I am sorry for the delay in replying. There are not many experts in European law around here.
The answer to your question is:
1. There is no difference in taxation of inheritance based on whether the deceased is a German citizen or not (or how he got his citizenship), nor on the citizenship of their family, nor on where they live.
2. The percentage is calculated as follows:
-> If children inherit, the first EUR 400.000 (four hundred thousand) is exempted. Then, the value of the inheritance above that is progressively taxed at between 7% (up to 75.000 over the 400.000) and 30% (for a value over 26 million EUR);
-> If parents inherit, the first EUR 20.000 (twenty thousand) is exempted. Then, the value of the inheritance above that is progressively taxed at between 15% (same up to 75.000) and 43% (at over 26 million EUR).
3. Any item in the inheritance (including money and debts owed to the deceased) is taken into account for the valuation of the inheritance. Then the exemption amount is deducted, and then the percentage is applied.
The following objects are exempted from the general valuation (they don't go into the calculation of the total value, and are exempted from tax beyond the exemptions based on the degree of kinship):
-> household goods up to 41.000 EUR value; and
-> other items like jewelry and cars, up to a total of 12.000 EUR value.
4. This particular tax is not caught usually in double taxation treaties, and is applied universally on anyone who inherits, because it is the inheritance which is taxed. Therefore, the amount of the tax can only be changed by the value of the goods in the inheritance and the class of heirs which inherits (as you can see, the difference between children and parents in their exemption is huge).
I hope my answer has helped you and look forward to your rating.
Dr I L Vlad