Zusammenfassung
Inhaltsangabe:Abstract:
On May 14th, 2007, the Frankfurter Allgemeine Zeitung announced in its Monday edition that the so-called Grand Coalition, formed of Social Democrats and Christian Democrats, had come to an agreement in principle regarding a fundamental modification of the Inheritance and Gift Tax.
A motion for a resolution containing the achieved compromise had been released to the public the day before. Thus, neither the abolition as intended by some liberal-thinking conservatives, nor a drastic tax increase as demanded by some egalitarian leftists will be the result. A precedent draft of the German Federal Ministry of Finance published last year therefore is very much likely to form the basis of an amended regulation of entrepreneurial succession. There had been long discussions beforehand, attendant on the outstanding ruling of the Federal Constitutional Court, which was expected to assess the differential treatment of acquired assets and its compatibility with the constitution.
Introduction:
Firstly, this thesis addresses, in its section 2, the legal status quo. I will depict in detail the issues of tax liability, valuation of assets, the calculation prescriptions as well as the current preferential treatment of business assets in practice all based on law in force. Next, the relevant changes comprised
in the amending draft are exposed in section 3 with a clear focus on issues dealing with corporate succession, i.e. the transfer of business property. This includes a short, summarizing critique, reflecting how the draft was perceived amongst scientific commentators. In section 5, the ruling of the Federal Constitutional Court is subject to recapitulating representation. The judges dealt
with the issue of preferential treatment of real estate and business property thus discriminating against the acquirers of shares or monies. As law just forms a theoretical framework, thereafter I conduct an assessment on possible individual, economically triggered reactions. Section 6 derives the basic approach of opportunistic behaviour, explaining and anticipating effective action of entrepreneurs. Finally, section 7 draws a conclusion, resuming the findings and possible links to further analysis. Inhaltsverzeichnis: Textprobe:
On May 14th, 2007, the Frankfurter Allgemeine Zeitung announced in its Monday edition that the so-called Grand Coalition, formed of Social Democrats and Christian Democrats, had come to an agreement in principle regarding a fundamental modification of the Inheritance and Gift Tax.
A motion for a resolution containing the achieved compromise had been released to the public the day before. Thus, neither the abolition as intended by some liberal-thinking conservatives, nor a drastic tax increase as demanded by some egalitarian leftists will be the result. A precedent draft of the German Federal Ministry of Finance published last year therefore is very much likely to form the basis of an amended regulation of entrepreneurial succession. There had been long discussions beforehand, attendant on the outstanding ruling of the Federal Constitutional Court, which was expected to assess the differential treatment of acquired assets and its compatibility with the constitution.
Introduction:
Firstly, this thesis addresses, in its section 2, the legal status quo. I will depict in detail the issues of tax liability, valuation of assets, the calculation prescriptions as well as the current preferential treatment of business assets in practice all based on law in force. Next, the relevant changes comprised
in the amending draft are exposed in section 3 with a clear focus on issues dealing with corporate succession, i.e. the transfer of business property. This includes a short, summarizing critique, reflecting how the draft was perceived amongst scientific commentators. In section 5, the ruling of the Federal Constitutional Court is subject to recapitulating representation. The judges dealt
