Family Breaks

Unusual Allies on Inheritance Tax

Who are your friends. German Finance Minister Schäuble faces widespread opposition to his inheritance tax plans.
  • Why it matters

    Why it matters

    Around 90 percent of German companies are family-run, and could face big inheritance bills if the plans move forward.

  • Facts


    • A top court ruled last December that inheritance tax breaks for family-run businesses were illegal.
    • German finance minister Wolfgang Schäuble proposed a revised law last month that has been rejected by much of his own center-right CDU party and backed by state finance ministers from the left-leaning SPD instead.
    • Each of the 500 largest family companies in Germany are worth more than €100 million, according to a study by the Center for European Economic Research.
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Germany’s political scene has been gripped in the past few weeks by a peculiar fight over changes to inheritance tax breaks for the country’s storied family-owned companies.

It’s a battle that is creating odd political partnerships and pitting business groups against each other. The outcome will impact how nearly 90 percent of German companies that are family owned are passed down to future generations.

The wrangling began in December, after a top court ruled that the broad exceptions which exempt family-run businesses in Germany from paying inheritance taxes were illegal, and gave the government until mid-2016 to produce a new, fairer law.

Last month, Germany’s finance minister Wolfgang Schäuble, unveiled a proposal that would dramatically scale up the government’s earnings from family-run companies to satisfy meet the court’s directive.

Ironically, Mr. Schäuble’s backers are mostly from the political opposition. At a meeting of financial ministers from federal and state governments, Mr. Schäuble, a member of the center-right Christian Democrats of Chancellor Angela Merkel, found most support for his proposal from Social Democrats, the junior partner in Ms. Merkel’s government.

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