Inheriting around €150,000 in Germany usually arrives tangled up with grief, paperwork and a vague sense that you are supposed to “do something clever” with the money quickly. You are not. The two questions that actually matter are, in order: do I owe any Erbschaftsteuer (inheritance tax) on this, and once that is settled, how do I invest the money without handing a chunk of it to a bank or the taxman I did not need to.
The honest headline for most people reading this: a €150,000 inheritance from a parent or spouse is very often entirely tax-free in Germany, because the personal allowances are large. And once you have confirmed that, the investing part is far simpler than the wealth-management industry would like you to believe. A single low-cost accumulating world ETF inside a cheap German Depot does most of the work.
I have watched friends here freeze for a year over an inheritance, leaving it in a current account losing real value to inflation, terrified of “getting it wrong”. This is my attempt to walk you through both layers calmly.
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See the full curriculum — €147, 30-day guarantee →First, the inheritance-tax layer: Erbschaftsteuer allowances
German inheritance tax works through personal tax-free allowances (persönliche Freibeträge) that depend entirely on your relationship to the person who died. The closer the relationship, the larger the allowance and the gentler the tax band. Only the amount above your allowance is taxable, and even then at rates that start low for close family.
How we calculate: see the tax calculation assumptions for the exact assumptions behind these figures.
For a €150,000 inheritance, the relationship is usually decisive. A child inheriting from a parent has an allowance of roughly €400,000, so €150,000 sits comfortably below it and no tax is due. A surviving spouse or registered partner has an even larger allowance (around €500,000, plus a separate pension-related allowance in many cases). Where people get caught is inheriting from someone more distant: a sibling, a niece or nephew, a friend or an unmarried partner, where the allowance drops to around €20,000 and the tax rate on the excess is materially higher.
These are 2026-vintage figures, given as approximate bands to orient you, not as a guarantee. Verify the current numbers and how they apply to your exact situation with the German tax authorities and, for anything non-trivial, a Steuerberater. You can start with the German Federal Ministry of Finance at bundesfinanzministerium.de.
| Relationship to deceased | Approx. tax-free allowance | Tax class / band |
|---|---|---|
| Spouse or registered partner | ~€500,000 | Class I (lowest rates) |
| Child (per parent) / stepchild | ~€400,000 | Class I |
| Grandchild | ~€200,000 | Class I |
| Parent / grandparent (on inheritance) | ~€100,000 | Class I |
| Sibling, niece/nephew, in-laws, divorced spouse | ~€20,000 | Class II |
| Unmarried partner / unrelated | ~€20,000 | Class III (highest rates) |
You still have a filing duty
Even when no tax is due, you generally have to notify the relevant Finanzamt of the inheritance, usually within three months of learning of it. Being under the allowance means you likely owe nothing, but it does not remove the reporting obligation, so do not ignore the letter. If the estate includes a property, a business share, or gifts the deceased made to you in the previous ten years, the picture gets more complicated and is exactly where a Steuerberater earns their fee.
Second, don’t rush: park the money while you decide
Grief is a terrible state in which to make a permanent financial decision, and there is no prize for deploying the money in week one. It is completely reasonable to leave the full €150,000 in a covered account for a few weeks while you settle the estate, notify the Finanzamt and work out what the money is actually for.
While it sits, keep it somewhere boring and safe rather than in a zero-interest current account. An instant-access savings account keeps it liquid; remember the EU deposit guarantee protects roughly €100,000 per person per bank, so at €150,000 you are slightly over that limit at a single bank until you deploy it. The point is not to chase yield here, it is to stop the money quietly losing purchasing power while you think.
Define what the money is for before you invest a cent
Before choosing any fund, split the €150,000 by time horizon. Money you might need within two or three years (a property deposit, paying off expensive debt, a cash buffer) should stay in cash or near-cash and never touch the stock market. Money you genuinely will not need for a decade or more is what belongs in equities, where the volatility is a feature you are paid for over time, not a bug.
For most people this ends up as a simple split: keep an emergency buffer plus any earmarked short-term spending in cash, and invest the long-term remainder. If you are unsure how large a bond or cash cushion you want alongside equities, my beginners’ guide to ETFs walks through the trade-offs.
Build a simple accumulating all-world core in a cheap Depot
For the long-term portion, you do not need fifteen funds. A single broadly diversified, accumulating (thesaurierend) all-world UCITS ETF, holding thousands of companies across developed and emerging markets, is a complete equity portfolio for most German investors. Accumulating funds reinvest dividends internally, which keeps your paperwork simpler and lets compounding run without you manually reinvesting.
Hold it in a low-cost German Depot. The neobrokers and established online brokers here charge very little, and many offer a Sparplan (automated savings plan) so you can drip additional money in monthly on top of the lump sum. I compare the options in my roundup of the best broker for German investors in 2026. To sanity-check the fund itself, the free UCITS ETF comparison tool lets you line up total expense ratios and tracking against each other before you commit.
