What does the 1.5 percent figure mean?

How to inherit, what to do? It’s not for nothing that inheritance tax is also known as the“stupid tax“. In other words, anyone who doesn’t deal with it is stupid. Why? You can see that very quickly here: €30 million becomes a tax burden of just €1.5 million.

The 1.5 percent is not a statutory tax rate, but an effective average that can result from very large company inheritances. It arises when exemption rules for business assets, deferrals and, in some cases, waivers come together. As a result, only a small part of the estate value is taxed at all.

Here is a concrete example calculation that shows how the effective tax rate falls from 30% to just 1.5% for a 100 million euro company inheritance. Extra short, so it’s easy to understand.

1st starting point – without benefits

Statutory rate: 30 %

Calculation:
€ 100 million × 30 % = € 30 million tax
→ Effective tax burden: 30 %

2. relief discount (85 % standard relief)

The Inheritance Tax and Gift Tax Act (ErbStG) allows 85% tax exemption for business assets if the business is continued for at least 5 years.

Calculation:
100 million × 15% = € 15 million taxable
15 million × 30 % = € 4.5 million tax
→ Effective tax burden: 4.5 %

3. option exemption (100% exemption possible)

Anyone who undertakes to continue the company for 7 years and not to reduce the payroll significantly can even apply for 100% tax exemption.

Calculation:
€ 100 million × 0 % = € 0 tax
→ Effective tax burden: 0 %

4. combination of structuring & deferral

In practice, there is often a mixture:

• Parts of the assets are outsourced to holding structures.
• Tax payments are deferred without interest for 7 years.
• The tax can be partially waived in the case of a “needs test“.

That means:

Real effect:
Instead of € 4.5 million, the tax office often only receives € 1.5 million.
→ Effective tax burden: 1.5 %

5. overview of the calculation

Here is an overview:

In short: you only pay €1.5 million in taxes this way

Legally, the state could demand €30 million. In reality, the company heir often only pays € 1.5 million due to tax exemption regulations, holdings and deferrals.

End.

In case you’re wondering… no family foundation involved?

The 1.5 % from the SPIEGEL article comes about without a family foundation – solely due to the statutory exemption of business assets. A family foundation can have a supplementary effect, but is not the reason for this figure.

A family foundation, on the other hand, is an independent structuring instrument. It can also be used for tax optimization, but in a different way:

• With a family foundation, assets can be transferred before inheritance.
• This allows inheritance tax obligations to be avoided or deferred.
• However, different rules apply here: Inheritance tax is payable, but with a time lag (e.g. every 30 years).

In combination with business assets, a family foundation can be used to save additional tax, but this is a separate strategy.

Learn more about the:

• Family foundation

How does inheritance tax work in Germany?

Inheritance tax (together with gift tax) regulates what goes to the tax authorities when assets are transferred. The decisive factors are tax brackets, allowances and types of assets that benefit. Important: Gifts count – and you can utilize many allowances every ten years. This allows you to plan over time and distribute assets cleverly.

• Legal basis: ErbStG + valuation law
• Tax classes I-III depending on relationship
• Allowances: e.g. € 500,000 (spouse), € 400,000 (children)
• Ten-year rule for gifts
• Benefits: Business assets, family home
• Progressive tax rates depending on class & level

Helpful links & sources:

• Federal Ministry of Finance – Inheritance and gift tax
• §Section 16 ErbStG Allowances
• Wikipedia: Inheritance tax in Germany

Tax brackets & allowances: The basic buffer

The tax class depends on the proximity to the testator. In class I (spouses, children, grandchildren), the tax-free amounts are significantly higher than in class II (e.g. siblings) and III (unrelated third parties). In addition, there are special pension allowances (e.g. for spouses). Result: A large proportion of normal inheritances already remain tax-free due to allowances. Only the surplus is taxable.

Family home & deferrals: Protection for your home

The owner-occupied family home can remain tax-free if acquired by a spouse or children under certain conditions (e.g. continued use, holding periods). In the case of real estate or companies, a deferral is also possible if the tax payment would otherwise jeopardize the assets. This provides time for financing or restructuring without having to sell immediately.

• §13 ErbStG Family home
• Family home information sheet (NRW)

Business assets: tax exemption of 85% or 100%

In the case of an inherited business, the standard exemption (85%) or the option exemption (100%) applies if the requirements are met (payroll, holding periods, administrative asset ratios). This is politically desirable: company successions should secure jobs and not fail due to the tax burden. For large estates, this is THE lever for tax reduction.

