Anyone who inherits millions or billions does not necessarily pay a lot of inheritance tax. On the contrary: special rules apply to large corporate assets that can significantly reduce or even eliminate the tax burden. The Hamburg Senate is therefore calling for a reform of the inheritance tax and is hoping for tailwind from the Federal Constitutional Court in Karlsruhe, which is hearing two inheritance tax lawsuits on Monday and Tuesday.
"The inheritance tax, as it is, is no longer fair; it must be reformed," said Finance Senator Andreas Dressel (SPD) on Tuesday at the state press conference. In particular, the extensive tax breaks for large corporate assets have been criticized for years. “It is no longer acceptable that billions in taxes are waived through the exemption requirement test,” said Dressel.
According to the Senate, 857 million euros in inheritance tax were waived in Hamburg between 2016 and 2025 as a result of the regulations. Hamburg is therefore committed to a reform that “strengthens tax justice, but also protects jobs and continues to enable necessary investments and business transfers.” This included a minimum taxation of large corporate assets as well as long-term deferral regulations so that the continuation of operations was not jeopardized.
The reason for the debate are two proceedings before the Federal Constitutional Court. From Hamburg's perspective, the focus is on a constitutional complaint against tax concessions for company assets. The complainant sees heirs of private assets at a disadvantage compared to heirs of companies. Karlsruhe is now examining whether these differences are compatible with the Basic Law.
In addition to the controversial discounts for company assets, Karlsruhe is also dealing with a second procedure. This is a lawsuit brought by the Bavarian state government. Bavaria considers parts of the inheritance tax to be unconstitutional and is calling for, among other things, higher tax allowances and greater consideration of regionally different real estate prices.
The Hamburg Senate rejects this initiative. Regionalizing the inheritance tax would trigger tax competition between the states, argues Finance Senator Andreas Dressel. It cannot be the case that countries compete for wealthy testators through low inheritance taxes. Such a development would be “bureaucratic, absurd and undignified,” he said.
The Senate receives support from the SPD parliamentary group. Their budget spokesman Milan Pein described the debate as a “question of justice”. It is not fair “if large corporate assets can be transferred almost tax-free through extensive exceptions, while no comparable exemption rules apply to private assets.” The SPD is promoting a reform with a company allowance of five million euros as well as deferral regulations for additional burdens.
The left goes even further. Their budget spokesman David Stoop spoke of a “tax privilege for the super-rich”. “Anyone who inherits a single condominium in Hamburg will quickly find themselves over the tax allowance and will have to pay proportionately more taxes than the heirs of multi-million fortunes,” he said. The exemption requirement test makes “the super rich needy by law”. The Left is also calling for tax advantages for family foundations to be abolished.
The AfD, on the other hand, has a significantly different approach. Citizens' representative Peggy Heitmann spoke out in favor of the complete abolition of inheritance and gift taxes. "The inheritance tax is fundamentally unfair. Instead of constantly reforming it and creating new burdens, it should finally be abolished," explained Heitmann. The minimum taxation required by the Senate could make company successions more difficult and endanger investments.
Criticism of Hamburg's reform plans also comes from the Taxpayers' Association. Its state chairman Sascha Mummenhoff is calling for higher allowances that are regularly adjusted to inflation. The tax burden on private heirs has been gradually increasing for years because the allowances have remained unchanged since 2009, while real estate prices and assets have increased significantly.
The association also warns of the consequences of higher taxation of business assets. "A workshop is not a bank account. A high company value does not mean that the money is available to pay taxes," said Mummenhoff. Even long deferral periods do not automatically solve possible liquidity problems for companies.
Unlike the Hamburg Senate, the Taxpayers' Association does not fundamentally reject regionalization of inheritance tax. Different real estate values and economic structures suggest that the states' scope for action should at least be seriously examined, explained Mummenhoff.
