Higher Taxation on Large Inheritances – Who Does It Affect?

Higher Taxation of Large Inheritances – Who Could Be Affected?

In recent months, proposals to change the inheritance tax system have increasingly appeared in Germany. One of the most widely discussed topics is the possibility of higher taxation of large assets inherited by private individuals. Although these are currently only proposals at the stage of political debate, they could in the future have a significant impact on estate planning – including in an international context.

Why Has the Topic of Inheritance Tax Returned to the Debate?

The main objective of the proposed changes is to increase public revenue and to limit the concentration of wealth in the hands of the wealthiest families. In the public debate, it is emphasized that current regulations often allow for a substantial reduction of the effective tax burden, especially in the case of very high-value inheritances.

Who Could Be Affected by the Planned Changes?

The proposals focus primarily on large, high-value inheritances. In practice, this means that:

• the inheritance of small family assets is unlikely to change,
• higher tax rates or reduced exemptions may apply to inheritances worth millions of euros,
• financial assets and investment properties are receiving particular attention.

Heirs Living Abroad

An important aspect is that German inheritance and tax law may also apply to individuals living outside Germany if:

• the deceased was a tax resident in Germany,
• the inheritance includes real estate or other assets located in Germany.

For families living in Poland or other EU countries, this may result in cross-border tax obligations.

What About Family Businesses?

The debate also addresses the taxation of family-owned businesses. Until now, many of them have benefited from extensive tax relief in order to enable a smooth transfer of the business to the next generation.

Possible Directions of Change

Among the solutions being considered are:

• tightening the conditions for benefiting from tax exemptions,
• introducing additional tax brackets for very large estates,
• increased monitoring of how inherited assets are actually used.

Are the Changes Already Decided?

At this stage, we are dealing with proposals and directions of discussion, not binding law. Any potential changes would require a legislative process and may still be modified.

However, for individuals with assets in Germany or those involved in cross-border inheritance planning, this is a clear signal that early estate planning is advisable.

Why Is Estate Planning Becoming Increasingly Important?

Changing tax regulations, rising property values, and the international nature of many families mean that a lack of proper preparation can lead to:

• unexpected tax liabilities,
• the need to sell part of the assets,
• lengthy administrative procedures.

For this reason, more and more families are choosing professional advice to ensure a secure and well-structured estate and inheritance planning process.