• IHK Munich: Business assets and tax exemptions

Erbe & Nachlass

Why do you save when you inherit a lot? … and how?

Large inheritances systematically take advantage of preferential treatment. Assets are structured in such a way that as much as possible falls into favored “drawers”: business assets, residential property (family home), usufruct concepts and deferred gifts. This lowers the assessment basis – and therefore the effective tax rate. Studies and government responses show: On average, major heirs often only pay low single-digit percentages.

• Effective load often only a few percent
• Reason: Exemption + allowances + design
• Gift instead of inheritance (time plays for you)
• Usufruct: transfer values, retain use
• Foundation solutions & family divisions
• Protect substance: Deferral/partial payments

Helpful links & sources:

• Süddeutsche Zeitung – Inequality through inheritance tax
• ZEIT – Large heirs pay less
• Wikipedia: Tax statistics on inheritances

Real estate GmbH: strategically shifting the tax burden

Many families rely on a so-called Immobilien-GmbH, especially for large real estate assets. Real estate is transferred to the business assets. The advantage: company shares often benefit from exemption rules of up to 85% or even 100%. In addition, shares can be transferred in stages over generations – often combined with gifts and usufruct rights.

Family foundation: Permanent tax optimization

A family foundation pools assets and ensures continuity over generations. As the foundation does not die, there is no traditional inheritance tax. Instead, lower current taxes apply. This model is often used for assets in the double-digit million range in order to secure long-term substance and avoid high one-off charges.

Designing with time: utilizing the ten-year cycle

If you start early, you can distribute assets via gifts at ten-year intervals. This allows you to increase your tax-free allowance several times. Example: A parent can transfer €400,000 tax-free per child every ten years – with two children, that’s €800,000 per round. Over 20 or 30 years, this results in a very high tax-free transfer without inheritance risk at the end.

Usufruct & residential rights: Give away value, keep control

With a reserved usufruct , you transfer a property, for example, but secure rental income or the right of use. This reduces the tax value of the gift because the capital value of the usufruct is deducted. You remain financially secure – and at the same time make more efficient use of tax-free allowances.

Why “stupidity tax”? Planning mistakes cost real money

If you don’t plan at all, you give away allowances, lose exemptions (e.g. due to failure to meet deadlines) or slip into higher rates due to an unfavorable structure. Advice helps to close gaps: from the structuring of matrimonial property regimes to wills, division arrangements and pre- and post-inheritance through to foundations. The difference between “doing nothing” and “smart planning”: often tens of thousands to millions.

50 million € inheritance Example calculation + tax optimization

Der Spiegel reports: “Rich company heirs often only pay 1.5% tax”. Is that possible? Yes. Clever planning reduces the tax burden. Without planning, you quickly pay almost €15 million in tax on a €50 million inheritance. With clever planning, the tax burden falls to 1-5%. Studies, laws and examples clearly show that those who optimize early on save millions. This is precisely why inheritance tax is often referred to as the “stupid tax”.

• 50 million € inheritance Example calculation

Avoid inheritance tax? My conclusion

You can rarely avoid tax completely – but you can manage it. The key: start early, stagger gifts, qualify beneficiary asset types, comply with holding and payroll rules and use the family home correctly. The greater the assets, the greater the leverage – and the more expensive mistakes become. Get tax and legal advice in good time, document everything properly and plan in variants (inheritance, gift, foundation). This will turn the “stupid tax” into an avoidable cost trap – and you will get more out of your inheritance.

Tax advantages for companies in Delaware

Delaware offers a variety of tax incentives for companies wishing to locate there.

Fact 1: No state corporation tax for companies without a physical presence

One of Delaware’s biggest advantages is that companies that operate outside the state and do not have a physical presence in Delaware are exempt from state corporate income tax. This is particularly advantageous for companies that operate on the Internet or have multiple locations in different states.

Fact 2: Low franchise tax

The franchise tax in Delaware is relatively low compared to other states. Businesses can choose how they want to be taxed based on their capital or stock. This offers flexibility and potential savings for businesses.

Fact 3: Protection of the corporate identity

Delaware has laws that protect the identity of business owners. This can be an advantage for investors who value privacy and do not want to make their personal information publicly available.

Delaware: Situation in the USA

My recommendation for the first 10 properties

For the first two to ten properties, an LLC (see GmbH in Germany) is best suited to minimize liability risks and at the same time take advantage of tax benefits. The LLC limits the personal liability of the owners, while profits and losses are attributed directly to the shareholders, which avoids double taxation. In comparison, a Limited Partnership (see KG) offers more flexibility in terms of passive participation, but the general partner bears full liability. A general partnership (see OHG) involves higher risks due to unlimited liability.

