A debate surrounding potential reforms to inheritance tax is gaining momentum in Germany, with representatives from both the Christian Social Union (CSU) and the Social Democratic Party (SPD) indicating a willingness to explore changes.
Alexander Hoffmann, leader of the CSU’s state group, acknowledged a “need for action” regarding the current inheritance tax system, stating that ongoing discussions underscore the possibility of reform. He highlighted concerns that the current structure can be “counterproductive to performance” potentially incentivizing the movement of wealth out of the country.
While expressing openness to dialogue, Hoffmann emphasized that any reform is not a priority, particularly given the absence of specific commitments within the existing coalition agreement. He indicated that the coalition will await a ruling from the Federal Constitutional Court in Karlsruhe before pursuing further action, prioritizing the implementation of commitments already outlined.
The debate is also fueled by calls for greater regional autonomy in determining inheritance tax rates. Hoffmann voiced support for a proposal from Bavaria advocating for the devolution of this authority to individual states. Proponents of this approach believe that it would create flexibility for states to tailor inheritance tax policies to their specific economic circumstances and ultimately reveal which regional approaches prove most effective.