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German Economic Council Urges Inheritance-Tax Overhaul With Lifetime Allowance and Tighter Business Relief

A formal government response is due within eight weeks, setting up a coalition test over taxing large transfers of wealth.

Overview

  • The annual report delivered on 12 November calls for replacing repeatable personal allowances with a single lifetime exemption, tested at about €1 million for close relatives.
  • The council proposes sharply scaling back preferential treatment for business assets, including reducing relief below €26 million in value, while offering generous tax deferrals to avoid forced sales.
  • Member Veronika Grimm filed a minority opinion warning that higher burdens on business inheritances would be risky given weak private investment and the importance of family firms.
  • Member Achim Truger argues for higher contributions from very large estates and has floated a solidarity levy on top earners, citing high wealth inequality and that roughly 30–50% of assets stem from inheritances and gifts.
  • Political lines are hardening as SPD factions signal openness to curbing privileges for large corporate estates, while CSU leader Markus Söder rejects any inheritance-tax hikes and has suggested devolving the tax to the states.