Germany’s ‘Turbo Tax’ Proposal Sparks Debate Over Inheritance Revenue

A bold tax overhaul could reshape Germany’s inheritance system—but will it protect small businesses or drain public funds? Critics clash over fairness and fiscal risks.

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2025 November 8 . 1:07 AM

1 min read

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Germany’s ‘Turbo Tax’ Proposal Sparks Debate Over Inheritance Revenue

A new study by the German Institute for Economic Research (DIW) suggests that a flat-rate inheritance tax could significantly impact revenues. The DIW proposes abolishing tax privileges for business heirs and introducing a 'turbo tax', but warns of substantial revenue losses at lower rates.

The DIW study indicates that a 10 percent 'turbotax' would reduce current revenues by €4.4 billion, or 36 percent. To maintain neutrality, the rate would need to be at least 16 percent. Higher rates could generate additional revenue: a 25 percent 'turbotax' would yield €8.3 billion more, while an 18 percent rate would bring in an extra €2.2 billion.

The DIW also proposes measures to ease the financial burden on 'my business' heirs. These include abolishing existing tax breaks and allowing companies to defer tax payments, linking collections to business performance.

The DIW's proposals aim to reform inheritance tax while moderating the burden on 'my business' heirs. However, they face opposition from the Green Party's financial policy spokesperson, Katharina Beck, who argues that a 10 percent 'turbotax' would lead to significant revenue losses and increased burden on smaller inheritances. The debate is set against the backdrop of an upcoming Constitutional Court decision on inheritance tax reform.