German Inheritance Research Articles

Проблема определения места совместного завещания супругов и наследственного договора в системе завещательных распоряжений

This article examines the place of legal novelties of Russian inheritance law in the system of testamentary dispositions: the inheritance contract and the joint will of spouses. The author explores the problems of the correlation of testamentary dispositions, their priority in the framework of law enforcement practice by notaries. The author raises the question of the expediency of changing the system of testamentary dispositions, changing the structure of regulatory regulation in Part 3 of the Civil Code of the Russian Federation. The author comes to conclusions concerning the flexibility of the approach to the system of testamentary dispositions in domestic inheritance law, conducts a comparative legal analysis with German inheritance law and identifies a potential vector of law enforcement problems in notary practice within the framework of the implementation of the will of citizens in case of death.

Rückläufige Einnahmen aus der Erbschaft- und Schenkungsteuer

Abstract The current German inheritance and gift tax statistics for 2022 suggest rising tax revenues. However, the statistics are misleading, particularly for large estates, because a large proportion of the taxes assessed are subsequently remitted. This is due to extensive tax exemptions for corporate assets. On the one hand, the findings are important for the assessment of the latest inheritance tax reform, which may not meet the requirements of the Federal Constitutional Court. On the other hand, they show that wealth-related taxes are currently declining despite very high wealth inequality in Germany.

Double Taxation with Regard to German Inheritance and Gift Tax

This article provides a comprehensive analysis of double taxation in the field of German inheritance and gift tax. It closes a gap in the literature, as most double taxation scholarship centres on income tax. The article examines the phenomena of double taxation from a legal, as well as economic, perspective. After surveying international literature in this area, the article describes how double taxation in the field of inheritance and gift tax is avoided in Germany unilaterally by crediting foreign inheritance and gift tax against German tax liabilities. Finally, the article comments on the Germany-United States Inheritance and Gift Tax Treaty (1980). The conclusion of the article is that the avoidance of double taxation is inconsistent, causing different taxation results in comparable cases, which conflicts with the principle of equality.

Inheritance Tax Evasion in Germany

Abstract It is estimated, that between 2015 and 2024 about 3 trillion € will be inherited in Germany. Due to far-reaching tax exemptions, the inheritance tax revenue per year is only about 7 billion €. Despite the fact, that the income or value-added tax burden is significantly higher, the inheritance tax is more unpopular than other taxes. The objective of the paper is to figure out, whether there is evidence of high tax evasion in the field of German inheritance tax, with a view to the low tax revenue and the high unpopularity of the tax. Therefore, data from the official inheritance tax statistic is compared with secondary data from studies, which estimate the yearly wealth transfer to the next generation by using survey data. The assumption is, that asset classes, which are easy to evade, should be recorded with a lower amount in the official tax statistic, than in the survey-based estimations. But the results do not show evidence of high tax evasion in the field of inheritance tax. As until now, only a small part of the inheritances is recorded in the official inheritance tax statistic, for the future it is recommended to the government, to record all inheritances in the official statistic. Because of far-reaching reporting obligations, the tax offices anyway have knowledge of most inheritances and the additional bureaucratic effort to record the additional data in the official tax statistic is small.

Behavioral responses to inheritance and gift taxation: Evidence from Germany

The desirability of inheritance and gift taxes depends on individuals’ tax responsiveness. This paper demonstrates how strongly, and in what way, the German inheritance and gift tax influences taxpayer behavior. To that end, it combines administrative data with cross-bracket tax variation: a convex kink in the tax liability precedes a concave kink. Extending the bunching approach to such double-kinked tax schedules, I document that individuals tailor their taxable wealth transfers to the schedules. One type of response dominates for inheritances: testators engage in testament planning. The magnitude of the testament-planning response is comparable to that of inter vivos gifts. However, neither the overall responses of gifts nor those of inheritances heavily interfere with tax revenue collection: the associated short-run net-of-tax elasticities of taxable wealth transfers lie below 0.1.

The inheritance and gift tax in Germany: Reform potentials for tax revenue, efficiency and distribution

The inheritance tax is often seen as an effective tool to reduce wealth inequality, raise public revenues if needed, and increase incentives to work by lowering the tax burden on labour, which is especially high in Germany, according to the OECD. The purpose of this paper is to shed light on the question of whether an inheritance tax is a promising tool for fighting wealth inequality without having distorting effects on the economy. For this purpose, firstly, the distributional effects of inheritances on wealth distribution are evaluated for Germany and are then compared with those in Austria and France, using data from the Household Finance and Consumption Survey (HFCS). A change in German inheritance tax law in 2009 is further used in a difference-in-difference analysis to identify the behavioural effects of the change in the inheritance tax on the volume of bequests, which are large and robust for different specifications.