• More about the LLC
• All US legal forms

US-Firmengründung speziell für Tax-Lien-Investoren

• Gründung einer LLC oder Corporation
• Registered Agent Service (gesetzlich vorgeschrieben)
• Geschäftsadresse
• Postservice

• US-Firmengründung

Real estate ownership in Delaware

Delaware is also an attractive location for real estate investment, and the tax advantages make buying property there particularly attractive.

Fact 1: Low property taxes

Property taxes in Delaware are relatively low compared to other states. This makes owning real estate in Delaware economically attractive for investors and property owners.

Fact 2: No inheritance tax

Delaware does not levy inheritance tax or property tax, making it an ideal location for buying real estate for assets and estate planning. This is particularly advantageous for German investors who wish to own real estate in the USA.

Fact 3 Rental yields

Delaware offers a growing demand for rental housing, especially in cities like Wilmington and Newark. Investors can benefit from attractive rental yields while taking advantage of the state’s tax benefits.

Tax advantages for German investors in Delaware

For German investors, Delaware offers unique advantages that facilitate real estate ownership and business start-ups.

Double taxation agreement USA / Germany

The USA and Germany have a double taxation agreement that is designed to prevent German citizens from paying taxes on the same income in both the USA and Germany. This enables investors to avoid double taxation and make their investments more efficient.

Access to a stable market

Delaware has a stable economy and attracts many international investors. German investors can benefit from a dynamic real estate market and a diverse business environment.

Support from local authorities

Delaware has programs to support foreign investors, helping them to settle and establish their businesses in the state. This can be done through counseling services and networks specifically geared toward foreign investors.

My Delaware tax conclusion

Delaware has established itself as an attractive tax haven for businesses and investors, especially for German citizens. With its favorable tax system, absence of inheritance taxes and low property taxes, the state is an ideal place to own real estate and start a business. If you are a German investor looking to become active in Delaware, it is advisable to learn about the specific requirements and benefits and possibly consult a professional to make informed decisions.

Delaware or Florida: Tax comparison

Delaware and Florida are both attractive tax havens in the US, but with different advantages. Delaware offers companies no state income tax on profits earned outside the state and minimal reporting requirements, making it ideal for holding companies and shell companies. Florida , on the other hand, does not impose a personal income tax, which is particularly attractive to individuals and real estate investors. However, companies in Florida do pay a state corporate income tax, unlike Delaware.

My conclusion: Both offer tax advantages, but Delaware is better suited for companies, while Florida is more interesting for private individuals.

Where to set up? More about:

• Florida as a tax haven

Legal forms USA: Foundation & real estate

What types of company are there? If you want to set up your first US company, choosing the legal form is one of the first steps in the company formation process. Whether you want to set up a special real estate company or a start-up, we have summarized all types of companies in the USA for you here – with extra tips for real estate investments, of course.

• Legal forms USA

Halve taxes, double assets: Register now

In this webinar, you will learn how to apply the tax strategies used by major international corporations – all without complicated tax structures or having to go abroad. Everything Alex Fischer teaches is completely legal and can be implemented without unnecessary stress. These methods are suitable for both private individuals and entrepreneurs who want to effectively reduce their tax rate.

• Halve taxes, double assets
• Directly to the registration with Alex Fischer

Why Alex? Why this live webinar?

100% legal, in Germany, without abuse of tax planning and without having to emigrate.

What are you learning here?

Honestly, first things first, what are you learning?

1. Minimize the tax rate: Tips and tricks
2. Claiming private expenses for tax purposes
3. Tax reduction: step-by-step process
4. Reduce bureaucracy, benefit from advantages
5. Wealth accumulation: Strategically optimize your finances

Why should you take part?

If you are looking for ways to significantly reduce your tax burden, you should definitely take part in one of Alex Fischer’s webinars. Not only will you receive valuable tax tips, but you will also learn how to build wealth while optimizing your taxes in a legal way. Alex Fischer shares his proven methods, which are not only applicable for large corporations, but also for private individuals and medium-sized entrepreneurs.

True to Alex’s motto:

“Taxes are a matter for the boss”

Taking part in the webinar is completely straightforward and offers you the chance to significantly expand your knowledge of taxes and wealth accumulation in a short space of time. You will learn how you can achieve significant financial benefits with intelligent tax strategies.

