When Christian von Stetten took the lectern in the Bundestag on September 29, 2016, he was both alarmed and satisfied. “If family businesses had to take an inheritance tax surcharge into account when calculating prices in the future, this would massively worsen their competitiveness,” calls the Union rapporteur. But thank God: “I’m glad that was prevented.”
Since 2009, company inheritances can be completely exempt from tax. In 2014, the Federal Constitutional Court objected to this privileging of business assets. The highest court mandate to the grand coalition of the Union and the SPD at the time was to reform the law. But on that Thursday 2016, the Bundestag passed a reform that meant that multimillion-dollar companies could continue to be transferred practically tax-free.
Today, social democrats like Carsten Sieling call this result a “worse improvement”. At the time, Sieling, as mayor of Bremen, was involved in negotiations for the federal states. He saw how the reform was softened by lobbying and blackmail. The social mood is changing today, says Sieling. But he expects strong headwinds again when it comes to making inheritance tax fairer: “My optimism about quick solutions is rather low.”
In hardly any other European country is wealth distributed as unequally as in Germany. While the poorer half of society hardly has anything the top percent a third of the total assets. Redistribution has taken place from the bottom up in recent decades, and this is also due to the unfair taxation of inheritances.
“Do you think that’s fair?”
An estimated 300 to 400 billion euros are given away or inherited in Germany every year, the majority of which is not recorded for tax purposes. In 2024, the state collected just 13.3 billion euros from inheritances and donations.
Almost no tax is due on large assets, which is because they are usually tied up as business assets. If someone inherits an apartment worth 1 million euros, 30 percent inheritance tax is due above the exemption amount. If someone inherits a housing company with 30 apartments worth 30 million euros, with a good tax advisor you don’t have to pay anything.
On Lawyers specializing in corporate tax law such as Christoph Juhn explain in service videos“how large assets can be transferred completely without inheritance and gift tax” – namely with the exemption requirement test – and at the end you ask yourself: “Do you think that’s fair?”
The exemption requirement test has been in place since the above-mentioned reform of 2016 and applies to large assets from 26 million euros. Anyone who can prove that they do not have private capital to pay the tax debt at the time of the transfer will have it waived.
Two attitudes in the Union
45 people took this test in 2024. How the tax justice network showsthey inherited company shares worth an average of 260 million euros and only gave 1.5 percent of this in the form of taxes. As a result of these and other exceptions, Germany loses out on 8.8 billion euros annually, according to Federal Government the largest government tax subsidy.
The Federal Constitutional Court is currently reviewing exceptions for business assets, specifically the exemption requirement test. Even entrepreneurs and their lobbyists do not believe that it is really constitutional.
In 2025, the leader of the Union parliamentary group in the Bundestag, Jens Spahn, described the distribution of wealth in Germany as a problem and was open to a real reform of inheritance tax. The mood in the CDU is divided, according to the group: one half shares Spahn’s view, the other half wants nothing to change.
The SPD already presented in the second week of January. Their concept stipulates that every company heiress can inherit tax-free for 5 million euros. All other exceptions, including the need for exemption test, should be deleted. The Union’s reaction: It doesn’t work at all! Anti-performance! Dangerous for the economy! Socialism! Class struggle! Spahn himself rejected the SPD’s “offer to talk”: wrong time, wrong signal.
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SPD concept “buried in the evening”
Only the chairman of the CDU workers’ wing, Dennis Radtke, is calling for his party to go above and beyond Daily Mirror to “look for gaps in justice not only in citizens’ money, but also elsewhere”. When it comes to inheritance, the state knowingly and willingly gives away billions. But the party leadership does not want a tax debate a few weeks before the state elections in Baden-Württemberg.
The SDP member Norbert Walter-Borjans, who helped negotiate the inheritance tax reform in 2016 as chairman of the Conference of Finance Ministers, says: “It started the same way back then as it does today.” As soon as you want to include the largest inheritances – as Karlsruhe demands – “they go on the barricades”. By “them” he means the highly wealthy family entrepreneurs and their representatives in the Bundestag.
