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German Government Proposes Changes To Inheritance Tax

by Glen Shapiro, LawAndTax-News.com, New York

18 December 2007


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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