East German family entrepreneurs demand: Get rid of inheritance tax!

East German family entrepreneurs demand: Get rid of inheritance tax!

In a passionate appeal today, Marie-Christine Ostermann, President of the Association of Family Businesses, called for inheritance tax to be abolished for businesses in eastern German states. She argues that companies in these regions were systematically disadvantaged until the fall of the Berlin Wall, especially when it came to building up equity. “The complete abolition of inheritance tax would significantly improve the equity strengthening of family businesses and craft businesses,” emphasizes Ostermann. At the same time, she expresses her skepticism about Markus Söder's (CSU) proposal to make inheritance tax regional and to set different tax rates in each federal state. Ostermann warns of a “patchwork quilt” of divergent regulations that would increase the bureaucratic burden for companies with locations in several federal states. However, he recognized that Söder's proposal was understandable from a Bavarian perspective, especially in comparison to countries like Austria, where there is no inheritance tax.

Chancellor Friedrich Merz (CDU) has already rejected Söder's draft and currently sees no consensus among the federal states regarding the reform. The pressure on decision-makers is growing because inheritance tax has a direct impact on the economic stability and future of family businesses and craft businesses. As the analysis on Zew.de shows, tax burdens on company succession have a significant influence on the success of these companies. The decisions as to whether a business is passed on to the next generation or sold are strongly influenced by the tax conditions.

International comparison of inheritance tax

An international look at inheritance tax shows that Germany is under a lot of pressure compared to other countries. A comprehensive study by KPMG examined 57 countries and shows evidence of tax relief and conditions for business transfers. An example illustrates the situation: If you inherit a company worth 10 million euros, the tax obligations can vary significantly. Some countries have no taxes at all, while others impose high rates. This shows how different the tax framework conditions are internationally.

In Germany, tax exemptions of up to 100% are possible for small and medium-sized enterprises (SMEs) under certain conditions, while graduated tax rates of up to 30% apply to transfers between family members. In comparison, Austria does not levy an inheritance or gift tax, only a real estate transfer tax for specific transfers.

The path to reform

The discussion about inheritance tax is becoming increasingly relevant not only in Germany, but also in an international context. Ostermann and other representatives of family businesses see the need for a fundamental reform that takes the special circumstances in East Germany into account. The main focus should be on strengthening the companies' equity base.

It remains to be seen how the political discussion around these essential questions will develop. What is clear, however, is that the need for reform is urgent. A clever, fair solution could not only improve the competitiveness of German family businesses, but also make a decisive contribution to economic stability in the country. The next steps must now be taken quickly and in a targeted manner in order to find a sustainable solution.