In its judgment on inheritance and gift tax of 17 December 2014, the Federal Constitutional Court has provided legal clarity. The Court held that the preferential tax treatment for the transfer of business assets — given the jobs thereby protected — is in principle compatible with the Basic Law, and objected only to certain individual aspects of the existing rules. For more detailed information, please refer to the article Bundesverfassungsgericht zur Erbschaftsteuer by Steffen Rechtsanwälte in Bocholt.
Frequently asked questions
Frequently asked questions
When did the German Federal Constitutional Court rule on inheritance and gift tax?
The German Federal Constitutional Court issued its ruling on inheritance and gift tax on 17 December 2014. The decision provided legal clarity regarding tax relief for the transfer of business assets.
Is the preferential tax treatment of business assets constitutional?
The Federal Constitutional Court has held that the preferential tax treatment for the transfer of business assets is, in principle, compatible with the German Basic Law. This is justified in particular by the protection of jobs, which the preferential treatment is intended to safeguard.
Which parts of the inheritance tax rules were objected to by the BVerfG?
The Federal Constitutional Court did not strike down the entire body of rules, but only objected to specific aspects of the current inheritance and gift tax provisions as unconstitutional. The fundamental framework for relief of business assets, by contrast, remained untouched.
Why does German inheritance tax law favor the transfer of business assets?
The legislator grants tax relief on the transfer of business assets primarily to safeguard jobs within the transferred companies. The Federal Constitutional Court has recognized this objective as a legitimate justification for the unequal treatment compared to other asset classes.