with the issue of preferential treatment of real estate and business property thus discriminating against the acquirers of shares or monies. As law just forms a theoretical framework, thereafter I conduct an assessment on possible individual, economically triggered reactions. Section 6 derives the basic approach of opportunistic behaviour, explaining and anticipating effective action of entrepreneurs. Finally, section 7 draws a conclusion, resuming the findings and possible links to further analysis. Inhaltsverzeichnis: Textprobe:
Leseprobe
Inhaltsverzeichnis
ID 10566
Marcus Bitterlich
German Inheritance Tax Reform
Bachelorarbeit
Hochschule für Technik und Wirtschaft des Saarlandes (FH)
Fachbereich Betriebswirtschaft
Juli 2007
Marcus Bitterlich
German Inheritance Tax Reform
ISBN: 978-3-8366-0566-3
Druck Diplomica® Verlag GmbH, Hamburg, 2007
Zugl. Hochschule für Technik und Wirtschaft des Saarlandes (FH), Saarbrücken,
Deutschland, Bachelorarbeit, 2007
Dieses Werk ist urheberrechtlich geschützt. Die dadurch begründeten Rechte,
insbesondere die der Übersetzung, des Nachdrucks, des Vortrags, der Entnahme von
Abbildungen und Tabellen, der Funksendung, der Mikroverfilmung oder der
Vervielfältigung auf anderen Wegen und der Speicherung in Datenverarbeitungsanlagen,
bleiben, auch bei nur auszugsweiser Verwertung, vorbehalten. Eine Vervielfältigung
dieses Werkes oder von Teilen dieses Werkes ist auch im Einzelfall nur in den Grenzen
der gesetzlichen Bestimmungen des Urheberrechtsgesetzes der Bundesrepublik
Deutschland in der jeweils geltenden Fassung zulässig. Sie ist grundsätzlich
vergütungspflichtig. Zuwiderhandlungen unterliegen den Strafbestimmungen des
Urheberrechtes.
Die Wiedergabe von Gebrauchsnamen, Handelsnamen, Warenbezeichnungen usw. in
diesem Werk berechtigt auch ohne besondere Kennzeichnung nicht zu der Annahme,
dass solche Namen im Sinne der Warenzeichen- und Markenschutz-Gesetzgebung als frei
zu betrachten wären und daher von jedermann benutzt werden dürften.
Die Informationen in diesem Werk wurden mit Sorgfalt erarbeitet. Dennoch können
Fehler nicht vollständig ausgeschlossen werden, und die Diplomarbeiten Agentur, die
Autoren oder Übersetzer übernehmen keine juristische Verantwortung oder irgendeine
Haftung für evtl. verbliebene fehlerhafte Angaben und deren Folgen.
© Diplomica Verlag GmbH
http://www.diplom.de, Hamburg 2007
Printed in Germany
Contents
List of Figures
IV
List of Abbreviations
V
1
Introduction
1
2
Status Quo
2
2.1
Tax Liability
. . . . . . . . . . . . . . . . . . . . . . . . . . .
2
2.2
Valuation, Exemptions & Allowances . . . . . . . . . . . . . .
3
2.2.1
Stocks and Shares . . . . . . . . . . . . . . . . . . . . .
3
2.2.2
Real Property . . . . . . . . . . . . . . . . . . . . . . .
3
2.2.3
Business assets . . . . . . . . . . . . . . . . . . . . . .
3
2.2.4
Foreign Assets and Real Property . . . . . . . . . . . .
3
2.3
Calculation
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
5
2.4
Assessment
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
8
2.4.1
Scheme
. . . . . . . . . . . . . . . . . . . . . . . . . .
8
2.4.2
Algorithm . . . . . . . . . . . . . . . . . . . . . . . . .
12
2.4.3
Tax Rate Cap . . . . . . . . . . . . . . . . . . . . . . .
14
3
The Draft
15
3.1
Purpose and Intention . . . . . . . . . . . . . . . . . . . . . .
15
3.2
Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16
3.3
Calculation
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
17
3.4
Preferential Treatment . . . . . . . . . . . . . . . . . . . . . .
19
3.4.1
Deferral and Waiver
. . . . . . . . . . . . . . . . . . .
19
3.4.2
Classification of Property
. . . . . . . . . . . . . . . .
21
4
Critique
23
5
The Constitutional Court's Verdict
26
5.1
The Head Notes . . . . . . . . . . . . . . . . . . . . . . . . . .
26
5.2
The Reasons . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26
5.2.1
Business Property . . . . . . . . . . . . . . . . . . . . .
