According to a decision of the Supreme Tax Court, the 5-year preferential period in Section 35b sentence 1 of the German Income Tax Act starts at the time the inheritance tax arises, which is generally upon the death of the testator. This also applies if it was not possible to claim the tax reduction in due time by reasons for which the taxpayer could not be held responsible.
Background
The plaintiff is the sole heir of W, who died in 2010 and whose estate included two investments in limited partnerships. Because the ascertainment of the heirs took almost six years through several instances and due to staff shortages at the probate court, a certificate of inheritance was only issued on 2 March 2016 which identified the plaintiff as the sole heir. A guardian of the estate was appointed, and the plaintiff was prevented from disposing of the estate until the certificate of inheritance was issued. The plaintiff finally sold the KG shares as of 1 January 2017 and realized a capital gain upon disposal.
