German Government Proposes Changes To Inheritance Tax
The German cabinet last week gave approval to an initiative which will ease the
inheritance tax payments that family members are faced with when businesses are
transferred between them.
However, the proposal, which was compiled by a working group headed by SPD
Finance Minister Peer Steinbrueck has already faced strong criticism from several
quarters. Under the proposed measure, the family member inheriting the business would
immediately be liable for 15% of the IHT liability, with the remaining 85% only
payable if control of the firm is transferred away from the new family owner
before the expiry of a 15 year period, or if employee wages drop below 70% of
their pre-transfer average. However, according to reports, Erwin Huber, Christian Social Union (CSU) head,
has suggested that many of the provisions contained in the planned new draft
are "economically not defensible". Georg Brunnhuber of the co-governing Christian Democrats, also reportedly weighed
in on the debate, and was quoted by Reuters as announcing that: "If the finance minister doesn't answer our questions, there will be no
further consultation."
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