- Children have an Erbschaftsteuer (German inheritance tax) Freibetrag (personal tax-free allowance) of 400,000 EUR PER PARENT every 10 years — so a couple with one child can transfer 800,000 EUR tax-free every 10 years
Children inherit on relatively favourable tax terms — but only up to the Freibetrag threshold. With larger estates, especially inherited real estate, the tax kicks in quickly. In my advisory practice I regularly see adult children who, after the death of their parents, pay five- to six-figure sums to the tax office — sums that could have been avoided with three to five years' lead time.
Children inherit in Steuerklasse I — the most favourable class with a 400,000 EUR Freibetrag per parent. For small inheritances that is enough. For family wealth above 800,000 EUR (both parents), a Schenkung planning approach 10 to 15 years before the inheritance is essential.
How high is the Freibetrag for children?
400,000 EUR per parent (§ 16 (1) Nr. 2 ErbStG). So 800,000 EUR can be transferred tax-free every 10 years from a couple with one child. With three children: 2,400,000 EUR.
The Freibetrag applies both to inheritances and to lifetime gifts — and is renewed every 10 years (§ 14 ErbStG).
Important: stepchildren and adopted children are treated like biological children. Children-in-law, by contrast, fall into Steuerklasse II with only a 20,000 EUR Freibetrag.
When do children have to pay Erbschaftsteuer?
From the portion of the inheritance which exceeds the Freibetrag of one parent. Specifically:
| Assets from father | Assets from mother | Taxable | Tax approx. |
|---|---|---|---|
| 300,000 EUR | 0 EUR | 0 EUR | 0 EUR |
| 500,000 EUR | 0 EUR | 100,000 EUR | 11,000 EUR |
| 800,000 EUR | 0 EUR | 400,000 EUR | 60,000 EUR |
| 400,000 EUR | 400,000 EUR | 0 EUR | 0 EUR |
| 800,000 EUR | 800,000 EUR | 0 EUR | 0 EUR |
| 1,000,000 EUR | 1,000,000 EUR | 600,000 EUR each | 90,000 EUR each = 180,000 EUR total |
Important: for non-marital children or unmarried parents living in the same household, both parents must gift or bequeath separately in order to use both Freibetraege.
Tax rates for children
Above the Freibetrag the tax is graduated (Steuerklasse I, § 19 ErbStG):
| Value above Freibetrag | Tax rate |
|---|---|
| up to 75,000 EUR | 7 % |
| 75,000 – 300,000 EUR | 11 % |
| 300,000 – 600,000 EUR | 15 % |
| 600,000 – 6,000,000 EUR | 19 % |
| 6,000,000 – 13,000,000 EUR | 23 % |
| 13,000,000 – 26,000,000 EUR | 27 % |
| above 26,000,000 EUR | 30 % |
For comparison: siblings pay more than double for the same amounts (Class II). Unrelated third parties pay 30 percent from the first euro above the Freibetrag.
Pension-allowances for children
Children up to 27 years of age additionally have pension-allowances (§ 17 ErbStG):
| Child's age at the inheritance | Pension allowance |
|---|---|
| up to 5 years | 52,000 EUR |
| 5-10 years | 41,000 EUR |
| 10-15 years | 30,700 EUR |
| 15-20 years | 20,500 EUR |
| 20-27 years | 10,300 EUR |
| from 27 years | 0 EUR |
CAUTION: these allowances are reduced by survivor pensions. If the child receives a half-orphan or full-orphan pension, the pension-allowance can be reduced down to zero.
Familienheim exemption
One of the most important special exemptions: if a child inherits the self-occupied parental home and themselves uses it for their own residential purposes within 6 months, the house is TAX-FREE up to 200 sqm of living space (§ 13 (1) Nr. 4c ErbStG).
Conditions:
- Child moves in within 6 months
- Self-occupation for at least 10 years (holding period)
- Living space up to 200 sqm fully exempt, above that pro-rata taxable
- For apartment buildings only the self-occupied unit qualifies
Anyone who does not keep up the 10-year holding period (sale, letting, moving out) loses the exemption retrospectively and has to repay — exception: compelling reasons (marriage in another city, need for care, death).
For larger houses above 200 sqm: the first 200 sqm are tax-free, the excess portion is taxed at the normal rate.
Step-by-step: optimise Erbschaftsteuer for children in 7 stages
I typically work through this order in advisory practice:
- Inventory of the parents' assets. What is actually there, what is it worth?
- Erbschaftsteuer calculation. What would arise if both parents died simultaneously?
- Plan a Schenkung strategy. From what age, in which tranches, which asset types first?
