VDA President on today’s ruling by German Constitutional Court
“The Federal Constitutional Court has made it clear that the inheritance tax benefit for transferring corporate capital is basically compatible as such with the country’s Basic Law. However, the judges indicated that the regulations governing the transfer of major corporate assets need correcting. The Constitutional Court sees the legislature as responsible for setting ‘precise and practicable’ criteria in this area. Politicians now have the task of developing new yardsticks for taxation when companies pass to the next generation. The Constitutional Court also stated that taxation must not jeopardise the existence of a company and the jobs it provides,” stressed Matthias Wissmann, President of the German Association of the Automotive Industry (VDA), commenting on today’s Constitutional Court ruling concerning inheritance tax.
Wissmann pointed out that the small and medium-sized automotive suppliers in particular were facing huge challenges: in addition to globalisation, electric mobility and connectivity demanded heavy investment in research and development. He underlined, “The companies’ economic capacity is revealed by the fact that they managed to expand their workforce again in 2014. Yet that does not happen by itself – international competition is getting tougher. Many family-run suppliers will have a new generation of owners in this decade. Precisely for this reason it is important that politicians apply moderation when drawing up new rules for inheritance tax, and not put companies and their jobs at risk.”