FASAB 56

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Under FASAB 56 rules (Statement of Federal Financial Accounting Standards Advisory Board), government financial reports can re-categorize, modify, omit, or "aggregate" data in ways that make certain spending less transparent to the public — especially if the information relates to national security.

https://files.fasab.gov/pdffiles/handbook_sffas_56.pdf

 

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Strategies to Minimize Inheritance and Gift Tax in Germany - WW+KN | Steuerberatung in Regensburg und München

Inheritance and gift taxes in Germany can be significant, especially for large estates. However, there are several strategies that individuals can employ to

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There are loopholes that are not part of common knowledge in Germany. There are various schemes to avoid taxes legally. There are not that many good English sources about this topic.

Inheritance and gift taxes in Germany can be significant, especially for large estates. However, there are several strategies that individuals can employ to minimize these taxes legally. This article outlines key strategies to consider for effective tax planning.


1. Utilizing Tax-Free Allowances


Maximizing Exemptions:

• Every Ten Years: Tax-free allowances can be used every ten years. For instance, parents can gift each child up to €400,000 every ten years without incurring gift tax. For spouses, this amount is €500,000.
• Strategic Gifting: Spread out large gifts over multiple years to take full advantage of the ten-year exemption period.

2. Planning Ahead with Lifetime Gifts


Early Transfers:

• Reducing the Taxable Estate: Make lifetime gifts to reduce the size of the taxable estate. By transferring assets early, you can take advantage of tax-free allowances multiple times.
• Utilizing Annual Allowances: In addition to the larger allowances every ten years, you can make smaller annual gifts that may not be subject to tax.

3. Setting Up Trusts


Trusts for Tax Efficiency:

• Family Trusts: Setting up family trusts can help manage the distribution of assets while potentially reducing tax liabilities. Trusts can be complex, so professional advice is essential.
• Charitable Trusts: Donations to charitable trusts can provide tax benefits and reduce the taxable estate.

4. Leveraging Business Asset Exemptions


Business Assets:

• Business Continuity: Up to 85% of business assets can be exempt from inheritance tax if certain conditions are met, such as continuing the business for a specified period.
• Special Exemptions: In some cases, a 100% exemption is possible for business assets, provided the business is continued and payroll levels are maintained.

5. Utilizing Property Valuation Rules


Property Valuation:

• Updated Methods: Ensure that real estate is valued using the most favorable method allowed by law. The Jahressteuergesetz 2022 introduced changes to property valuation that can be beneficial.
• Market Value Adjustments: Use local market data to adjust property values accurately and potentially lower the taxable value.

6. Engaging Professional Advice


Tax Advisors:

• Expert Guidance: Hiring a tax advisor with experience in inheritance and gift tax law can help navigate complex regulations and ensure all available exemptions and strategies are utilized.
• Compliance: Professional advisors can help ensure that all tax returns are filed correctly and on time, avoiding penalties and interest.

7. Family Agreements


Family Planning:

• Joint Ownership: Consider joint ownership of assets to spread the tax burden. For example, joint ownership of property can help in splitting the value for tax purposes.
• Succession Planning: Develop a clear succession plan that takes advantage of tax-free allowances and exemptions.

Conclusion


Effective inheritance and gift tax planning in Germany involves a combination of strategic gifting, utilizing exemptions, setting up trusts, and seeking professional advice. By employing these strategies, individuals can significantly reduce their tax liabilities and ensure that more of their wealth is passed on to their heirs.