How do you inherit a house abroad?

Without a will, EU law applies

One of the major questions is: which inheritance law applies when a testator dies abroad? German law, foreign law, or even the laws of both countries? The answer can be found in the European Succession Regulation (EuErbVO).

According to this regulation, the inheritance law of the country in which the deceased had their habitual residence at the time of death applies. If the person dies, for example, in Mallorca, where they spent a significant part of each year, and no will exists, Spanish inheritance law applies to the entire estate.

How owners can influence the process

Anyone who does not want to fall automatically under foreign inheritance law should therefore draw up a will. In it, they can explicitly stipulate that German inheritance law should apply to their assets.

In that case, it would no longer matter if the person had habitually lived in Mallorca. The assets would fall under German inheritance law, as specified in the will.

The tax system also presents pitfalls

Unlike inheritance law, tax law cannot be influenced by a will when assets are inherited across borders. The entire estate—meaning both domestic and foreign assets—is subject to German inheritance tax, provided that the deceased was considered a “resident” under German inheritance and gift tax law at the time of death.

Treaties are intended to prevent double taxation

Because the inheritance tax systems of many countries are not coordinated, there is a real risk in cross-border inheritance cases that a foreign country may impose inheritance tax on the same estate again. Only double taxation agreements can prevent this. However, such agreements do not yet exist with all countries.

This information is intended to provide you with an initial overview of inheriting property abroad, but it cannot replace legal or tax advice. If you plan to draft a will or prepare a gift, you should seek support from a specialized law firm.