If business heirs own more than 26 million euros, they actually have to pay tax. A loophole in the law allows them to avoid this.
Springer CEO Mathias Döpfner received company shares worth 1 billion euros from Friede Springer in 2020 Photo: image
You may have also heard of Susanne Klatten, the BMW heiress and probably the richest woman in Germany. She recently transferred part of her fortune to her three children. The Time has explained it very nicely, writing about “at least 1.5 billion euros” per capita and that it is not yet clear what taxes the children will have to pay – or whether that will be the case at all.
Ha, now think about it: as is well known, business heirs do not pay taxes (as long as the company continues to exist for a while)! But no, I just heard this week: The tax exemption for business heirs only goes up to 26 million euros, maximum 90 million.
To get an exemption, you have to apply for an exemption from that moment on. You have to prove that you are “needy” (that is what it really means), that is to say that you do not have enough private assets to pay the taxes. That can certainly be a threshold, such an application. The tax advisor has to think about something.
The choice of things to do seems quite large, however. For example, company shares can be transferred to a family trust that was set up specifically for the purpose of transferring assets. She had nothing in the account before, so she doesn’t have to pay any tax.
The same goes for children who previously only received pocket money. You can also, like Springer boss Mathias Döpfner, who received 1 billion euros worth of company shares from Friede Springer in 2020, quickly buy additional Springer shares to the value of the expected gift tax – and then you have nothing liquid.
The state is missing out on 2.1 billion euros
Julia Jirmann of the Tax Justice Network investigated this. She rightly points out on the phone that it is at least possible that Döpfner paid a few euros in taxes after all.
Unfortunately, the data from the tax offices does not provide anything more precise – but at least this: last year there were 26 cases in which particularly large corporate assets were saved, so the state waived 2.1 billion euros in inheritance and gift taxes, and the tax rate for major heirs was the same, about 0.1 percent.
“I asked if it could at least be split into male/female or East and West,” says Jirmann. But she suspects the Tax and Customs Administration will not say much about it.
The SPD has miscalculated
Most recently, in 2014, the Federal Constitutional Court declared the tax exemption scheme for corporate heirs unconstitutional. In 2016, the grand coalition presented a new law. Financial expert Carsten Schneider defended the law on behalf of the SPD parliamentary group in the Bundestag against criticism from the Greens and the Left: The super-rich – “these people, if they inherit more than 26 million euros, now actually have to pay taxes,” Schneider shouted, “they didn’t have to do that before, and they will now, and I think that’s fair.”
Someone has clearly miscalculated – keyword 0.1 percent. This is also a bit funny because Schneider is now the eastern commissioner of the federal government and, because of the enormous wealth inequality between East and West, is calling for a basic inheritance for everyone, financed by a higher inheritance tax “for aspiring inheritance millionaires”. . Maybe he is deliberately not mentioning the billionaires here.
In any case, the inheritance tax has been back with the Federal Constitutional Court since 2022. The Tax Justice Network actually hoped for a ruling in 2023, and this year it doesn’t look like it either. Maybe in 2025 for the federal election campaign. The SPD usually comes up with far-reaching demands.