Whatever you do, resist the urge to hand €150,000 to a private bank or wealth manager charging 1% or more a year. That fee compounds into a genuinely large sum over decades for a portfolio you can replicate yourself for roughly 0.2% all-in. I ran the maths on exactly this temptation in wealth manager versus DIY ETF investing.
Mind the German investor taxes: Vorabpauschale and Sparer-Pauschbetrag
Once invested, your ETF is subject to normal German investment taxation, not inheritance tax again. Two things to know. First, the Sparer-Pauschbetrag gives you a tax-free allowance on investment income (around €1,000 per person per year, roughly €2,000 for a jointly assessed couple); set up a Freistellungsauftrag with your broker so this allowance is applied automatically. Second, accumulating ETFs are subject to the Vorabpauschale, a small advance lump-sum tax charged annually even though the fund did not distribute, calculated from a base rate and your fund’s value. Your German broker normally calculates and withholds it for you, but it is worth understanding so it does not surprise you. I explain the mechanics in the Vorabpauschale guide.
This analysis sits within our ETF taxes in Europe by country.
Lump sum or phase it in?
The evidence is that investing a lump sum immediately beats drip-feeding the same amount over time in roughly two out of three historical periods, simply because markets rise more often than they fall. Mathematically, if this were someone else’s money, I would deploy the long-term portion in one go.
But this is not someone else’s money, it is an inheritance, often loaded with emotion, and the regret of investing everything the week before a 20% drop is real. A sensible middle path is to invest a large first tranche now and phase the rest in over three to six months, not over years. That caps your regret without leaving the money in cash indefinitely. I weighed this specific decision for inherited money in lump sum versus DCA for an inheritance.
What I’d do
If I inherited €150,000 from a parent in Germany, I would first confirm the inheritance is under my ~€400,000 allowance and therefore tax-free, notify the Finanzamt, and then do nothing financial for a few weeks. I would carve out an emergency buffer plus anything I need within three years and keep it in cash. The rest I would put into one accumulating all-world UCITS ETF in a cheap Depot, set up a Freistellungsauftrag, invest a big first tranche immediately and phase the remainder in over about four months. For a distant-relative inheritance where the allowance is only ~€20,000, or where property or a business is involved, I would pay a Steuerberater before touching anything. The temptation on inherited money is to be clever. The winning move is usually to be simple, cheap and patient.
Fourteen countries, one calculation: the free EU dividend tax calculator compares what an investor actually keeps from the same distribution.
Frequently asked questions
Q: Do I pay inheritance tax on €150,000 inherited from a parent in Germany?
A: In most cases no. A child’s tax-free allowance from a parent is around €400,000, so a €150,000 inheritance sits well below it and no Erbschaftsteuer is due. You should still notify the Finanzamt of the inheritance, usually within three months, even when no tax is owed.
Q: What is the German inheritance-tax allowance for a spouse?
A: A surviving spouse or registered partner has a personal allowance of roughly €500,000, plus in many cases a further pension-related allowance. That means inheritances well beyond €150,000 are frequently tax-free between spouses. Confirm the current figures for your circumstances with the tax authority or a Steuerberater.
Q: Where should I keep the money while I decide how to invest it?
A: Somewhere safe and liquid such as an instant-access savings account, a money market fund, or a short-dated bond ETF. Note the EU deposit guarantee covers roughly €100,000 per bank, so at €150,000 you are briefly over that limit at a single institution. There is no rush to invest, but do avoid leaving it in a zero-interest current account where inflation erodes it.
Q: Should I invest the whole inheritance at once or spread it out?
A: Historically, investing a lump sum immediately has beaten phasing it in about two-thirds of the time, because markets rise more often than they fall. For inherited money, a reasonable compromise is to invest a large first tranche now and drip the rest in over three to six months to limit regret, rather than sitting in cash for years.
Q: What taxes will my ETF face once I have invested the inheritance?
A: Normal German investment taxation applies, not inheritance tax again. You get a Sparer-Pauschbetrag allowance of around €1,000 per person per year on investment income, and accumulating ETFs incur the annual Vorabpauschale advance tax, which your German broker typically calculates and withholds. Set up a Freistellungsauftrag so your allowance is applied automatically.
Q: Do I need a financial adviser to invest a €150,000 inheritance?
A: For the investing itself, usually not; a single low-cost accumulating all-world ETF in a cheap Depot covers most people. Where professional help genuinely pays is the tax side, especially if you inherited property, a business share, or from a distant relative with a small allowance, in which case a Steuerberater is worth the fee.
This guide is part of our hub on investing a windfall, inheritance or payout — browse the full cluster for related situations.
European UCITS/ETF investor with 11+ years building a global dividend and index portfolio, and founder of Financial Expert Class. I write every guide here from first-hand experience investing across EU brokers and tax regimes — not theory. More about me →