The proposed overhaul of inheritance tax by Germany’s Social Democratic Party (SPD) is drawing fierce criticism from leading industry associations, who warn of damaging consequences for the nation’s economy and family-owned businesses. The plans, slated for public unveiling this week, are being characterized as a misguided intervention at a time when stability and investment are urgently needed.
The German Chemical Industry Association (VCI) has voiced particular concern, labeling the proposed reforms a “misplaced signal” delivered at an inopportune moment. Berthold Welling, Head of Law and Tax at the VCI, argued that while politicians frequently champion the importance of small and medium-sized enterprises (SMEs) and family businesses, legislative actions increasingly contradict such rhetoric. He highlighted the substantial portion of family business capital tied directly to the operational assets of the company, emphasizing that any additional tax burden will likely curtail investments and jeopardize employment. “Family businesses need planning certainty, not debates about tax hikes” Welling stated.
The “Family Businesses and Politics” Foundation echoed this sentiment, launching a scathing rebuke of the SPD’s approach. Rainer Kirchdörfer, the foundation’s director, warned that the proposed model would ultimately prove detrimental to the entire nation, leading to a decline in overall prosperity. He termed potential increases as “drastic” and projected a direct negative impact on both medium and large family businesses.
Details emerging suggest the SPD aims to raise the inheritance tax exemption threshold, but simultaneously plans to abolish the ten-year rule, a provision allowing for tax-free gifts or inheritances every decade. This pairing, critics argue, negates the benefits of the increased exemption while adding significant complexity and uncertainty.
Kirchdörfer further contended that the impending tax adjustments would exacerbate the ongoing economic recession, diminish the competitiveness of German businesses and necessitate reductions in private investment. He dismissed potential tax deferral options as insufficient, arguing they would only worsen the financial situation of affected companies and put their creditworthiness at risk. The Foundation’s head accused the SPD of resurrecting “an outdated tax increase concept” that will deepen structural weaknesses and undermine the global competitiveness of numerous German enterprises, ultimately impacting both businesses and employees. The swift and robust backlash underscores the political sensitivity surrounding the SPD’s proposals and highlights the potential for significant economic disruption.