This is probably a scheme designed to avoid a tax of some kind (or perhaps to conceal the fact that no taxes were reported in income from the asset).
My first guess would be that it would be to evade a wealth tax on net worth assessed on a given date each year, but Germany's wealth tax was struck down in violation of the German constitution in 1995.
Another possibility is that what is being called a "gift" to you is being reported as an "expense" or capital investment in a depreciable asset, by him or one of his companies, thereby reducing an income tax burden.
On one hand, if this isn't truly a gift and you cooperate by receiving the asset and then returning it, you are at a minimum you are knowingly conspiring to participate in evasion of German or UK taxes (which is a crime for both of you, one that Germany is unlikely to seek your extradition to prosecute if the taxes evaded are German, but the UK would prosecute if the taxes evaded were UK taxes).
At worst, are engaged in money laundering which might be prosecuting as a crime in the U.K. too. Money laundering is basically concealing the source, ownership or purpose of assets to evade some other law, and is a crime.
For example, the story about reducing taxes might be a lie and the true reason might be to hide assets from a creditor, a divorcing spouse, or assets obtained illegally through a criminal enterprise. The fact that he was really doing something more than evading taxes wouldn't be a defense if he was really doing something more nefarious, as you still knew that the money was being laundered.
Even if it was found to be merely a "fraudulent transfer" to you while he was insolvent, rather than true money laundering, someone could still sue you to get the money improperly transferred to you back, possibly together with legal fees and costs and interest and civil penalties.
On the other hand, if it is a true gift (and your friend would be in no legal position to argue otherwise), you could alway just keep the money he gave to you with an understanding that it be returned, although that would be a betrayal of his trust, arguably an act defrauding him which he could complain against you criminally for (even if he couldn't sue to get the money back), and at a minimum would permanently destroy the friendship.
Overall, the safest course of action would be to decline to participate in this arrangement as it is probably illegal.