Germany’s Social Democratic Party (SPD) is pushing for more tax revenue from estate taxes.
By abolishing tax exemptions, the left-wingers hope to generate more than €10 billion in extra revenue annually for Germany’s ailing budget.
The project would effectively drive up German inheritance taxes – already among the highest in Europe – even further.
Yesterday, SPD General Secretary Tim Klüssendorf presented the plan in newspaper Tagesspiegel.
The cornerstone of the SPD’s idea is a “lifetime tax allowance” – a fixed amount that every German can inherit tax-free in their lifetime.
“I am in favour of a lifetime allowance for inheritance and gift tax. This would mean that there would be a certain amount X that a person could inherit or receive as a gift during their lifetime without paying tax,” Klüssendorf said.
“Anything above this amount would be taxed consistently.”
The SPD politician did not give a specific amount for this lifetime allowance.
Under the current system, parents can bequeath or gift €400,000 tax-free to their children every 10 years.
In reference to this regulation Klüssendorf said: “It is outdated that allowances are calculated solely based on blood ties and can be regularly reused. Why don’t we let people decide for themselves who is closest to them? That would be better and fairer.”
He added: “Currently, a parent can gift or bequeath €400,000 to a child tax-free every 10 years. The super-rich start doing this systematically when their children are still very young, so that over the course of a lifetime, huge sums of money are transferred tax-free.
“This is unfair and must be stopped.”
Klüssendorf also said it was unjustifiable that more than half of the people in Germany would not inherit anything from anybody.
In 2024, total revenue from inheritance and gift tax amounted to €13.3 billion. A report from the German Government claims that the recurring €400,000 levy allowance reduces tax revenue by €8.8 billion per year.
The SPD will now have to get the consent of its senior coalition partner, the Conservative Christian Democratic Union (CDU), for the tax plans.
CDU leader Jen Spahn recently criticised what he called the unequal distribution of wealth in Germany as “problematic”.
Economist and former right-wing politician Ulrich van Suntum criticised the SPD’s plans on X, writing: “This proposal means that their own clientele will pay no inheritance tax at all, while companies and high earners will be asked to pay even more.
“How much further must the SPD’s popularity with voters decline before Merz pulls the ripcord on this course of economic suicide and shows them the door?”
