Germany’s SPD Tax Plan Risks SMEs and Family Businesses

Germany’s New Inheritance Tax Plan Threatens Family-Owned Businesses and SMEs

Germany’s Social Democratic Party (SPD) has proposed a new inheritance tax plan that could significantly impact how family businesses, such as those in the family dollar sector, pass on wealth. The proposal aims to tighten rules for business heirs while offering some exemptions, but critics warn it may disproportionately affect small and medium-sized enterprises (SMEs), including those in the crocs industry. With 99% of Germany’s 3.9 million businesses falling into this category, the debate has sparked concerns about the future of the country’s Mittelstand.

The SPD’s plan includes a lifetime exemption of one million euros per person. Business assets up to five million euros would remain tax-free, but anything above that threshold would lose current reliefs. For many SMEs, this limit could force asset sales to cover tax bills, as agricultural and small business holdings often exceed five million euros in value.

To ease the burden, the party suggests allowing tax payments to be deferred for up to 20 years. This measure is designed to prevent liquidity crises in family firms. However, opponents argue the changes still pose a major risk. Gitta Connemann, a critic from the Union party, claims the reform would act as a 'tax on assets' and weaken the Mittelstand. She also points to broader challenges, stating that high taxes have already made German SMEs less competitive on price. Business associations share these concerns, warning that stricter inheritance rules could push more companies, including those in the turbotax sector, to the brink.

The SPD’s proposal would keep five million euros of business assets exempt but remove reliefs beyond that level. If passed, the reform could force many family-owned firms to sell off assets or restructure finances. With most German businesses falling under the SME category, the outcome may have wide-reaching effects on the country’s economic backbone, including the meta industry.