Advantages of participating: 5 good reasons

In Alex Fischer’s webinar, you will learn how to drastically reduce your tax burden. The methods you will learn here are legal and will ensure that you can keep more of the money you earn. There is no reason to use complicated tax constructions or tax tricks that are legally questionable. Alex Fischer’s strategies are based on a sound knowledge of tax laws and are safe to use.

1. Drastically reduce your tax burden: efficiently and legally
2. Increase your wealth: Through strategic wealth accumulation
3. Stay in Germany: no need to emigrate
4. Simple implementation: Clearly structured processes without complexity
5. Immediate results: You can implement the first measures directly after the webinar

Contents of the webinar

In his webinar, Alex Fischer teaches you the most important techniques for tax optimization and wealth accumulation. The best thing about it: everything you learn is legal, safe and comprehensible. The strategies are based on the same principles that major international corporations use to minimize their tax burden – but presented in a way that makes them applicable to everyone.

Example 1: Use of international tax strategies

Large international corporations use special techniques to keep their tax rate as low as possible. Alex Fischer shows you exactly which of these methods are suitable for you and how you can use them successfuly. Terms such as profit shifting, tax optimization through affiliated companies and the use of low-tax countries are explained in more detail. You will learn how to legally integrate these mechanisms into your own tax concept.

You will also learn why SMEs often do not use the same tax strategies as large companies, even though they are available to everyone. Alex will show you how you can break through these barriers and secure the same tax advantages.

Example 2: Making private expenditure operational

Another key point of the webinar is to understand how you can shift private expenses to the business area without breaking the law. Alex Fischer explains, for example, how you can make the most of the 1% rule for company cars and avoid the annoying hassle of logbooks.

Alex also looks at other ways of making private costs business-capable. You will learn how you can claim private expenses, such as office supplies or telecommunications, for tax purposes. The trick is to legally transfer these expenses to the business sphere so that you benefit from them for tax purposes without having to deal with more administrative work.

Example 3: The 5-step process for tax reduction

At the heart of the webinar is the 5-step process developed by Alex Fischer. This process enables you to reduce your tax burden by up to 50% within three months – all without creating more stress or complexity in your life. Alex takes you through this process step by step and shows you how to maximize tax benefits without having to set up complex tax structures.

It explains in detail how to correctly use the deductibility of business expenses, how you can use the investment deduction amount (IAB) for yourself and which tax write-offs you can use specifically to reduce your tax burden. By following these clear and actionable steps, you can ensure that you take full advantage of all legal opportunities for tax optimization.

What will you learn in the webinar?

Here again a small overview:

1. Minimizing the tax rate: Learn how large corporations minimize their taxes and how you can implement this for yourself
2. Business use of private expenses: Find out how you can claim private expenses, such as the company car, for tax purposes
3. Step-by-step guide: A clear, comprehensible process for tax reduction
4. Less administrative work: learn how to reduce bureaucracy and still enjoy tax benefits
5. Strategic wealth building: discover how to optimize your finances to grow wealth in the long term

Next webinars: coming soon!

If you are now curious and want to effectively reduce your tax burden, you will soon have the opportunity to take part in one of Alex Fischer’s regular webinars. These webinars are ideal for you if you are an entrepreneur, investor or simply interested in structuring your finances better. These events will provide you with all the information and tools you need to optimize your tax rate and build long-term wealth at the same time.

How can you take part?

Participation in one of the webinars is free of charge and completely non-binding. You can simply register with Alex Fischer and receive all the information you need to participate. The webinar itself takes place online, so you can take part from the comfort of your own home. You can put the strategies taught into practice immediately after the webinar to achieve immediate financial benefits.

• Halve taxes, double assets
• Directly to the registration with Alex Fischer

Alex Fischer: Short portrait

Due to my regional proximity (Cologne / Düsseldorf), I naturally also learned a lot from Alex Fischer. His book “Reicher als die Geissens” has reached over 200,000 readers, including me. Alex Fischer is a real estate investor from Düsseldorf. With over 100,000 followers, he is one of the most successful YouTube channels on real estate and taxes. There are also media reports on Ntv, FIV and Wallstreet Online.

But much more excitingly, he holds over 20,000 m² in Düsseldorf alone and spends a lot of time in Mallorca. More practice is not possible, is it?

Now, not every real estate investor tells his tax tricks, Alex Fischer is more open and likes to pass on his knowledge. Now also in the new course:

Halve taxes, double assets? My conclusion

Alex Fischer’s webinars are a great opportunity for anyone who wants to significantly reduce their tax burden and build wealth at the same time. With his proven 5-step process and in-depth expertise, Alex will show you how to reduce your taxes legally and efficiently – without any added complexity or risk. If you’re ready to take your finances to the next level, be sure to sign up for one of the upcoming webinars.

