Tax changes vex German family businesses

A Porsche Spyder in production. Image: Porsche
A Porsche Spyder in production. Image: Porsche

Concern is growing among family businesses in Germany that politicians want to tax them more at a time when many of them are facing slow growth in domestic and export markets.

A recent article in Germany’s leading business newspaper The Frankfurter Allgemeine Zeitung said that finance minister Wolfgang Schäuble is thinking of including private property in inheritance tax calculations for of heirs of businesses.

Other revisions to the potential detriment to family businesses are also been looked at, according to the article. Schäuble appears to be taking a harder line towards inheritance because of pressure from the more left-wing politicians within Germany’s ruling coalition.

Lutz Goebel, the president of the powerful lobbying group the Association of Family Businesses in Germany, has been strident in his objections to any changes. He said in response to these potential changes: “Schäuble has promised… a minimally invasive proceed when it comes to inheritance tax reform. Now he is reneging on these intentions and getting an axe out to hurt family enterprise as well as Germany’s unique financing culture.”

Goebel, who is a vocal advocate of German family businesses, added: “Family businesses in Germany are beginning to lose faith in the economic competence of the CDU and CSU (the two main centre-right parties) in relationship to inheritance tax reform.”

How family businesses are taxed in Germany promises to continue to be a heated debate for a number of years yet. But at a time of still weak economic growth in much of the eurozone and an unconvincing recovery in the domestic market, many German family businesses aren’t happy with the uncertainty around taxation