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Hamburg is hoping for a reform of the inheritance tax, a topic currently under discussion at the Federal Constitutional Court in Karlsruhe. The city could benefit significantly from such a reform.
Current Inheritance Tax System Under Scrutiny
Under the current regulations, individuals inheriting large assets, for example, over 20 million Euros, often pay proportionally less tax than those inheriting smaller amounts. Furthermore, heirs of businesses can, under certain conditions, be completely exempt from inheritance tax. This disparity has led to the Federal Constitutional Court examining whether the inheritance and gift tax can be made fairer.
Hamburg vs. Bavaria: A Regionalization Debate
Bavaria is advocating for each federal state to have its own tax law, similar to trade tax. However, Hamburg opposes this, pushing for a swift nationwide agreement. “It must absolutely remain uniform nationwide, also to preserve legal and economic unity,” said Hamburg’s Finance Senator Andreas Dressel (SPD) on Tuesday at the state press conference.
Dressel Warns Against “Bureaucratic Madness”
Dressel cautioned that regionalization would allow people to relocate their residence shortly before their death to avoid taxes. Moreover, many cases involve families with property in different states, such as Lower Saxony and Bavaria. A regionalized tax system would necessitate adhering to different tax rates, which Dressel described as “total bureaucratic madness.”
Goal of the Reform: Fairer Taxation for Large Estates
The primary objective of the reform is to prevent heirs of very large fortunes from artificially reducing their assets to avoid inheritance tax, according to Dressel. Over the past ten years, Hamburg has lost 857 million Euros due to these loopholes, representing approximately 7.5 percent of the nationwide tax relief volume. This indicates that Hamburg is disproportionately affected by the current system.
A decision from the Karlsruhe court is expected in several months.
Hamburg’s Tax Revenues from Inheritances and Gifts on the Rise
Last year, Hamburg generated 436 million Euros from inheritances and gifts, a significant increase from approximately 218 million Euros ten years ago.
Source: https://www.ndr.de/nachrichten/hamburg/hamburg-hofft-auf-reform-der-erbschaftsteuer,steuer-176.html
