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SPD Proposes Changes to Inheritance Tax Targeting Wealth Inequality
The Social Democratic Party (SPD) has put forward proposals to reform Germany’s inheritance tax, arguing that the current system is inequitable, especially because the wealthiest individuals pay comparatively little tax. The SPD’s plan aims to increase taxation on large inheritances while protecting smaller estates, with the intent to address perceived social injustice in wealth transfers. These proposals include ending certain exemptions, such as those benefiting business heirs, which have been criticized as loopholes allowing significant tax avoidance. The SPD conceptualizes a life-long tax allowance for private heirs but wants to abolish exemptions for business succession to ensure larger estates contribute fairly [Source 1][Source 8].
Union and Economic Lobby Groups Criticize SPD’s Inheritance Tax Plans
Reactions from the conservative CDU/CSU Union and various business associations have been sharply critical, describing the SPD’s inheritance tax reform as the wrong approach, especially at this economic juncture. The Union argues that increasing taxes on sizeable inheritances would send negative signals to investors and entrepreneurs, potentially harming job creation and economic growth, particularly within the German Mittelstand (SMEs). The CSU has explicitly rejected higher tax rates, emphasizing instead the importance of reforming tax reliefs linked to business succession to close loopholes without raising rates. Business leaders from chemical and automotive sectors echo concerns, warning that taxing family-owned enterprises more heavily could threaten employment and regional prosperity. The Union insists on abolishing the current “need for relief” test but fears the SPD’s plan imposes new burdens instead of fostering economic stability [Source 3][Source 6][Source 7].
Implications for Expats and Foreign Residents in Germany
For expatriates, international students, and foreign workers residing in Germany, changes in inheritance tax rules could have a range of practical effects. Those holding property or assets in Germany or those who stand to inherit German assets should consider the potential for adjustments in tax liabilities, especially if the estates involved are substantial. Currently, the rules allow for certain exemptions, such as the tax-free inheritance of family homes if the heir resides there for at least ten years and the property does not exceed 200 square meters. Should the SPD’s reform pass, some of these provisions, particularly for larger estates, might be tightened or eliminated, possibly increasing costs for heirs. Staying informed on application deadlines and updated regulations will be vital. Expats with cross-border assets should also seek tailored advice given the complexity of inheritance law in international contexts. The debate highlights the importance of proactive estate planning and consultation with tax professionals to navigate potential changes effectively [Source 7][Source 8][Source 1].
For additional details, readers can refer to the original report by Tagesschau: Union kritisiert SPD-Vorschläge für neue Erbschaftsteuer [Source 1].