Behavioral Responses to Inheritance and Gift Taxation: Evidence from Germany

The desirability of inheritance and gift taxes depends on individuals’ tax responsiveness. This paper demonstrates how strongly, and in what way, the German inheritance and gift tax influences taxpayer behavior. To that end, it combines administrative data with cross-bracket tax variation: a convex kink in the tax liability precedes a concave kink. Extending the bunching approach to such double-kinked tax schedules, I document that individuals tailor their taxable wealth transfers to the schedules. One type of response dominates for inheritances: testators engage in testament planning. The magnitude of the testament-planning response is comparable to that of inter vivos gifts. However, neither the overall responses of gifts nor those of inheritances heavily interfere with tax revenue collection: the associated short-run net-of-tax elasticities of taxable wealth transfers lie below 0.1

Zur (In)Korrektheit der erbrechtlichen Terminologie in der polnischen und deutschen Rechtssprache anhand ausgewählter Beispiele. Eine kritische Studie

The linguistic picture of the world as the way of perception of the world determined by the culture and reflected in the language, as well as communicative function of language may constitute a basis for research of two questions: 1) whether - and to what extent - a term used in communication act reflects the intention of the speaker and corresponds to the reflection of the picture of this term in his or her mind; 2) whether the term expressed by the speaker evokes the same - or at least similar - picture in the recipient’s mind. The importance of this matter becomes particularly evident in respect of legal language within the scope of which the utterance precision shall be the main goal of legislators. This article is an attempt at finding the answer whether the terms of Polish and German languages of inheritance law always express the content they shall reflect or whether there are such terms in both languages which suggest on the linguistic basis another content than that supposed by the legislators. The article presents the results of the analysis of the chosen terms describing institutions of Polish and German inheritance law in consideration of the representation function of the terms and the linguistic picture of the world reflected in them.

Effects of Tax Exemptions in the Context of the Inheritance Tax Reform

The 2016 German Inheritance Tax reform brought some modifications to the highly debated new and existing tax exemptions both favouring the transferees of business property. The analysis shows that the unintended consequences of this policy such as unequal treatment of transferees, administrative problems and economic inefficiencies persist. Furthermore, the analysis shows that there is no reasonable economic justification for the existing and highly discriminatory exemptions, which predominantly serve the politically-influential owners of midsize enterprises. Once again, an appeal at the constitutional court may be required and would likely be successful considering the grave shortcomings of the current legislation.

Inheritance tax planning with uncertain future payroll expenses: an analytical solution to the optimal choice between full and standard exemption

Under the German Inheritance Tax and Gift Tax Act, the transfer of business assets can be exempted from taxation up to 100%. However, this exemption depends on the evolution of the company’s payroll, which is highly uncertain. We model the uncertain nature of payroll evolution using a Geometric Brownian motion. We obtain closed-form solutions for the expected effective exemption and for the expected effective tax rate. We find that the uncertainty effect is most pronounced for moderate negative and positive growth rates. Furthermore, higher uncertainty reduces the value of the effective tax exemption. Also, we find that the (partially progressive) German inheritance tax function by trend promotes standard exemption. The results enable tax planners to make an optimal choice between standard or full exemption and allow for calculating the expected tax burden.

The Influence of ECJ Case Law on the German Inheritance and Gift Tax Act

This article describes the German inheritance and gift tax regime in the context of the recent decision of the ECJ in Sabine Hünnebeck (Case C-479/14), concerning the optional resident taxation of EU/EEA citizens. The German rule enshrined in section 2(3) of the Inheritance and Gift Tax Act did not withstand the scrutiny of the ECJ in Hünnebeck and might be changed shortly to bring the Inheritance and Gift Tax Law in line with EU law.

Who benefits from the preferential treatment of business property under the German inheritance tax?

This paper contributes to the recent debate on the tax privilege for business property introduced by the German Inheritance Tax Act of 2009. We shed light on the tax effects of the preferential treatment based on micro-level data of realized business transfers from the German Inheritance Tax Statistic. As the tax exemptions are tied to employment expenses of the transferred business, we combine information from the tax statistic with a simulation of future employment expenses. We then compare the effective tax rates under a preferential treatment to the ones under a non-preferential treatment alternative. Results show that a large portion of business successions is untaxed under the current German inheritance tax law and that average effective tax rates approach zero. Moreover, the preferential treatment levels the differences between the effective taxation of small and large transfers and leads to an almost equal effective tax rate across all tax brackets. We also demonstrate that tax reductions are considerably larger in times of economic growth where the requirements for a preferential treatment are more likely to be met.

