A leading economist is proposing a significant overhaul of inheritance tax regulations, advocating for a lifetime tax-free allowance of €800,000 for beneficiaries. Stefan Bach, a tax expert at the prestigious German Institute for Economic Research (DIW), suggests this measure would simplify the system and alleviate the burden on individuals with limited financial expertise.
Speaking to “Bild am Sonntag” Bach argued that a lifetime allowance of this size would remove many unsophisticated citizens from the inheritance tax system, particularly benefiting those who may lack comprehensive financial planning capabilities. He acknowledged that the proposal could result in a reduction in overall tax revenue but emphasized a potential shift towards greater fairness.
The suggestion comes in response to a similar proposal by Tim Klüssendorf, General Secretary of the Social Democratic Party (SPD), who also advocated for a universal lifetime allowance for inheritance recipients. Bach’s plan further calls for a reassessment of the current preferential treatment afforded to substantial, tax-free transfers of businesses – ranging from hundreds of millions to billions of euros – a practice currently evaluated through a complex “hardship exemption” process. He believes that such large-scale transfers deserve closer scrutiny within the context of broader inheritance tax reform.
