In its judgment of 1.4.2026 (I R 11/24), the Federal Fiscal Court ruled on the…
The coronavirus has already prompted the legislator to introduce far-reaching aid measures and tax breaks. So far, the inheritance and gift tax law has not been addressed. The wage bill regulation as regards the tax exemption for business assets, agricultural and forestry undertakings and corporate shares may, however, also be affected by the consequences of the coronavirus.
Tax exemption for business assets – consequences of corona for wage bill Regulation
In the context of transfers of business assets under inheritance and/or gift law, the German Inheritance and Gift Tax Law (Erbschaftssteuer- und Schenkungsgesetz, “ErbStG”), upon request, grants a relief, the so-called “Verschonungsabschlag”. Under certain circumstances this results in 85% (section 13a para 1 ErbStG) or 100% (section 13a para 10 ErbStG) of business assets being exempt from inheritance tax, if certain requirements are met for a period of five or seven years, respectively.
Pursuant to section 13 para 3 sentence 1, one of the conditions for the granting of such relief under section 13a para 1 ErbStG is that, within a period of five years following the acquisition (wage bill period), the total sum of all relevant annual wage bills of the business does not fall below 400% of the initial wage bill (minimum wage bill). If one were to aim for an exemption of 100%, the wage bill period is extended from five to seven years and the minimum wage bill to 700%.
Due to the progressing corona pandemic, it cannot be ruled out that it will become more difficult to achieve the prescribed minimum wage bill. For example, a reduction of employees due to the worsened economic situation may have a negative impact. Furthermore, it is still unclear how this regulation will apply in connection with wage cuts and any short-time work compensation claimed (on the topic of short-time work compensation see also blog article "Mit Kurzarbeit durch die Corona-Krise"). So far, neither the tax authorities have responded by issuing a letter of application nor the legislator has reacted with a legislative initiative.
Therefore, if short-time work compensation is claimed by a company (or subsidiary) that has taken advantage of the relief, we recommend first checking and then continuously monitoring the wage bills in order to ensure that they are observed despite any necessary measures. If this is not feasible, we recommend reaching a coordinated agreement with the responsible tax office.
