Background: • 27 September 2012: BFH considers the inheritance tax unconstitutional • 19 October 2012: Proceedings pending before the BVerfG (Az. 1 BvL 21/12) • 6 June 2013: Bundestag adopts the recommendation of the Mediation Committee on the AmtshilfeRLUmsG – end of the so-called Cash-GmbH. Against this background, the Bundesverband der Steuerberater (BVStB) examined the question of whether, after 26 years of unconstitutional inheritance and gift tax, it is possible to design an inheritance and gift tax law that largely dispenses with valuation issues. On 17 June 2013, the BVStB therefore publicly presented a simplified, enrichment-based model for inheritance and gift tax for discussion. We have briefly summarised the key points of this draft for you:
• Businesses and real estate should be able to continue unchanged without any pressure to sell. The tax on assets that are not sold should be payable out of the income they generate.
• Non-income-producing assets should be captured and taxed as comprehensively as possible (broadening and monitoring of the tax base).
• The tax focuses on liquid inflows to the heir or donee as a concrete, market-independent increase in ability to pay.
• Spouses and partners in a registered civil partnership, as a community of acquisition and support, should not have to bear any tax on asset transfers between each other.
• Valuations should, as far as possible, be replaced by actual values.
• The tax rate should be set uniformly at 10%, since a progressive bracketed tariff with marginal tax rates of 50% requires, in a particular way, a valuation that meets the principle of equality.
You can access the full discussion paper in its first revised version on the BVStB website www.bvstb.de.
Frequently asked questions
Frequently asked questions
Why was a simplified model for inheritance and gift tax proposed?
The background is the decades-long debate about the constitutionality of the inheritance and gift tax. On 27/09/2012, the BFH ruled the tax to be unconstitutional and referred the matter to the Federal Constitutional Court (Az. 1 BvL 21/12). In response, the Bundesverband der Steuerberater (BVStB) presented a simplified, enrichment-oriented model for public discussion on 17/06/2013, which largely dispenses with complex valuation issues.
What uniform tax rate does the BVStB model propose for inheritance tax?
The BVStB proposes a uniform tax rate of 10%. The rationale is that a progressive tiered tariff with marginal rates of up to 50% would require an especially equality-compliant valuation, which is hardly achievable in practice. A uniform, low rate is intended to simplify the tax and make it constitutionally robust.
How should businesses and real estate be treated under the BVStB model?
Businesses and real estate should be able to continue operating unchanged, without pressure to sell. The resulting inheritance or gift tax should be payable from the ongoing earnings of these assets, provided they are not sold. This is intended to preserve the substance of the assets and avoid liquidity shortfalls.
How are spouses and registered civil partners treated under the simplified model?
Spouses and partners in a registered civil partnership are to be regarded as a single economic and support community. Transfers of assets between them should therefore not be subject to inheritance or gift tax. This recognises the close economic ties within the partnership for tax purposes.
What role does asset valuation play in the simplified model?
The model aims to replace valuations as far as possible with actual figures. The decisive factor is to be the liquid inflows to the heir or recipient as a concrete, market-independent increase in ability to pay. Non-income-producing assets are to be captured as comprehensively as possible in order to broaden the tax base and keep it controllable.