No tax class privilege for foreign family foundations after all

The establishment of a foreign family foundation is subject to inheritance or gift tax in Germany at a rate of 30 or even 50 percent of the transferred assets. For domestic family foundations, on the other hand, there is a so-called tax class privilege, which results in a significantly lower tax burden. The Cologne Fiscal Court had expressed doubts about the compatibility of this unequal treatment with European law and referred the case to the ECJ for a preliminary ruling. On November 13, 2025, the ECJ announced its ruling on this matter and, subject to compliance with the principle of proportionality, found no violation of the free movement of capital. Dr. Michael Feldner explains the ECJ's decision in DB Steuerboard.