Inheriting real estate with a foreign connection

The answer to this for German nationals can be found in the European Inheritance Regulation (EuErbVO). According to this, the national law of succession of the state in which the deceased had his habitual residence at the time of his death is to be applied.
Let us look at two examples
Example 1: The deceased is a German citizen. He spends the autumn and winter months of each year in his holiday home on Mallorca. In January he dies without a testamentary disposition. The habitual residence of the deceased at the time of death was thus in Spain. Spanish inheritance law applies to the entire estate.
However, the testator can influence the applicable law of succession by stipulating that the law of the state to which he or she belongs at the time of the choice of law or death should be applied.
Example 2: The situation is the same as Example 1, but this time the testator has, before his death, made a Will before his death and expressly stipulated German inheritance law for himself. This choice of law means that German law applies to the succession - even though his habitual residence at the time of death was in Spain.

Risk of double taxation
Under tax law, however, the situation is different when inheriting a property from abroad: The entire estate, i.e. all domestic and foreign assets of the deceased, is subject to German inheritance tax - provided the deceased was a resident within the meaning of the Inheritance and Gift Tax Act at the time of his death. This is the case if he or she had a domicile or habitual residence in Germany or, as a German national, had not lived abroad for more than five years.
However, since the inheritance tax systems of the individual states are not coordinated, there is a risk in cross-border inheritance cases that a foreign state may levy inheritance tax on the same inheritance.
However, in order to avoid double taxation, Germany has concluded double taxation agreements in the area of inheritance tax only with Denmark, Greece, Austria, Sweden, Switzerland and the USA. In these cases, inheritance tax paid abroad is (regularly) credited against German inheritance tax.