27
5.2.2
Real Property . . . . . . . . . . . . . . . . . . . . . . .
28
5.2.3
Shares and Stocks . . . . . . . . . . . . . . . . . . . . .
28
II
6
The Opportunistic Entrepreneur
30
6.1
Increasing Prices . . . . . . . . . . . . . . . . . . . . . . . . .
32
6.2
Constant Prices . . . . . . . . . . . . . . . . . . . . . . . . . .
34
6.3
Price Decline
. . . . . . . . . . . . . . . . . . . . . . . . . . .
35
7
Conclusion
37
References
37
Erkl¨
arung
41
III
List of Figures
1
Tax Brackets
. . . . . . . . . . . . . . . . . . . . . . . . . . .
6
2
Allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
3
Tax Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11
4
Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . .
12
5
Expiry of Accrued Taxes . . . . . . . . . . . . . . . . . . . . .
16
6
Calculation of Deferred and Due Taxes . . . . . . . . . . . . .
20
7
Pending Tax . . . . . . . . . . . . . . . . . . . . . . . . . . . .
31
8
Increasing Prices . . . . . . . . . . . . . . . . . . . . . . . . .
33
9
Constant Prices . . . . . . . . . . . . . . . . . . . . . . . . . .
34
10
Price Decline
. . . . . . . . . . . . . . . . . . . . . . . . . . .
36
IV
List of Abbreviations
abb.
abbreviation
AG
Aktiengesellschaft, public limited company
art.
article
BewG
Bewertungsgesetz, Valuation Law
BFH
Bundesfinanzhof, Supreme Tax Court
BGBl
Bundesgesetzblatt, Federal Law Gazette
BStBl
Bundessteuerblatt, Federal Tax Gazette
BVerfG
Bundesverfassungsgericht, Federal Constitutional
Court
e.g.
exempli gratia [lat.], for example
EStG
Einkommensteuergesetz, Income Tax Law
ErbStG
Erbschaftsteuer- und Schenkungsteuergesetz, In-
heritance and Gift Tax Law
etc.
et cetera [lat.], and so on
et seq.
et sequentes [lat.], and the following ones
GG
Grundgesetz, constitution of the Federal Republic
of Germany
GmbH
Gesellschaft mit beschr¨
ankter Haftung, private
limited company
IDW
Institut der Wirtschaftspr¨
ufer in Deutschland e.V.,
German Institute of Auditors
Ibid.
ibidem [lat.], the same place
i.e.
id est [lat.], that is to say
KGaA
Kommanditgesellschaft auf Aktien, association
limited by shares
lat.
latin
Nr.
Nummer, number
p.
page
p.a.
per annum [lat.], per year
V
ref.
(file) reference, record token
SME
small and medium sized enterprises
UmwStG
Umwandlungssteuergesetz, Conversion Tax Law
UntErlG-E
Entwurf des Gesetzes zur Erleichterung der Un-
ternehmensnachfolge, Draft Law for the Facilita-
tion of Entrepreneurial Succession
VI
1
Introduction
On May 14th, 2007, the Frankfurter Allgemeine Zeitung announced in
its Monday edition that the so-called Grand Coalition, formed of Social
Democrats and Christian Democrats, had come to an agreement in principle
regarding a fundamental modification of the Inheritance and Gift Tax
1
.
A motion for a resolution containing the achieved compromise had been
released to the public the day before.
Thus, neither the abolition--as intended by some liberal-thinking
conservatives--, nor a drastic tax increase--as demanded by some egalitar-
ian leftists--will be the result. A precedent draft of the German Federal
Ministry of Finance published last year therefore is very much likely to
form the basis of an amended regulation of entrepreneurial succession
2
.
There had been long discussions beforehand, attendant on the outstanding
ruling of the Federal Constitutional Court, which was expected to assess
the differential treatment of acquired assets and its compatibility with the
constitution.
