Inheritance tax in China: Assets are transferred as undiminished through taxes as far as possible

What about inheritance tax in China? China has no inheritance tax, but charges a transfer fee (Fangchanguohufeizong) when real estate assets are transferred upon death. Inheriting a house worth 1 million euros would cost around 80.000 euros in fees. Therefore, if possible, real estate should not be held directly. Corporate law solutions may be available. Germany and China have not concluded any agreements or contracts under international law in this regard. This means that if tax liability still exists in Germany, both countries will levy taxes and fees. However, Germany would credit the fees paid in China proportionately if the purchase in Germany results in a tax at all.

More critical is the transfer of business assets that a German company holds in China. While domestic business assets, no matter how high they may be, can be exempted up to 100%, foreign assets are subject to tax from the first euro. Entrepreneurs would therefore do well to structure asset development with inheritance tax aspects in mind.