- 10-year mapping. With large estates, plan 2-3 tranches (gift at 60, 70, 80).
- Secure the Familienheim. Align the parental home with the right child in good time (clarify questions of place of residence).
- Pflichtteil equalisation. Avoid sibling conflict, where appropriate by waiver of the Pflichtteil against settlement (§ 2346 BGB).
- Optimise life insurance. Change the beneficiary to the children, otherwise it belongs to the estate.
Comparative calculation: with and without preparation
Starting point: married couple, both 70, one child, assets of 2,500,000 EUR (1,500,000 EUR Familienheim plus 1,000,000 EUR liquidity).
| Strategy | Erbschaftsteuer | Comment |
|---|---|---|
| Spontaneous inheritance without preparation | approx. 130,000 EUR | Familienheim only partly exempt |
| Berliner Testament (assets bequeathed twice) | approx. 260,000 EUR | MOST EXPENSIVE variant |
| Familienheim exemption (child moves in) | approx. 80,000 EUR | With correct execution |
| Plus 800,000 EUR Schenkung 10 years earlier | approx. 25,000 EUR | Two tranches used |
| Plus reserved Niessbrauch on the Familienheim | approx. 0 EUR | Valuation discount fully exploited |
Clean preparation can save 130,000 EUR here. The Berliner Testament is particularly dangerous from a tax perspective.
Frequently asked questions
How high is the Freibetrag for children on inheritance?
400,000 EUR per parent (§ 16 (1) Nr. 2 ErbStG). With both parents, that is 800,000 EUR every 10 years — for inheritances as well as for lifetime gifts.
When do children have to pay Erbschaftsteuer?
Once the acquisition from each parent exceeds 400,000 EUR. With a 500,000 EUR inheritance from one parent: 100,000 EUR taxable × 11 percent = 11,000 EUR of tax.
Do stepchildren inherit like biological children?
Yes. Stepchildren, adopted children and biological children are all classified in Steuerklasse I with a 400,000 EUR Freibetrag (§ 15 (1) Nr. 2 ErbStG).
What is the Familienheim exemption for children?
If the child inherits the parental home and themselves moves in within 6 months (up to 200 sqm of living space), the house is tax-free (§ 13 (1) Nr. 4c ErbStG). Condition: 10 years of self-occupation.
How can I use the Freibetrag multiple times?
Through the 10-year rule (§ 14 ErbStG). Someone who gifts at age 60 can use the full Freibetrag again at 70, and again at 80. For a couple with one child: 3 × 800,000 EUR = 2.4 million EUR tax-free over 30 years.
What about care services?
Children who cared for their parents can claim a 20,000 EUR care allowance alongside the inheritance (§ 13 (1) Nr. 9 ErbStG). With demonstrable care duties even more.
What is the tax effect of the Berliner Testament?
For tax purposes it is often DISADVANTAGEOUS. The estate is bequeathed twice — first to the surviving spouse (Freibetrag 500,000 EUR), then to the children (Freibetrag 400,000 EUR per parent). But: at the first inheritance, the Freibetrag of the predeceased parent is lost from the children's perspective.
What about non-marital children?
Fully equivalent to marital children. Freibetrag 400,000 EUR per parent. For unmarried parents who do not live together, each parent has to use the Freibetrag separately through their own Schenkung or bequest to the child.
Further detailed answers
- Erbschaftsteuer 2026: Freibetraege, tax rates, instructions — Main guide
- Erbschaftsteuer Freibetraege — table 2026
- Erbschaftsteuer on real estate and houses — valuation, exemptions
- Calculate Erbschaftsteuer — formula and calculator
- Schenkung to children — 10-year strategy
- Topic hub Erbschaftsteuer
- Topic hub Schenkung
Lead magnet: plan a children's strategy
- Erbschaftsteuer calculator — calculation for your children.
- Succession checklist — structured 10-year strategy.
- Pflichtteil protection — avoid Pflichtteil conflict with several children.
- Book a first meeting — individual family strategy.
Authority sources
- § 13 ErbStG (tax exemptions, Familienheim, care)
- § 14 ErbStG (10-year rule)
- § 15 ErbStG (tax classes)
- § 16 ErbStG (Freibetraege)
- § 17 ErbStG (pension-allowance)
- § 19 ErbStG (tax rates)
- § 30 ErbStG (notification duty)
- § 2346 BGB (waiver of the Pflichtteil)
- BFH judgment of 17.06.2020 — II R 33/17 (Familienheim exemption)
- BFH judgment of 11.07.2019 — II R 38/16 (pension-allowance)
Free guide
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