Firstly, this thesis addresses, in its section 2, the legal status quo. I will
depict in detail the issues of tax liability, valuation of assets, the calculation
prescriptions as well as the current preferential treatment of business assets
in practice--all based on law in force. Next, the relevant changes comprised
in the amending draft are exposed in section 3 with a clear focus on issues
dealing with corporate succession, i.e. the transfer of business property. This
includes a short, summarizing critique, reflecting how the draft was perceived
amongst scientific commentators. In section 5, the ruling of the Federal Con-
stitutional Court is subject to recapitulating representation. The judges dealt
with the issue of preferential treatment of real estate and business property--
thus discriminating against the acquirers of shares or monies. As law just
forms a--theoretical--framework, thereafter I conduct an assessment on pos-
sible individual, economically triggered reactions. Section 6 derives the basic
approach of opportunistic behavior, explaining and anticipating effective ac-
tion of entrepreneurs. Finally, section 7 draws a conclusion, resuming the
findings and possible links to further analysis.
1
See [12].
2
See [7].
2
STATUS QUO
2
Status Quo
German Inheritance and Gift Tax is regulated in the "Erbschaftsteuer- und
Schenkungsteuergesetz" (ErbStG)
3
, applicable in all cases when a German
citizen is granted a benefit, no matter where the donor or deceased lived, or
where the concerning assets are located physically
4
.
2.1
Tax Liability
Currently
5
, there are four circumstances of acquisition, under which the Ger-
man Inheritance and Gift Tax Law (ErbStG) is applicable
6
:
1. acquisition by death,
2. gift inter vivos,
3. earmarked grant,
7
4. (family) trust property.
8
In all these cases, the entire property to be handed down or given away is
concerned. The liability accrues in cases 1) to 3) if the deceased, donor, or
acquirer can be classified as native
9
. In case of no. 4) it is decisive whether a
trust or its management have a domestic domicile
10
. If none of the conditions
mentioned above applies, one has to check § 121 BewG for applicability.
Domestic property in terms of § 121 Nr. 4 BewG will be taken into account
if the deceased or donor held shares of a domestic corporate company at the
date of death or gift. This applies even for holdings of less than 10 per cent
of the nominal capital or equity
11
of the concerned company, in contrast to
the general investment treshold
12
.
3
Inheritance and Gift Tax Law.
4
§ 2 (1) Nr. 1 ErbStG.
5
§ 1 (1) ErbStG.
6
Taxation of gifts inter vivos is subject to regulation by Inheritance Tax Law, as far as the
law does not deal with circumstances exclusively applicable to acquisition by death, see
R 1 ErbStR 2003.
7
donations in case of death or inter vivos, where the donation is linked to a specified
obligation or purpose, thus lowering the enrichment of the acquirer; § 8 ErbStG
8
All author's translations.
9
§ 2 (1) Nr. 1 ErbStG.
10
§ 2 (1) Nr. 2 ErbStG.
11
§ 2 (1) Nr. 3 ErbStG.
12
R 4 (3) ErbStR 2003.
2
2.2
Valuation, Exemptions & Allowances
2
STATUS QUO
2.2
Valuation, Exemptions & Allowances
The valuation principles divide acquired property into five types, depicted in
the following while leaving out the negligible case of natural resources
13
.
2.2.1
Stocks and Shares
In case of the acquisition of shares of corporate entities, § 11 (2) BewG is
applicable. Thus, the assets will be valued according to the amount indicated
by the date of accrual of the tax, where market values are applied. Goodwill
and assets of the same kind are excluded
14
2.2.2
Real Property
For acquirers of real estate, §§ 138 to 150 of the BewG are applicable. These
regulations determine the assessed value
15
, indicated by the date of accrual
of the tax. Here, an "uniform value" is derived from fiscal directives
16
.
