(de-news.net) – According to a concept paper jointly drafted by the SPD’s leadership and its parliamentary caucus, the party has put forward a detailed proposal for a comprehensive reform of Germany’s inheritance tax system, a development that has been reported in several national media outlets. The reform is explicitly framed as an effort to enhance distributive fairness, with the intention of increasing the tax burden on extremely large inheritances while simultaneously reducing the financial obligations for small and medium-sized estates. This dual focus reflects the party’s attempt to balance equity concerns with economic practicality, seeking to relieve pressure on middle-class families while addressing wealth concentration at the top.
Central to the proposal is the introduction of a lifetime tax allowance of approximately 1 million euros per heir, largely independent of familial proximity. This new mechanism is intended to replace the current approach, under which comparatively lower exemptions can be claimed repeatedly at ten-year intervals. Under the SPD’s envisioned system, the lifetime allowance would encompass the cumulative value of all inheritances an individual receives throughout their life, thereby simplifying the tax structure and potentially reducing administrative complexity. The party indicates that the bulk of this allowance would be allocated to inheritances received from immediate family members, with a smaller portion reserved for transfers from more distant relatives or non-family members. Importantly, owner-occupied residential properties would remain exempt from taxation, provided that heirs continue to occupy the property, a measure that reflects the party’s effort to protect personal and familial housing stability.
To safeguard the continued tax-free transmission of the majority of family-owned businesses, the SPD proposes an additional exemption of 5 million euros specifically for business assets. This provision is designed to ensure that family enterprises can be transferred across generations without jeopardizing operational continuity or liquidity. Only business valuations exceeding this threshold would be subject to taxation, and the party further proposes the option of deferring payment obligations for up to twenty years, a mechanism aimed at mitigating potential cash-flow pressures on heirs while preserving the long-term viability of these enterprises. Beyond these defined exemptions, larger inheritances would face an increased tax burden, although the concept paper does not yet specify the precise rates or tiers, leaving room for further legislative refinement and debate.
The SPD estimates that the implementation of these measures could generate additional public revenues in the low single-digit billions of euros annually. The party intends for these funds to be primarily allocated toward the education sector, including the modernization of both schools and higher education institutions, as well as the recruitment and retention of highly qualified teaching personnel. This investment is framed as a strategic effort to bolster Germany’s long-term innovation capacity, productivity, and global competitiveness, signaling a broader vision in which fiscal policy serves as a lever for sustainable economic development. The party’s coalition partners, the Christian Democratic Union (CDU) and the Christian Social Union (CSU), have, to date, expressed skepticism regarding the proposed reforms, highlighting the political challenges that lie ahead in achieving consensus on a significant restructuring of the inheritance tax system.
