At the end of October, our institute welcomed a scientific delegation from the Japanese Federation of Certified Public Tax Accountants' Association and their “tour guides,” the vice president of the chamber, Hideaki Ozaki, and the highly respected professor emeritus of the University of Tokyo, Minoru Nakazato.
They were particularly interested in how inheritance and gift tax law is handled in Germany with regard to business assets. After an introduction to constitutional issues by Wolfgang Schön, two of our alumni, Dominik von Armansperg and Maximilian Haag from the law firm Pöllath + Partner, explained the highly complicated and time-consuming practice of tax law. In doing so, they repeatedly left our visitors in incredulous amazement.
Last year, inheritance and gift tax accounted for only 1.4 percent of total tax revenue in Germany. From a fiscal point of view, it is therefore a rather insignificant tax – but politically, it is highly controversial. The topic of inheritance tax repeatedly comes up on the political agenda in Berlin – primarily in relation to the inequality of wealth distribution. But there is also room for improvement in the “technical” aspects of the tax.
Von Armansperg and Haag explained that compiling the information required to reliably assess the applicability of the relief provisions is often time-consuming and labor-intensive, for example, for a group of companies with subsidiaries in several different countries. “In many smaller cases it would be much more cost-efficient for the taxpayer to pay just the IGT instead of a significant higher amount in accountant and lawyers’ fees,” according to the experts at Pöllath + Partner. In addition, the timing of the transfer is also crucial for determining and granting relief. For the same company, the cut-off date could determine whether the transfer is fully or partially exempt from tax or subject to taxation.
“The existing relief rules give rise to many arbitrary outcomes, and thus for the last two decades have been subject of many appeal procedures with the revenue service as well as lengthy litigation in the German tax courts and the Federal Constitutional Court,” reported Dominik von Armansperg and Maximilian Haag.
For the following day, our institute had arranged a meeting between the Japanese delegation and judges from the Second Senate of the Federal Finance Court, which is responsible for inheritance tax law. There, our guests learned about the latest case law of the tax courts and the prospects for ongoing proceedings before the Federal Constitutional Court.
Practice repeatedly reveals the weaknesses of inheritance and gift tax law. Now it is up to the legislature to dare to undertake a reform – possibly also in terms of social policy.
November 2025