Inheritance Tax

Keeping It in the Family

resized Man and young man in wealthy looking room source Photonica World Getty Images 66695313
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  • Why it matters

    Why it matters

    Businesses are worried that the plan to cut some tax breaks for the heirs of family-run businesses will hurt Germany’s econonomically vital small and medium-sized companies.

  • Facts

    Facts

    • Chancellor Angela Merkel’s coalition government is tasked with implementing changes to federal inheritance tax laws following a Constitutional Court ruling in 2014.
    • The judges ruled that Germany’s complicated tax code under charges family-owned companies, compared with other forms of capital inheritance.
    • Small family-owned businesses can transfer assets without taxation; the normal inheritance tax rate in Germany is a maximum 50 percent.
  • Audio

    Audio

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Owners of small and medium-sized family businesses, which form the backbone of Germany’s economy, will continue to enjoy inheritance tax breaks, allowing them to transfer their companies to the next generation without taxation or at a reduced rate, a committee of lawmakers agreed Thursday.

The deal between politicians from Germany’s lower and upper house, the Bundestag and Bundesrat respectively, will restrict the transfer of assets to corporate assets only, excluding, for instance, art work, yachts and old-timer cars.

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