Debates over inheritance tax remain intense. Besides a lawsuit by Bavaria's state government over federal jurisdiction, a constitutional complaint regarding tax conditions for business heirs is also being discussed in Karlsruhe.
Should the Federal Constitutional Court reject the current exemption regulations, this would have far-reaching consequences, as DIHK president Peter Adrian explains: "Behind every family business are people, employees, trainees, and often entire regions that depend on these operations. If we want to protect them, productive business assets must continue to be exempted under inheritance tax."
Reliable conditions for succession are particularly crucial for family-run small and medium-sized enterprises to secure investments, employment, and value creation in Germany, Adrian added.
It’s not about privileges
"It’s not about privileges", he clarifies. "The exemption is not a subsidy but is subject to strict conditions, such as the continuation of the business or the preservation of jobs."
Why is the exemption rule so important?
Business assets are generally tied up within the company and are not available to successors in the form of liquid funds. They are invested in machinery, facilities, and innovations. As a result, an additional tax burden directly impacts the company's ability to invest and compete.
If the exemption is missing, up to 50 percent of the transferred value may be due as tax. This leaves many heirs with no choice but to sell parts or even the entirety of the business to pay this tax.
The situation around generational succession is already extremely tense. In 2024, the German Chambers of Commerce and Industry (IHKs) held nearly 10,000 advisory sessions with businesses on the verge of transition – a record figure. More than one in four of these businesses is even considering closure due to a lack of suitable successors.
Investments must not trigger tax risks
In such a situation, harsher taxation of generational transitions would send "the wrong signal", said Adrian. "For these businesses, it is essential that they can plan transitions – whether after unexpected deaths or in long-term succession planning – with realistic company valuations, practical retention periods, and robust payroll rules."
His urgent appeal: "Crises not caused by companies must not lead to the loss of exemptions. Business liquidity reserves and essential investments should be possible without incurring new tax risks."
Deferral is not a substitute
The discussed deferral of inheritance tax is not an equivalent replacement for exemption from the economy’s perspective. It merely distributes the burden over time, depriving businesses of funds for investments, innovations, and employment over many years.
Adrian stated: "Any reform of the inheritance tax or adjustments to the current regulations must aim to simplify business succession, secure investments, and safeguard jobs. This is about the core of businesses and, by extension, the future of Germany as an economic hub."
DIHK Demands
Simplification Instead of Intensification
The DIHK demands targeted reforms to improve the legal application of inheritance tax and reduce unnecessary bureaucracy. The focus is particularly on the following measures:
- Evaluate companies in line with the market: Restrictions on availability should already be taken into account during the valuation, and the capitalization factor in the simplified earnings value method should be reduced to a realistic level.
- Design advance deduction in a practical way: The applicable deadlines of up to 20 years after the transfer should be shortened to economically realistic periods. In addition, the deduction should already be taken into account when valuing business assets.
- Define administrative assets in a practice-oriented manner: The error-prone 90 percent limit (§ 13b ErbStG) should be abolished or at least mitigated by taking business debts into account.
- Make the payroll rule crisis-proof: External crises must not jeopardize the exemption. Companies need realistic leeway to respond to developments for which they are not responsible.
- Simplify young financial resources and investment clause: Crisis-related liquidity injections must not be treated disadvantageously for tax purposes simply due to rigid deadlines.
- Key areas:
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- Taxes
- Business Succession
It has been translated with the assistance of AI.
No guarantee is made as to the accuracy or completeness of the translation.
Released 12.10.2026
Modified 14.10.2026
Contact
Dr. Rainer Kambeck
Managing Director Economic and Financial Policy, SME
Christian Lebrecht
Director Employee Taxation, Travel Expenses, Inheritance and Gift Tax