Behavioral Responses to Wealth Transfer Taxation: Bunching Evidence from Germany

The desirability of inheritance and gift taxes depends on individuals' tax responsiveness. This paper demonstrates how strongly, and in what way, the German inheritance and gift tax influences taxpayer behavior. To that end, it combines administrative data with cross-bracket tax variation: a convex kink in the tax liability precedes a concave kink. Extending the bunching approach to such double-kinked tax schedules, I document that individuals tailor their taxable wealth transfers to the schedules. One type of response dominates for inheritances: testators engage in testament planning. The magnitude of the testament-planning response is comparable to that of inter vivos gifts. However, neither the overall responses of gifts nor those of inheritances heavily interfere with tax revenue collection: the associated short-run net-of-tax elasticities of taxable wealth transfers lie below 0.1.

Constitutional Review of Tax Laws and the Unconstitutionality of the German Inheritance Tax

AbstractConstitutional review of German tax laws has become a major area for the development of the jurisprudence of the German Federal Constitutional Court, constitutional doctrine, and theory. This Article takes a recent decision in which the German Federal Constitutional Court declared parts of the inheritance tax statute unconstitutional as an example to demonstrate why tax law in particular has become such an interesting field in constitutional jurisprudence. The case is also noteworthy for the court's new views on equal protection, its deference to parliamentary discretion, and the abolishment of the so-called consequentiality doctrine (Folgerichtigkeit) it had introduced ten years before.

Identifying Selective Advantages in the Context of the German Inheritance and Gift Tax Act Reform

Whenever government authorities have discretion, the practice of the European Commission, as well as the ECJ, is to assume that those authorities are affording certain businesses a selective advantage. Not every form of discretion, however, creates a selective advantage. This article analyses the factors that indicate that discretion amounts to a selective advantage in the context of a provision contained in the Draft Bill of 8 July 2015 on the Reform of the German Inheritance and Gift Tax Act.

How Do Employment Tax Credits Work? - an Analysis of the German Inheritance Tax -

This paper contributes to the recent debate on the tax privilege for business property introduced by the German Inheritance Tax Act of 2009. We shed light on the tax effects of the preferential treatment based on micro-level data of realized business transfers from the German Inheritance Tax Statistic. As the tax exemptions are tied to employment expenses of the transferred business, we combine information from the tax statistic with a simulation of future employment expenses. We then compare the effective tax rates under a preferential treatment to the ones under a non-preferential treatment alternative. Results show that a large portion of business successions is untaxed under the current German inheritance tax law and that average effective tax rates approach zero. Moreover, the preferential treatment levels the differences between the effective taxation of small and large transfers and leads to an almost equal effective tax rate across all tax brackets. We also demonstrate that tax reductions are considerably larger in times of economic growth where the requirements for a preferential treatment are more likely to be met.

How Do Employment Tax Credits Work? An Analysis of the German Inheritance Tax

Employment tax credit programs have been repeatedly used during economic crises, although their usefulness is empirically contestable. The objective of this paper is to quantify the tax effects of employment tax credit programs. A recent revision of the German inheritance tax law provides an eminent opportunity to analyze the effects caused by such a preferential treatment. The tax liability depends on a company’s future employment expenses. Hence, we use micro-level data of realized business transfers from the German Inheritance Tax Statistic and combine them with a simulation of the future development of employment over the relevant time-horizon. We identify the magnitude of tax reductions granted to business transfers under a preferential treatment. Further, we demonstrate that these reductions are considerably larger in times of economic growth. Our findings also suggest that employment tax credits have pro-cyclical effects and specifically foster transfers between unrelated parties. Finally, the preferential treatment of business transfers does not provide incentives to increase employment.

Hepatitis C and Metabolic Disorders: Genetics, Mechanism, and Therapies (Clinical and Experimental)

Hepatitis C and Metabolic Disorders: Genetics, Mechanism, and Therapies (Clinical and Experimental)

Endangering of Businesses by the German Inheritance Tax? — An Empirical Analysis

AbstractThis contribution addresses the substantial tax privilege for businesses introduced by the German Inheritance Tax Act 2009. Advocates of the vast or even entire tax exemption for businesses stress the potential damage of the inheritance tax on businesses, as those often lack liquidity to meet tax liability. This submission tackles this issue empirically based on data of the German Inheritance Tax Statistics and the SOEP. The results indicate that former German inheritance tax law has not endangered transferred businesses. Hence, there is no need for the tremendous tax privilege for businesses in current German inheritance tax law. An alternative flat inheritance tax without tax privileges, which meets revenue neutrality per tax class according to current tax law, provokes in some cases relative high tax loads which might trouble businesses.

Breite Bemessungsgrundlage und niedriger Proportionaltarif als alternative Erbschaftsteuerreform – Eine empirische Analyse

AbstractThis submission deals with an alternative to the German Inheritance Tax Reform Act 2009 in form of an inheritance tax with a broad tax base and low tax rates. In contrast to the new German Estate Tax Act we analyse an inheritance tax reform proposal that provides no tax relief for particular asset categories but contains low proportional tax rates. Our empirical analysis shows that abolishing of tax exemptions and market valuation of assets lead to a remarkable broadening of the inheritance tax base and enables substantial tax rate cuts.