German top court weighs tax breaks for heirs of family businesses
The Constitutional Court heard a challenge to sweeping inheritance tax exemptions for business assets, brought by a man who inherited only private wealth. A ruling is months away.
Archive image · Photo: DrHackbert / Wikimedia Commons, CC BY-SA 4.0 (cropped and resized)
Germany's Federal Constitutional Court on Tuesday morning heard a challenge to the country's inheritance tax rules. The case was brought by a man who inherited a securities account and other private assets from his aunt and had to pay tax on them. After losing before the tax courts, he argues he is treated unconstitutionally worse than heirs of companies. On Monday, the court heard a separate complaint by the state of Bavaria seeking regional tax rates.
Under current law, business assets below 26 million euros can be 85% exempt if the heir keeps the firm running for five years, with full exemption possible after seven years and further conditions. For larger estates, the tax can be waived if heirs show they cannot pay from private wealth. The DGB trade union federation puts the cost of the exemptions this year at almost 9 billion euros. In 2025, inheritance tax revenue hit a record 13.3 billion euros.
DGB deputy chair Stefan Körzell called the rules a form of pampering the rich that the country can no longer afford. The BDI industry federation argues that business assets are often tied up long-term in machinery or buildings. Finance Minister Lars Klingbeil of the SPD said on Sunday he plans a reform after the ruling: "As soon as the Federal Constitutional Court has clarified the legal framework, we want to implement it." Conservatives reject SPD plans for a 5 million euro allowance for businesses.