1. Overview
The SPD has announced plans to reform the inheritance tax to hit very large estates harder and close tax loopholes that currently allow the wealthiest heirs to pay little or nothing. The party says ordinary private inheritances, such as family homes, should be protected. SPD parliamentary leader Matthias Miersch signaled a draft law soon and argued that ‘rich heirs must contribute more to the common good; this is a question of justice.’
2. Key elements of the proposed reform
The proposed changes aim to increase taxes on ‘super‑heirs’ and to reduce or restructure preferential rules for very large business inheritances. At the same time, the SPD plans to shield typical private inheritances — for example by introducing a life allowance that keeps normal family homes and everyday inheritances tax‑free. The reform tries to balance fairness, revenue needs and protecting viable family businesses.
2.1 Specific measures described
- Raise effective taxation on extremely large estates and close loopholes that lower the burden for the richest heirs.
- Reduce or limit long-standing reliefs for business assets that have produced very low effective rates for billion‑euro inheritances.
- Introduce a life allowance or similar exemption to keep usual private inheritances, such as family homes, tax‑free.
- Design targeted rules to protect operational companies while distinguishing between operating capital and purely financial or investment wealth.
- Allow structured deferral options where necessary to avoid disruptive sales, but tighten conditions to prevent abuse.
3. Political debate and reactions
SPD leaders present the plan as a justice and fairness measure that also strengthens public finances. SPD deputy parliamentary leader Wiebke Esdar emphasized that usual private inheritances should be tax‑free under a life allowance, while very large corporate inheritances would face higher taxation to reduce inequality and help make companies future‑proof.
3.1 Critics and opposing arguments
- CSU parliamentary leader Alexander Hoffmann called the proposal ‘performance‑hostile’ and argued for reforms that are friendlier to business and growth rather than higher taxes.
- Some CDU politicians, like Fritz Güntzler, defend exceptions for business assets to secure companies and jobs.
- AfD voices such as Hauke Finger warned the plans would act as a ‘accelerant’ in an economic crisis and criticized risks of double taxation.
4. Data, expert views and context
Several economic institutions and expert councils back changes to how business assets are treated in inheritance taxation. Research institutes including DIW, the national council of economic advisers and even the IMF have recommended reducing some of the preferential treatment that currently applies to inherited company assets. Critics of the status quo point out that since 2022 about €7 billion in taxes on business assets were effectively waived, and effective tax rates for the very largest inheritances often approach zero.
| Item | Figure / Note |
|---|---|
| Tax relief on business assets since 2022 | ~€7 billion (estimate) |
| Recorded inheritances in 2024 | €121.5 billion (officially recorded) |
| Estimated true total inheritances (approx.) | About three times recorded amount (~€364.5 billion) |
| Share of wealth over €250 million remaining tax‑free | ~91.6% (analysis by a foundation) |
| Effective rates for billion‑euro inheritances | Tend towards zero under current reliefs |
| Context | Experts call for reduced exemptions and better targeted rules to improve fairness. |
5. Legal timeline and next steps
The SPD move comes ahead of an expected ruling by Germany’s Federal Constitutional Court in the first quarter of 2026 on the constitutionality of special benefits for business assets in inheritance tax law. SPD leaders say they will present a draft law soon that responds to both the court decision and the demand to close loopholes.
5.1 Expected sequence
- Federal Constitutional Court ruling (expected Q1 2026) on preferential treatment for business inheritances.
- SPD publishes a draft reform aligned with legal requirements and political goals.
- Parliamentary debate and negotiation, including possible cross‑party adjustments to protect viable firms.
- Adoption of new rules that balance continuity for operating businesses with higher taxation of extreme wealth.
6. Potential impacts and considerations
If well designed, the reform could reduce wealth concentration, increase fairness in the tax system and raise revenue by better taxing very large estates while keeping ordinary private inheritances protected. Poorly designed changes could, however, create uncertainty for family businesses or force asset sales if reliefs are removed without practical transition rules.
International models show it is possible to spare operational companies from disruptive taxation while taxing non‑operational wealth more heavily. The debate will focus on how to implement safeguards — such as clear definitions of operating assets, reasonable deferral options and limits on loopholes — so the policy achieves fairness without harming productive companies.
7. Key takeaways
The SPD plan aims to tax extreme inheritances more fairly, close loopholes for the wealthiest heirs, and protect normal private inheritances with a life allowance. The proposal is driven by justice and revenue goals but faces criticism from conservative parties and concerns about business impacts. Expert bodies back reforming reliefs for business assets, and a constitutional court decision in early 2026 is likely to shape the final outcome.
- Keywords: inheritance tax, estate tax, super‑heirs, tax loopholes, life allowance, business assets, wealth inequality, constitutional court, SPD reform.
- Main message: higher taxes on extreme inheritances combined with protections for typical family inheritances.
- Watchpoints: court ruling, draft legislation, treatment of operational companies, and safeguards against double taxation or forced sales.
