Background:
In 2014, the Bundesverfassungsgericht ruled that the existing privileges for business heirs were too far-reaching; the legislator was therefore required to enact a new regulation by 30 June 2016. The grand coalition reached a compromise on 20 June 2016, which was passed as law by the Bundestag on 24 June 2016.
On 8 July 2016, the federal states called upon the Mediation Committee to fundamentally revise the provisions adopted by the Bundestag with regard to business heirs.
Adjournment:
The negotiations between the federal government and the federal states on the reform of inheritance tax in the Mediation Committee have now been further adjourned until 21 September 2016.
Source: Bundesrat online
Frequently asked questions
Frequently asked questions
Why did the inheritance tax need to be reformed in 2016?
In 2014, the Federal Constitutional Court ruled that the previous privileges granted to heirs of businesses were too far-reaching and violated the principle of equality. The legislature was required to enact a constitutionally compliant new regulation by 30 June 2016.
When did the Bundestag pass the Inheritance Tax Reform Act?
The grand coalition reached a compromise on the reform of inheritance tax on 20 June 2016. The Bundestag passed the corresponding act on 24 June 2016.
Why was the Mediation Committee convened on the inheritance tax reform?
On 08 July 2016, the federal states (Länder) referred the matter to the Mediation Committee because they considered the rules on tax relief for business heirs adopted by the Bundestag to be in need of revision. The aim was a fundamental overhaul of the reform.
Was the inheritance tax reform completed by the deadline of 30 June 2016?
No, the deadline set by the Bundesverfassungsgericht (Federal Constitutional Court) of 30 June 2016 was not met. The Bundestag did pass a law in time, but the federal states referred it to the Mediation Committee, so the reform did not enter into force.
When were the negotiations in the Mediation Committee adjourned to?
The negotiations between the federal government and the states on the inheritance tax reform in the Mediation Committee were adjourned to 21 September 2016. No agreement had been reached at that point.