As I said at the beginning:

“Everyone can take care of their own taxes, hire a tax advisor (although in my experience 95% give absolutely no input in the area of tax optimization) or take part in coaching with people who pass on their knowledge from their own practice.”

What is a family foundation?

A family foundation is a special form of foundation that primarily serves the purpose of preserving and increasing a family’s assets in the long term. In contrast to charitable foundations, which are geared towards the common good, the family foundation is primarily concerned with private interests, namely the protection of family assets and the provision for family members.

Important features of a family foundation:

• Asset protection: the assets are transferred to the foundation and legally belong to the foundation, no longer to the founder or the heirs
• Long-term nature: A foundation is generally set up for an indefinite period and remains in existence for several generations
• Tax optimization: clever structuring can reduce gift and inheritance taxes as well as income taxes

Why set up a family foundation?

A family foundation offers numerous advantages, especially for wealthy families, entrepreneurs and property owners who want to protect and optimize their assets in the long term. Of course, real estate can be transferred to foundations. Here are the main reasons why you should consider a family foundation.

• Protection from inheritance disputes: Since the assets belong to the foundation and are not inherited directly, inheritance disputes can be avoided
• Tax advantages: Income generated within the foundation is usually subject to a lower tax burden. Inheritance and gift taxes can be saved
• Control over the assets: The founder can specify in the articles of association how the assets are managed and who benefits from them
• Avoidance of asset fragmentation: assets remain bundled and are not divided up by sale, inheritance or private disposal

Who establishes a family foundation?

For those who want to save taxes! Only 15% on rentals, protection against access and many other benefits, especially for your loved ones.

Now you could say, 15% on rent and protection against access, a GmbH holding company can do that too, right! But – and we’ll come to this in a moment in the functions – the transfer of assets in particular is one of the tools that families choose for foundations.

Typical founders of a family foundation are

• Entrepreneurial families: It is particularly common for entrepreneurial families to want to keep their company in the family for the long term
• Property owners: Families with large real estate assets who want to secure their property and optimize it for tax purposes
• Wealthy private individuals: Anyone who has considerable capital and wants to protect it from external risks (such as divorce or creditor access)

As a rule, it is worth setting up a family foundation with assets of at least 1 million euros. Above this threshold, the advantages associated with a foundation begin to outweigh the establishment costs and administrative expenses.

How does a family foundation work?

The process of setting up and managing a family foundation can be complex, so it is important to plan the steps carefully:

1. Advice and planning: You should first seek advice from experts – lawyers, tax advisors and foundation experts – to understand the legal and tax framework
2. Creation of a foundation charter: This charter is the “basic law” of the foundation. It defines the purpose, who is a beneficiary and how the assets are managed
3. Contribution of assets: The founder contributes his assets to the foundation. From this moment on, the assets legally belong to the foundation and no longer to the founder
4. Recognition by the foundation authorities: The foundation must be recognized by the responsible foundation authority and the tax office
5. Administration and ongoing support: The foundation’s Board of Directors manages the assets and ensures that the foundation’s purpose is fulfilled

Advantages of the family foundation at a glance

• Asset protection: No access by third parties (e.g. in the event of divorce or insolvency)
• Tax advantages: Reduction of inheritance, gift and income taxes
• Long-term wealth planning: protection and management of assets over generations
• Avoidance of inheritance disputes: Clear regulations through the foundation statutes
• Flexibility and control: The founder can customize the articles of association and thus retain control

How do you set up a family foundation?

If you are considering setting up a family foundation yourself, here is a brief overview of the necessary steps. A little tip, I have explained the whole thing in more detail here in Establishing a family foundation and here in Family foundation costs:

1. Advice from experts: get professional help from lawyers, tax advisors and foundation experts
2. Define the foundation’s purpose: What should the foundation achieve? Who should be the beneficiaries?
3. Create legal documents: The foundation statutes and other founding documents must be drawn up
4. Contribute foundation assets: Transfer real estate, capital or other assets to the foundation
5. Registration and recognition: The foundation must be recognized by the competent authorities
6. Managing a foundation: Regular review and adaptation to legal and tax changes

Conclusion: Is a family foundation right for you?

A family foundation can be a powerful tool to protect assets, plan for the long term and save taxes. However, it is not suitable for everyone and requires careful planning and advice. If you think a family foundation may be right for you or your family, get expert advice and make sure all aspects are well thought through.

You can now find out more about this on Steuern Sparen One – my experts for setting up foundations and tax optimization.