Baldessarelli & Partner


Glossary - Part 1

Sole heir

A sole heir is understood to be a testator who, as the sole legal successor, can dispose of the estate completely freely, without having to observe certain specifications. After the deceased's death, he or she is the sole owner of all the deceased's assets. The term differs from a principal heir or co-heirs. The main heir does not inherit the entire estate, but only the largest part of the assets, whereas co-heirs are the case when there are several heirs.
Although a sole heir does not have to deal with the administration and distribution of the estate, he or she is not necessarily unrestricted in his or her rights and may, for example, only have the right of administration and disposition or be a pre-heir. It is customary that sole heirs cannot claim a compulsory share, as they receive the entire inheritance. Exceptions concern situations when the inheritance is below the value of the compulsory portion. If a sole heir so wishes, he or she can be issued with a sole heir's certificate by application.

Duty to keep records

Legal obligations include the duty to keep records, which entails having to keep certain business records of completed business transactions within a certain period of time. As a rule, this covers a period of between 6 and 10 years. The purpose of the retention obligation is to safeguard the documents and make them verifiable if necessary in order to account for financial transactions or business dealings to external bodies.
Typically, the retention requirement is subject to the principle of archiving for tax-related books, including financial statements, opening balances, inventories, trading books, stock reports and similar papers. Some must be kept as originals; for others, copies or storage on a data carrier are sufficient. Violations of the obligation to keep records entail legal consequences, as they are considered a breach of the obligation to keep records.

Legitimate interest

Legitimate interest concerns the economic, scientific or idealistic interest of a person or an institution and includes the right to information or a service. A person may cite a legitimate interest if certain official registration data or sensitive data are needed to conduct a business case and must be requested by the authority.
The person seeking information must prove to the authority that he or she has a legitimate interest. This is common, for example, in the case of termination of a business relationship in the event of death, a credit check or creditworthiness check, insurance contracts or outstanding debts. Documents such as invoices, account statements, reminders, contracts, applications or a description of the facts are considered as proof of legitimate interest. Legitimate interest is different from legal interest. In the case of the latter, the information requested is common in a legal prosecution or legal defence.

Tax audit

A tax audit is also called an external audit and involves the examination of tax-relevant facts by the tax office. The aim is to find out whether accounting has been implemented correctly. In the course of a tax audit, the taxpayer is investigated, examined and assessed. This can affect private individuals as well as companies.
The scope of the audit varies and relates, among other things, to tax periods, types of tax, circumstances or sub-areas such as the turnover tax special audit or the wage audit. The tax audit always takes place on the taxpayer's business premises, while the auditor must identify himself and record the results in an audit report.


In the legal field, the term "compliance" describes the observance of legal provisions and internal guidelines in a company. Translated, the word means "compliance with the law" or "conformity to rules". This also includes the duty of a board of directors to ensure compliance with certain binding agreements. It includes both legally binding regulations and rules that a company and an organisation implements voluntarily.
Therefore, compliance is also defined as the totality of all operational measures to ensure rule-compliant behaviour in the company and to avert risks. This is possible through comprehensive compliance management, including status and risk analysis, implementation in the company and mechanisms to protect compliance with the rules. This prevents, for example, white-collar crime, tax evasion or money laundering.

Duration of storage

The length of retention relates to data protection. Companies have permission to retain certain data for a longer period of time and to store it until the fulfilment of the conditions for the purpose for which the data was required has taken place. The length of storage is subject to legal requirements. Thus, under certain circumstances, in addition to the legally permissible storage period, it is also possible to apply for the deletion of the data.
Data storage includes all personal data for the purpose of further processing and storage for later availability. Since the European General Data Protection Regulation (GDPR) has been in effect, stricter deletion obligations apply. Data must be deleted if the data subject revokes the consent given for the processing of the data. Non-implementation can result in fines and claims for damages. Inheritance
When a person dies, they usually leave behind certain assets. These are called an estate or inheritance and refer to, for example, cash, savings, shares or real estate, which are considered active assets. However, the estate may also have debts as a component, which are part of the inheritance.
At the same time, the word "heir" also refers to the person who, in the event of inheritance, receives the deceased's assets as a whole or in parts together with others. According to the law of succession, as soon as the deceased dies, the heir is not required to expressly accept the inheritance. It should be noted that the drawing up of a will does not permit the distribution of assets to heirs without restriction, as the closest relatives of the deceased always receive a so-called compulsory share of the inheritance.


Succession is relevant if a deceased person has left neither a will nor a contract of inheritance. In this case, intestate succession applies, which stipulates that the closest relatives, including the children, grandchildren and spouse of the deceased, inherit the assets first. As a rule, spouses are entitled to half of the estate.
If there are neither children nor spouses, the inheritance falls to the parents, siblings and finally uncles and aunts and cousins, who, on the other hand, inherit nothing if there are children. The family of the spouse of the married person also inherits nothing according to the rules of intestate succession. Anyone wishing to bequeath their estate to certain people should therefore make a will in order to avoid disputes between heirs.

Inheritance law

Inheritance law includes all the rules that determine who receives the deceased's assets and how the whole thing is done. The testator can determine the estate himself by drawing up a will or concluding a contract of inheritance. He or she can also disinherit certain persons. The right of inheritance is subject to the conditions of intestate succession. The compulsory portion of an inheritance for children is generally half of the statutory portion of the inheritance. In order to obtain more detailed information on inheritance law, it is often useful to seek the help of a lawyer who can assist heirs in settling their estates or mediate conflicts and disputes between the parties involved.

Inheritance tax

Anyone who inherits something is inevitably confronted with inheritance tax. Inheritance tax is always due when the assets of a deceased person are transferred to another person. Inheritance tax is often supplemented by gift tax. Its amount is determined by the amount of the assets and the tax bracket. Children and heirs are taxed according to tax class I, which accounts for 7 to 30 per cent, while siblings, parents and other relatives fall into tax class II, which covers 15 to 43 per cent of the total value. Persons who are not related to the deceased are in tax class III and pay inheritance tax of at least 30 per cent.

European Data Protection Regulation (EU GDPR)

The European General Data Protection Regulation is related to data protection and has been in force since 2018. It applies to the entire European Union and within the European Economic Area. Its purpose is to set uniform rules on how companies collect, store and handle individuals' private data.
One regulation states that all information may now only be collected with the consent of the person concerned, which can also be revoked at any time. If this is the case, companies must delete the data. The GDPR was introduced for the online service that companies offer where data of website visitors or registered users is processed. This way, people who share their data have more control rights or can more easily understand what is happening with their data.

For any business question or assistance in the field of auditing and consulting, Baldessarelli & Partner, as a professional and experienced business law firm, is at your side.

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