Inheritance and gift tax – Policy advice for companies, associations, and institutions

FinTax policy advice – public affairs agency based in Berlin

Understanding inheritance tax.
Classifying reforms.
Protecting interests.

Inheritance and gift tax is a key element of asset and business succession in Germany. It influences investments, transfers of ownership, and location decisions – especially for family businesses that ensure economic stability across generations.

At FinTax policy advice, we support you in identifying political and legal developments in the area of inheritance and gift tax at an early stage, evaluating them thoroughly, and addressing them strategically.

Focus on inheritance tax – succession, investments, and location stability

Inheritance tax has an impact that extends far beyond the inheritance event itself: it plays a decisive role in determining whether businesses can continue to operate, jobs can be secured, and corporate structures can be maintained. A legally compliant, predictable structure is therefore highly relevant for companies, especially small and medium-sized enterprises and family businesses.

Our analysis provides guidance in this politically, legally, and economically highly complex environment – with a focus on:

Reform proposals for exemption regulations and valuation law
Legislative initiatives and tax policy plans at federal and state level
Administrative practice and state decrees (including the 2017 state decree, 2019 guidelines)
Coalition agreements, political guidelines, and parliamentary group initiatives
Current BFH and BVerfG case law
Discussions on fairness, location attractiveness, and substance taxation

Relevant developments in inheritance and gift tax

For years, inheritance and gift tax has been caught between fiscal interests, constitutional requirements, and the goal of not jeopardizing business succession through tax burdens. Requirements imposed by the Federal Constitutional Court, extensive legislative changes, and subsequent application decrees and guidelines have fundamentally changed the framework conditions for the transfer of business assets in recent years.

The focus here is on the constitutionally compliant design of exemption regulations, the valuation of business assets, the implementation of succession arrangements in small and medium-sized enterprises, and tax planning for family businesses.

1. Aftermath of the last major reform in 2016 – what has happened so far

Judgment of the Federal Constitutional Court of December 17, 2014
In its ruling of December 17, 2014, the Federal Constitutional Court declared key exemption provisions in inheritance and gift tax law (Sections 13a, 13b, 19 ErbStG, old version) to be unconstitutional insofar as they gave excessive privileges to large business assets.

Inheritance tax reform 2016
On July 1, 2016, the Act to Amend the Inheritance Tax and Gift Tax Act in line with the ruling of the Federal Constitutional Court (Inheritance Tax Adjustment Act – ErbStAnpG) of November 4, 2016 came into force. It contains a new system for exempting business assets with several regulatory instruments (including a so-called advance deduction, standard exemption, optional exemption, exemption deduction, and exemption requirement test).

Clarification by the tax authorities
The tax authorities initially attempted to address the many open questions of interpretation with a coordinated state decree dated June 22, 2017, on the application of the amended provisions of the Inheritance Tax and Gift Tax Act and later with new inheritance tax guidelines 2019 (ErbStR) dated December 16, 2019.

2. Constitutional clarification and debates on distribution policy – looking to the future

Inheritance tax is and remains a key tax and social policy issue.

Constitutional law:
Another case concerning inheritance tax is currently pending before the Federal Constitutional Court. The subject matter is, in particular, the valuation rules for business assets and their impact on large-scale business succession. A decision (expected in 2025) could once again necessitate fundamental adjustments.
Distribution policy:
In view of the ongoing economic crisis and growing budgetary pressures, the debate on distributive justice, wealth taxation, and contributions by particularly wealthy groups is becoming more intense. Inheritance tax is at the center of political debate.
Political discussion:
At the federal and state levels, adjustments to allowances, exemption mechanisms, and the expansion of the tax base are being discussed. At the same time, business associations are calling for planning security and continuity.

3. Classification

The reforms of recent years mark a fundamental change in the inheritance and gift tax system:

A shift away from flat-rate benefits toward complex, differentiated exemption rules that are subject to certain conditions.
Higher requirements for planning security and tax succession strategies for family businesses.
Increasing importance of corporate agreements for maintaining tax privileges.
Ongoing political debate about the balance between fiscal burden, constitutional protection, and location promotion.

In practice, this means that business succession and asset transfers must be planned early, in a legally secure and strategic manner, in order to minimize tax risks and preserve location opportunities.

What you get from us – for your successful positioning in inheritance and gift tax policy

Our tax policy advice provides guidance, strengthens your position vis-à-vis politicians and administrators, and ensures compliance with regulatory requirements. We support you in identifying developments in inheritance and gift tax policy at an early stage, assessing their economic and legal implications in a well-founded manner, and representing your interests effectively.

Your advantages:

Our tax policy consulting services:

Contact & Consultation

Would you like to know which inheritance and gift tax policy developments will affect your company or industry—and how you can respond to them?

Talk to us. We analyze. We evaluate. We argue. Let us represent your interests together—in a well-founded, understandable, and strategic manner.