Business Succession Planning

German inheritance and gift tax law is currently under close scrutiny from both a constitutional and a political perspective. Particular attention is being paid to the extensive inheritance and gift tax relief available for business assets, which has played a central role in business succession planning to date.

Several cases before the Federal Constitutional Court, together with political debate on potential reforms, could lead to changes in the tax framework governing future transfers of business assets. For entrepreneurs and family-owned businesses, this could have significant implications for inheritance and gift tax liabilities.

Anyone planning or preparing for business succession should therefore assess at an early stage which structuring options are currently available and what risks may arise from potential changes in the law.

Current Cases Before the Federal Constitutional Court and Initial Reform Proposals

Possible Implications of Current Developments for Business Succession

Potential changes could affect future business successions, particularly in terms of predictability, structuring options and the tax burden:

• The tax burden may increase: Depending on the outcome of the proceedings currently pending before the Federal Constitutional Court (BVerfG), inheritance and gift tax liabilities could increase. The implementation of the SPD’s reform proposal could also result in a higher tax burden in many business succession cases.
• Tax relief may be more limited in the future: There is a risk that the extensive relief currently available for business succession will no longer apply in its present form. If the Federal Constitutional Court (BVerfG) finds the relief for business assets to be unconstitutional, new legislation could provide for significantly lower exemptions.
• Timing considerations are becoming increasingly important: The current relief for business assets is under review by both the Federal Constitutional Court and policymakers. For planned business successions, it may therefore be appropriate to consider using the existing provisions while their availability remains sufficiently certain.
• Legal uncertainty may complicate planning: Given the pending proceedings, neither the outcome nor its implications can currently be predicted with certainty.

How We Can Support You

We help you take potential changes in the law into account at an early stage in your business and succession planning and carefully assess the relief currently available for business assets. Our aim is to clarify potential tax liabilities, identify optimisation measures in good time and implement them in compliance with applicable law.

In addition, we can assist you with

• the valuation of shares, business assets and real estate,
• the preparation of consolidated statements of assets (“Verbundvermögensaufstellung”) for inheritance tax groups (“Verbund”),
• the preparation of valuation, inheritance tax and gift tax returns,
• the monitoring of holding periods and payroll monitoring periods,
• the calculation of the relevant payroll amount, and
• coordination with the tax authorities.

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