Matrimonial Property Regime Swing: What It Is and When It Can Make Sense

What is a Güterstandsschaukel?

The term does not appear in the statutory texts evaluated here. It describes a sequence of three steps that German matrimonial property law permits.

Starting point: Anyone who marries without a marital agreement lives in the property regime of the community of accrued gains (Zugewinngemeinschaft) (§ 1363 BGB). Each spouse's assets remain his or her own. The accrued gains achieved during the marriage are, however, equalised "when the community of accrued gains ends".

1. End: Spouses can regulate their matrimonial property relationships by contract (marital agreement), "in particular also, after entering into the marriage, cancel or change the property regime" (§ 1408(1) BGB). If they cancel the statutory property regime, separation of property applies unless the marital agreement provides otherwise (§ 1414 BGB).
2. Equalise: If the property regime ends in a manner other than by the death of a spouse, the accrued gains are equalised in accordance with §§ 1373 to 1390 BGB (§ 1372 BGB).
3. Return: With a further marital agreement, the spouses can change the property regime again and once more agree on the community of accrued gains. For the initial assets, the law refers to the commencement of the property regime (§ 1374(1) BGB). Whether a return gives rise to any further particularities remains an open review question.

Every marital agreement must be concluded before a notary and recorded by the notary, with both spouses present at the same time (§ 1410 BGB).

Takeaway: The swing is not a legal institution of its own but a sequence of two notarised marital agreements with a statutory equalisation of accrued gains in between.

How the equalisation is calculated

The equalisation follows a fixed calculation. It determines the amount of the statutory equalisation claim.

• Accrued gain is the amount by which a spouse's final assets exceed his or her initial assets (§ 1373 BGB).
• Initial assets are the assets after deduction of liabilities at the commencement of the property regime. If a spouse subsequently acquires assets upon death, with regard to a future right of inheritance, by gift or as a marriage settlement (Ausstattung), they are added to the initial assets after deduction of liabilities, unless the circumstances indicate that they are to be counted as income (§ 1374 BGB). Inheritances and gifts from third parties therefore do not simply increase the accrued gain.
• Final assets are the assets after deduction of liabilities at the end of the property regime. Added to them are reductions that arose after the commencement of the property regime through gratuitous transfers by which the spouse did not comply with a moral duty or a consideration of decency, through squandering of assets, or through acts carried out with the intention of disadvantaging the other spouse. This does not apply if the reduction occurred at least ten years before the end, or if the other spouse consented to the gratuitous transfer or the squandering (§ 1375 BGB).
• Reference dates: The initial assets are valued at the time the property regime commenced, assets to be added at the time of their acquisition. For the final assets, the value at the end of the property regime applies; for a reduction in assets to be added to the final assets, the value at the time the reduction occurred. The same applies accordingly to liabilities (§ 1376 BGB).
• Equalisation claim: If the accrued gain of one spouse exceeds that of the other, half of the surplus is due to the other spouse. The amount is capped by the value of the assets remaining after deduction of liabilities at the end of the property regime; in the cases of § 1375(2) sentence 1 BGB, this cap increases by the amount to be added. The claim arises when the property regime ends. Before that, neither spouse can undertake to dispose of it (§ 1378 BGB).

Example: the Berger couple

Assumptions, all fictitious: The Bergers have been married without a marital agreement since their wedding. Neither had any assets when the property regime commenced. There are no acquisitions under § 1374(2) BGB and no additions under § 1375(2) BGB. Their assets consist only of securities accounts and bank accounts.

The cap under § 1378(2) BGB is not reached, because Mr Berger has 3,000,000 EUR after deduction of liabilities.

Takeaway: A statutory equalisation claim arises only in the amount this calculation produces, and only in favour of the spouse with the smaller accrued gain.

AI generated: Florian Enders explains the matrimonial property regime swing

What tax law says about the equalisation

Ending the regime by marital agreement is an ending in a manner other than by death. For this case, § 5(2) ErbStG provides: if the property regime of the community of accrued gains "is ended in a manner other than by the death of a spouse or a civil partner […], the equalisation claim (§ 1378 of the Civil Code) does not form part of the acquisition within the meaning of §§ 3 and 7".

Three conditions belong to this statement:

• It refers to the statutory claim under § 1378 BGB. Whether a contractually agreed higher amount is partly treated as a gift is not answered by the wording.
• The abuse limit applies. Under § 42 AO, an abuse exists "if an inappropriate legal structure is chosen which, compared with an appropriate structure, leads to a tax advantage for the taxpayer or a third party that is not provided for by law". This does not apply if the taxpayer proves non-tax reasons for the chosen structure that are significant in view of the overall circumstances. As to the legal consequence: if the elements of a provision in an individual tax law that serves to prevent tax avoidance are met, the legal consequences are determined by that provision. Otherwise, where there is an abuse, the tax claim arises as it would arise under a legal structure appropriate to the economic transactions.
• None of the provisions read here specifies a minimum duration for the separation of property. How the courts assess a swing with a short period of separation of property or an immediate return remains open.