2.2.3
Business assets
For the sake of valuation of business assets or business property, §§ 95 to
99, 103, 104, and 109 (1) and (2) of the BewG are applicable. These regula-
tions yield a crucial provision, resulting in the mandatory application of tax
balance sheet values instead of market values.
2.2.4
Foreign Assets and Real Property
Assets and real property of foreign origin are valued at market prices. § 31
BewG is applicable, mentioning explicitly § 9 BewG and referring to the
concept of market value. Monies, monetary receivables, shares and monetary
liabilities are not comprised.
If none of these applies, acquired assets are valued at the amount indicated
by the date of accrual of the tax
17
, basically following the regulations of
13
Apart from minor deposits of natural gas, brown coal and hard coal owned by large utility
groups like Vattenfall, Eon, etc. there are no relevant natural resources to be found in
Germany.
14
§ 12 (2) ErbStG.
15
§ 19 BewG.
16
§ 20 BewG et seq.
17
§ 11 ErbStG.
3
2.2
Valuation, Exemptions & Allowances
2
STATUS QUO
the first part of BewG. The latter implies the valuation by application of
the market value
18
. § 13 ErbStG names roughly twenty cases whereby the
tax is either not imposed, or lowered considerably.
Here I give a short,
summarizing overview therein neglecting circumstances without relevance
to entrepreneurial succession.
According to § 13 (1) Nr. 1 a) to c) ErbStG, household effects are subject
to an allowance of
e41,000. Other movable are not subject to taxation as long
as their value does not exceed the threshold of
e10,300. All these benefits
are reserved for acquirers qualifying for tax bracket
19
I. In case of acquirers
qualifying for tax bracket II an amount of
e10,300 applies, all others miss
out.
§ 13 (1) Nr. 2 a) and b) ErbStG deal with the issues of real property,
works of art, collections, archives, and libraries. These may benefit from an
allowance up to 60 per cent of their value if preservation thereof is of public
interest, costs exceed revenues, and access for research or educational means
is granted
20
.
But not only household and personal effects are subject to, so to speak,
preferential treatment. To an even greater extent, distinction of different
types of property leads to benefiting valuation of assets. Each of them has
to be applied independently
21
. According to § 13a (1) ErbStG, business
property as well as shares of corporate companies are taken into account, as
follows:
1. domestic property
22
of an entire business
23
--or parts thereof--, or
shares owned by a general partner of an association limited by shares
24
2. domestic agricultural and forestry property
25
, let real property, building
land
26
3. shares of a--domestic--corporate company
27
, given the decedent or
18
§ 9 BewG.
19
For a reference of tax brackets see figure 1.
20
This exemption can reach a level of 100 per cent, if the acquirer places the assets under
the direction of the authorities for the preservation of monuments and historic buildings;
a holding period of 10 years applies in each case.
21
R 41 (2) ErbStR 2003.
22
§§ 95, 96 BewG; R 51 (1) ErbStR 2003.
23
Be it either in terms of § 12 (5) ErbStG or in terms of § 15 (1) Nr. 2 and (3) or § 18 (4)
EStG; R 51 (2) ErbStR 2003
24
KGaA; § 13a (4) Nr. 1 ErbStG.
25
In terms of § 141(1) Nr. 1 and 2 BewG.
26
§ 69 BewG, § 13a (4) Nr. 2 ErbStG.
27
e.g. GmbH, AG, KGaA.
4
Details
- Seiten
- Erscheinungsform
- Originalausgabe
- Jahr
- 2007
- ISBN (eBook)
- 9783956362910
- ISBN (Paperback)
- 9783836605663
- Dateigröße
- 410 KB
- Sprache
- Englisch
- Institution / Hochschule
- Hochschule für Technik und Wirtschaft des Saarlandes – Betriebswirtschaft
- Erscheinungsdatum
- 2007 (September)
- Note
- 1,3
- Schlagworte
- erbschaftssteuer unternehmensnachfolge abschmelzmodell steuerreform kalkulation
