Bavaria’s constitutional lawsuit against the federal inheritance tax and gift tax law, which has been threatened again and again for many months, is to be filed in June. “Bavaria is suing,” said Prime Minister Markus Söder (CSU) on Tuesday after the cabinet meeting in Munich. The Council of Ministers had previously decided that the lawsuit would be filed with the Federal Constitutional Court in Karlsruhe “in about two weeks”.
According to the State Chancellery, the application is intended to open the way for an increase in personal allowances, a reduction in tax rates and a regionalization of inheritance tax via a constitutional review. “The aim is that both the home in family hands and many jobs in medium-sized companies are secured. That is a question of fairness and tax justice.”
The allowances for inheritance tax have not been increased since 2008, emphasized Söder. In contrast, inflation and land and real estate prices have risen massively in recent years. Nevertheless, the federal legislature has not yet increased the allowances, the State Chancellery said. That is unfair and at the same time a constant tax increase, especially since the annual tax law 2022 leads to “one of the most massive inheritance and gift tax increases in recent German history”.
A tax-free inheritance of single-family houses has not been possible in large parts of Bavaria for a long time, many heirs are forced to sell, the financial lifework of the previous generation cannot be maintained. In this context, the CSU Free Voters state government referred to a decision by the Federal Constitutional Court from 1995. At that time, the judges in Karlsruhe obliged the federal legislature to adhere to the values of average single-family houses for the tax exemptions in tax class I – these relate to the closest family members to orient. However, this requirement has not been taken into account since the 2008 inheritance tax reform. As a result, the tax burden increased significantly.
“This is unfair and ultimately leads to a sell-out of the homeland”
Bavaria also complained that the value of land had developed very differently across Germany – according to Söder, “a gazebo in Miesbach now has the same value (…) as some villas in Greifswald”. The Free State is affected by particularly high prices, but the current federal allowances and tax rates do not take these conditions into account. “That is unfair and ultimately leads to a sell-out of the homeland and also leads to speculators then being active accordingly.”
Finance Minister Albert Füracker (CSU) emphasized that the Free State was unfortunately unable to assert itself with its political demands for reforming the inheritance tax. Bavaria demands that the tax should not be calculated according to nationwide standard tariffs if the property values differ so massively. The countries should be able to determine essential aspects of inheritance tax themselves. After all, it is a pure state tax.
The Greens, the SPD, the AfD and also the FDP accused the government of only wanting to create atmosphere with the lawsuit before the election. There is no other way to explain why the lawsuit was not filed until the election year. Furthermore, it is paradoxical to sue against a tax reform that the Federal Constitutional Court itself had called for in a judgment, said Tim Pargent (Greens). The CSU once again acts only as the “patron saint of millionaires”.
Even if the Free Voters support the lawsuit as coalition partners, party leader and Economics Minister Hubert Aiwanger made no secret of the fact that he believes inheritance tax must be completely abolished. From Söder’s point of view, this is not possible for constitutional reasons – but Bavaria would reduce it to the lowest possible level.