For example, the Mittelstand Parliamentary District (PKM), the largest group of representatives in the Union parliamentary group. Christian von Stetten, who then as now speaks as PKM chairman and heads the Bundestag’s economic committee, absolutely wants to prevent taxation of business assets. Regarding the SPD concept, von Stetten says: “In the morning, the previously uncoordinated concept was presented by the SPD, in the afternoon we discussed it and buried it in the evening.” Von Stetten is allowed to call himself baron, a title that he does not attach importance to in conversation in the Italian restaurant next to the Brandenburg Gate. He orders pizza and Coke and talks like a down-to-earth businessman.
Von Stetten’s CV on the Bundestag website shows a long list of functions in companies and investments in them: from real estate to the community energy park. You can say that he also speaks in his own interest when he advocates for business heirs.
“Tough lobbying”
The aristocratic scion is also the deputy mayor of Künzelsau, the headquarters of the Würth Group. Company patriarch Reinhold Würth, who inherited the former screw wholesale business from his father in 1954 sea Business Insider With a fortune of over 33 billion euros, he is the third richest man in Germany. Im On average, Germans own 163,000 eurosWürth owns 200,000 times as much.
Von Stetten sees no problem with this. “It is better that we have these large family businesses here in Baden-Württemberg than if they were sold to the Chinese or an American stock corporation.” The family businessman, he also emphasized that in the Bundestag in 2016is by no means just an employer, “but he also takes care of social and private problems”. A feudal understanding shines through, which fits with the family tree.
Von Stetten sees his task then as now as taking into account “the special needs of large German family businesses”. As early as 2016, he emphasized that he received many letters from the entrepreneurs concerned, “who now point out the catastrophic consequences that will occur if we make a mistake in the legislative process. That’s why this is not banned lobbying.”
Norbert Walter-Borjans speaks of “hard-core lobbying” by family businesses. “Works councils were put in charge and said, as desired: If an inheritance tax comes, our jobs will be gone.”
The fairy tale of tax ruin
The fact that company heirs have to give up or sell the business in order to pay the tax is a frequently used argument. In its concept, the SPD has already given every company heir a tax exemption of 5 million euros and wants to spread the remaining tax liability over 20 years.
The story of company heirs emigrating or selling is probably a fairy tale. When CDU Finance Minister Wolfgang Schäuble presented a bill for the constitutional taxation of inheritances in 2015, the business associations painted a horror scenario on the wall: company bankruptcies and job losses were inevitable. When the taz started looking If I was looking for medium-sized businesses that the inheritance tax would have driven to ruin, the research ended in nothing.
The law was passed in the Bundestag with the votes of the SPD. But the SPD-governed states and Thuringia, led by the Left Party, did not agree in the Bundesrat, and the law went to the mediation committee.
“That alone was a success,” says Sieling, the former mayor of Bremen. “But the Union continued to be united against stricter rules and blackmailed us in the mediation committee – either this law or the inheritance tax will be suspended entirely.” The Federal Constitutional Court had set a deadline until the end of 2016. It is feared that if no new regulations are in place by then, the tax, the income from which goes to the states, would be eliminated entirely.
Times of crisis are times for higher taxes
Walter-Borjans, then Finance Minister in North Rhine-Westphalia, says: “That was the threat, but it was never a given that it would actually happen.” He and some of his colleagues were of the opinion that we should take a chance. “Because without an agreement, the Constitutional Court would not abolish the tax as a whole, but rather the criticized privileges for the largest inheritances. But we were unable to prevail with this.” Not even against the then First Mayor of Hamburg, party colleague Olaf Scholz.
In October 2016, the SPD states approved the law, including the exemption requirement test, against their better knowledge. “The unrestrained way in which the loopholes were used and everything that was not nailed down was declared to be business assets,” says Walter-Borjans, “has ensured that the tax is now even more unconstitutional.”
If Karlsruhe objects to the inheritance tax again, the legislature will have to get back to it. Wait for the verdict and then take a look, says the Union. Christian von Stetten says: “If a reform comes, it must not put German family businesses at a disadvantage compared to stock corporations and foreign corporations.” A flat tax, regionalization or abolition would then also be discussed. Scenarios that less or no tax revenue would mean.
But history shows: Higher taxes on wealth have always been levied in times of crisis. And then it was conservatives who implemented it.