The Federal Ministry of Finance (BMF) wants the inheritance tax reform to adhere exactly to what the Federal Constitutional Court has stated in its ruling. After all, the new law would have to stand up to a renewed examination by the highest judges.
The key points known so far are thus much more restrictive than expected. In order to make use of the exemption regulation, company heirs and companies would have to prove that they cannot bear the inheritance or gift tax or that the company is at risk.
In mid-December 2014, the judges in Karlsruhe overturned the generous exemption of business assets, which allowed company heirs to be fully or partially exempted from the tax burden. The prerequisite here was the preservation of jobs or a high commitment of capital to production.
Exemption limit includes 98% of all companies
According to dpa, an exemption limit of 20 million euros per inherited business asset is now planned for the needs test as part of the inheritance tax reform. The business community criticises this limit and demands an increase. The BMF points out that in 2013 about 98% of all transferred businesses were below this value limit. With a higher limit, the new regulation could again not stand up to scrutiny by the Federal Constitutional Court.
Private assets to be considered when calculating inheritance tax
What is new is that in future the private assets of the heirs or donees are to be included in the consideration. However, the inheritance tax burden on private assets is to be limited in the case of a business succession.
Assets that are necessary for the business’ are to be spared in the future as well. In addition, the BMF plans to introduce a de minimis limit of one million euros for small businesses. If the value of the business is below this limit, the retention of employees in the case of a business succession does not have to be proven in order to claim tax exemption.
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