What applies for tax purposes when a spouse dies during the community of accrued gains is explained in the article Community of accrued gains and inheritance.

Takeaway: Where the regime ends other than by death, the wording provides that the statutory equalisation claim does not form part of the acquisition for gift tax purposes. Record the non-tax reasons for the arrangement in writing from the outset.

Gift to the spouse or equalisation of accrued gains: the comparison

Instead of changing the property regime, Mr Berger could give his wife the same amount. A gift is any voluntary transfer inter vivos to the extent that the recipient is enriched by it at the expense of the donor (§ 7(1) no. 1 ErbStG). The spouse belongs to tax class I (§ 15 ErbStG); under unlimited tax liability, the spouse's allowance is 500,000 EUR (§ 16(1) no. 1 ErbStG). Acquisitions from the same person within ten years are aggregated (§ 14 ErbStG).

Additional assumptions: unlimited tax liability, no prior acquisitions within ten years, payment in cash with tax value equal to nominal value, immediate payment without deferral, no tax exemptions. Costs, income taxes and later inheritance cases are not included.

Regarding the tax rate: Under § 19(1) ErbStG, in tax class I the rates are 7% for a taxable acquisition of up to and including 75,000 EUR, 11% up to 300,000 EUR, 15% up to 600,000 EUR and 19% up to 6,000,000 EUR. The example does not reach higher brackets. Hardship relief under § 19(3) ErbStG does not apply here: 171,000 EUR minus 90,000 EUR (15% of 600,000 EUR) is 81,000 EUR. That is less than half of the amount above the value threshold (150,000 EUR). An overview of the rate and allowance tables can be found in the table of tax rates and allowances, and notes on using the allowances in the article Gifts and allowances.

Regarding the compulsory share row: Under § 2325(3) BGB, a gift made within the first year before the inheritance case is taken into account in full, and for each further year by one tenth less; if it was made to the spouse, the period does not begin before the dissolution of the marriage.

An alternative for the family home

Under § 13(1) no. 4a ErbStG, the following remain tax-free: "transfers inter vivos by which one spouse provides the other spouse with ownership or co-ownership of a developed property within the meaning of § 181(1) nos. 1 to 5 of the Valuation Act located in Germany or in a member state of the European Union or a state of the European Economic Area, insofar as a dwelling therein is used for own residential purposes (family home), or releases the other spouse from obligations entered into in connection with the acquisition or construction of the family home". The same applies where one spouse bears subsequent construction or maintenance expenses for a family home that is jointly owned or owned by the other spouse.

Takeaway: Under the assumptions, the tax question only separates the two routes above the allowance. Up to 500,000 EUR, under unlimited tax liability and without prior acquisitions within ten years, a gift also remains free of tax.

When does a Güterstandsschaukel make sense?

The statutory calculation and the tax wording yield points to check. On their own, they do not answer whether the swing is worthwhile in an individual case.

It is more likely to be considered where

• the accrued gains are clearly unequal, as with the Bergers,
• the amount to be transferred exceeds the spousal allowance of 500,000 EUR under unlimited tax liability, or this allowance has already been used by earlier transfers within ten years,
• the equalisation can be paid in cash,
• there are non-tax reasons that can be documented.

It carries less weight where

• the accrued gains are of similar size, because the claim is then small or does not arise,
• the assets derive mainly from inheritances or gifts from third parties that are added to the initial assets,
• the amount stays within the allowance anyway, under unlimited tax liability and without prior acquisitions within ten years,
• only real estate, GmbH shares or business assets are available for the equalisation, because further tax questions are then open.

Also consider the interim phase: as long as separation of property applies, there is no community of accrued gains. The increase of the inheritance share under § 1371(1) BGB requires that the property regime of the community of accrued gains is ended by the death of a spouse. How the inheritance shares differ is shown in the article Community of accrued gains and inheritance.

Takeaway: First calculate both of your accrued gains and compare the result with the allowance. Only then is it worth asking about the marital agreement.

Risks in implementation

• Deferral: The Federal Fiscal Court has ruled that the interest-free lifelong deferral of a claim for equalisation of accrued gains is, because of the benefit of use granted, a voluntary transfer subject to gift tax (BFH, judgment of 22 August 2018, II R 51/15). In the case decided, the spouses had ended the community of accrued gains by notarial agreement and agreed on separation of property. No conclusions for a swing with a return can be derived from this. The example therefore assumes immediate payment.
• Real estate as settlement: § 23 EStG covers disposal transactions involving land where no more than ten years lie between acquisition and disposal. Excluded are assets that were used exclusively for own residential purposes in the period between acquisition or completion and disposal, or for own residential purposes in the year of disposal and in the two preceding years. Whether transferring a property in settlement of the equalisation claim is a disposal is not answered by the wording. Under § 3 no. 4 GrEStG, the acquisition of land by the spouse of the transferor is exempt from real estate transfer tax; other provisions of the Real Estate Transfer Tax Act were not evaluated here.
• GmbH shares, business assets and other assets: This article makes no statement on the tax consequences of an equalisation made with such assets. They must be examined in the individual case.
• Amount of the claim: If the agreed amount deviates from the statutory calculation, it is open whether the excess counts as a gift.

