Current German inheritance tax is unconstitutional

According to the Bundesfinanzhof (German High Court for Fiscal Matters), it is possible that the current inheritance tax is unconstitutional. The High Court has called for a review by Germany's Federal Constitutional Court. According to the last amendment, operational property was exempted from the inheritance tax, since many small and medium enterprises are taxed as if they were an individual person.

The Bundesfinanzhof has now declared that transferring personal property into a corporate property is too easy and potentially provides an opportunity for fraud.

The current law is presently being reviewed, and soon the Bundesverfassungericht will make a decision. Although the income of the inheritance tax belongs to the individual federal states (Länder), a federal law regulates said tax. If Bavaria were able to vote on this issue, all indications are that the Free State would abolish the tax entirely.



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