Many business owners in Germany have built up their wealth over decades, whether in the form of a business, real estate, or a securities portfolio. Now, there are political proposals on the table that could significantly change the existing rules on wealth succession – and quite soon.
SPD presents new concept for succession planning
In January 2026, the SPD, a party in Germany’s ruling coalition, presented its “FairErben” concept. Officially, it is merely a “position paper,” not a draft bill and not a done deal. And yet it makes unmistakably clear where things are headed, at least if the coalition partner does not object.
A one-time lifetime exemption of one million euros for all gifts and inheritances
Perhaps the most far-reaching proposal is a recipient-based lifetime exemption of one million euros. However, it would apply only once in a person’s lifetime and cover all gifts and inheritances.
The ten-year rule currently in effect in Germany, which allows assets to be transferred in a tax-optimized way through staggered gifts, would be completely eliminated. Thus, anyone who has been systematically transferring shares, real estate, or capital every ten years would lose an important tool in their succession strategy. Additionally, the tax system, which is currently tiered according to the degree of relationship, is to be replaced by a uniform progressive rate, which would make large transfers in particular significantly more expensive.
Business transfers face a heavy tax burden
The proposal provides for a tax exemption of five million euros for business transfers. The existing tax relief provisions, which previously exempted 85 percent or even all business assets from taxation, are to be completely abolished.
According to estimates by the German Chamber of Industry and Commerce, companies with annual revenues of around 10 million euros or more will fall into the fully taxable bracket. In other words: A company that generates just under 400,000 euros in annual profit could already be valued at over 5 million euros for tax purposes, thereby exceeding the tax-exemption threshold. An owner-managed family business that has existed for generations could thus face a tax burden that is not easily manageable. As a solution, the SPD proposes deferral options. However, even deferred taxes must be paid in full, which slows down investment and makes loans more expensive.
Companies without succession planning face financial difficulties
It is clear what would happen if these proposals became law: Since no entrepreneur can afford to own a company that, in the event of their sudden death and transfer to their heirs, would plunge the latter into financial difficulties and threaten the company’s very existence, the entrepreneur would be forced to step down from their company as early as possible. Building a large and valuable company would simply be irresponsible, as it would jeopardize the very existence of both the heirs and the company itself. This would not bode well for Germany as a hub for business and startups.
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Timely planning for assets and succession is recommended in every case
None of this is law yet, and – at least given the current political situation – it is unlikely to be implemented. But the governing coalition’s political direction has, after all, been set.
It is therefore advisable to take action promptly if you:
- wish to transfer assets worth more than one million euros,
- own a company valued at over five million euros,
- have so far relied on staggered gifts within the ten-year period,
- have previously benefited from existing business asset exemptions.
The tools of anticipated succession, usufruct arrangements, and corporate restructuring are still fully available today. However, the window of opportunity for effective planning could be closing – not only because of the aforementioned SPD proposal, but also because it is foreseeable that the Federal Constitutional Court will announce its long-awaited decision on the constitutionality of inheritance and gift tax laws in the coming months.
We would be happy to work with you to determine how your interests can best be safeguarded in light of these developments.