Takeaway: An equalisation in cash, paid immediately and calculated correctly under the statute, keeps the number of open questions to a minimum.

Step-by-step process

1. Clarify the objective: Record which non-tax reasons support the arrangement (§ 42(2) sentence 2 AO).
2. Record the assets: Determine, with supporting documents, the initial assets at the commencement of the property regime, additions under § 1374(2) BGB and the final assets on the planned reference date for both spouses; check additions under § 1375(2) BGB together with their exceptions.
3. Calculate the claim: Half of the surplus; observe the cap under § 1378(2) BGB, including any increase by amounts to be added.
4. Conclude the marital agreement: End the community of accrued gains, recorded by a notary with both spouses present at the same time. Unless otherwise agreed, separation of property applies afterwards.
5. Settle the claim: Preferably in cash and without deferral. Non-cash assets only after separate legal and tax review.
6. Clarify the tax treatment: Discuss the classification under § 5(2) ErbStG and the open question of notification with your adviser before implementation.
7. Consider the return: If the community of accrued gains is to apply again, a further notarised marital agreement is required. The starting point for the new initial assets is the commencement of the property regime (§ 1374(1) BGB); clarify in advance whether this gives rise to any particularities.

Takeaway: The calculation comes before the notary appointment, and documenting the reasons comes before both.

Frequently asked questions

Is the equalisation of accrued gains in a Güterstandsschaukel free of gift tax?

Under § 5(2) ErbStG, the equalisation claim under § 1378 BGB does not form part of the acquisition within the meaning of §§ 3 and 7 ErbStG if the community of accrued gains ends other than by death. This requires a claim calculated correctly under the statute and is subject to the abuse limit of § 42 AO. According to BFH II R 51/15, an interest-free lifelong deferral of the claim is, with regard to the benefit of use granted, a voluntary transfer subject to gift tax.

How long must the separation of property last?

The provisions read here do not specify a minimum duration. The standard is § 42 AO: an abuse exists if an inappropriate legal structure is chosen which, compared with an appropriate structure, leads to a tax advantage not provided for by law. This does not apply if non-tax reasons are proven that are significant in view of the overall circumstances. How the courts assess short interim phases is an open review question.

Do we need a notary for the swing?

Yes. A marital agreement must be concluded before a notary and recorded by the notary, with both spouses present at the same time (§ 1410 BGB). This applies to the ending and to any later return.

Can we settle the equalisation with a property?

This article does not evaluate the civil law conditions under which a property can be transferred instead of cash in settlement of the claim. For tax purposes, it is open whether the transfer counts as a disposal under § 23 EStG. Under § 3 no. 4 GrEStG, the acquisition of land by the spouse of the transferor is exempt from real estate transfer tax. Have this route examined in your individual case.

Does the equalisation have to be notified to the tax office?

Under § 30 ErbStG, every acquisition subject to inheritance tax must be notified in writing by the acquirer to the competent tax office within three months of becoming aware of the accrual or of the occurrence of the obligation. If the taxable acquisition takes place by a transaction inter vivos, the person from whose assets the acquisition derives is also obliged to notify. No notification is required if a gift inter vivos has been recorded by a court or a notary. Whether the equalisation of accrued gains must be notified on this basis remains an open review question.

Does the equalisation count towards the children's compulsory share?

§ 2325 BGB refers to a gift made by the deceased. Whether an equalisation of accrued gains is a gift in this sense is not answered by the wording. This remains an open review question.

Open review questions and limits

The following questions are not answered by the wording evaluated here. They must be clarified before implementation:

1. Do any particularities arise for the initial assets after the return to the community of accrued gains compared with the basic rule of § 1374(1) BGB?
2. How does the Federal Fiscal Court assess the Güterstandsschaukel, in particular with a short period of separation of property or an immediate return? No decision on this has been evaluated.
3. Is an amount contractually set above the statutory claim partly a voluntary transfer?
4. Under which civil law conditions can the claim be settled with a property instead of cash, and is such a transfer a disposal within the meaning of § 23 EStG?
5. What tax consequences does an equalisation with GmbH shares, business assets or other assets have?
6. Is the equalisation a gift within the meaning of the supplement to the compulsory share under § 2325 BGB?
7. Must the equalisation be notified under § 30 ErbStG?
8. What applies in a later inheritance case after the return? For the inheritance case in the community of accrued gains, see Community of accrued gains and inheritance.

Sources: The statutory texts are linked at the relevant points on gesetze-im-internet.de, and the BFH judgment II R 51/15 on rechtsprechung-im-internet.de. The figures in the example are based solely on the assumptions disclosed. Further articles can be found in the Gifts topic area.

Limits: This article is general information. It does not replace legal or tax advice in the individual case and does not promise any tax outcome. If you would like your situation to be assessed, you can request an initial consultation.