt Hamburg Munich Stuttgart, Germany and London, UK. Contact: GRP Rainer LLP Hohenzollernring 21-23 50672 Cologne Germany T +49-221-2722750 law@grprainer.com http://www.grprainer.com/en/
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