Statement delivered by Matthias Wissmann, President of the German Association of the Automotive Industry (VDA), concerning today’s Cabinet resolution on inheritance tax
“The German Cabinet decision on reforming inheritance tax is a compromise that actually does not go far enough. It will require additional improvements as it passes through Parliament to avoid putting the numerous family businesses in the automotive supply industry at a disadvantage when it comes to inheritance tax.
“The proposed upper limit for company assets of 26 million euros is too low for the “means test.” Instead, the legislators should apply the guideline value of 100 million euros suggested by the Federal Constitutional Court. Furthermore, the requirement that capital be tied up over the very long period of 40 years for a higher upper limit to apply bears no relation to entrepreneurial practice.
“In addition there are more unanswered questions, including which financial assets will actually count toward a company’s assets in the future. The crucial factor is that the inheritance does not lead to shortages of liquidity and that capital is not removed from companies, which they urgently need for innovations and investments precisely in times of ever tougher international competition.
“Many family-run supply companies will be passed on to the next generation within this decade. This is another reason why it is important for policy-makers to move forward now with moderate amendments to the inheritance tax rules, and not jeopardize the existence of firms and their jobs. The SMEs are one of the pillars on which Germany’s economic strength is built. Further burdens on these companies should therefore be avoided. The opportunity for major improvements to the draft bill must now be grasped as a matter of urgency.”