High costs for a large grave complex built as a second grave in a cemetery can reduce inheritance tax.

If the construction of a mausoleum for the deceased is appropriate because of his lifestyle or because of religious requirements and customs and if he was only provisionally buried in the first grave site, heirs can deduct the costs incurred in individual cases from the estate to reduce inheritance tax, decided the Federal Fiscal Court (BFH) in Munich in a judgment released on Thursday.

(AZ: II R 8/20)

In this specific case, it was about two Muslim brothers.

When one died in 2017, the surviving brother became the sole heir.

He initially buried his relatives in a smaller grave monument.

He claimed the costs of 9,300 euros as a debt to the estate.

Because of the reduced inheritance, the tax office also set a lower inheritance tax.

However, the heir objected and submitted a construction contract from 2019 for the construction of a mausoleum in which the deceased brother should find his final resting place.

The tax office must also consider the costs of 420,000 euros as an estate liability, so that the inheritance tax must be further reduced.

However, the construction of the large tomb was not specified in the will.

The heir referred to verbal agreements with his brother.

Like the tax office, the Munich tax court dismissed the plaintiff.

The BFH has now ruled that normally only the costs for a memorial that was erected first are deductible for inheritance tax.

In individual cases, however, this could also apply to a mausoleum intended as a second grave.

The prerequisite for this is that the first burial place was only provisional and the mausoleum was intended as the final resting place.

The second grave must also be appropriate.

What is considered appropriate depends on how the deceased lived and how much he left behind.

The customs and religious guidelines customary in his circles also played a role.

If the costs for the second grave exceed the appropriateness, they are to be reduced accordingly and only the reasonable costs are to be taken into account in the inheritance tax.

According to these specifications, the Munich Finance Court must examine the case again.