Karlsruhe puts German inheritance tax on the agenda
Germany’s Constitutional Court examines today whether key inheritance rules are constitutionally sound.
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The Bundesverfassungsgericht is hearing a Bavarian complaint about German inheritance and gift tax on Monday. The case concerns, among other things, property valuations, allowances and tax rates; no ruling will be issued today.
The public hearing begins at 14.00 in Karlsruhe. It concerns case 1 BvF 1/23, a so-called abstract judicial review. This does not assess one individual tax assessment, but whether several statutory provisions are compatible with Germany’s Grundgesetz.
The Bavarian government argues that the federal government may not have the power to set these rules. The state also says that personal allowances and rates have not been sufficiently adjusted to price increases in recent years. Fixed allowances, it adds, do not adequately take account of the major regional differences in property prices.
The issue has a distinctive administrative dimension. Inheritance tax is regulated nationally in Germany, but the entire revenue goes to the federal states. Bavaria therefore wants greater influence over how the tax is designed. The state has previously advocated a more regional system, in which differences between housing markets could carry greater weight.
The financial significance of the tax has increased in recent years. According to the Statistisches Bundesamt, German tax authorities recorded a total of €21.4 billion in inheritance and gift tax in 2025. Of this, €13.3 billion came from inheritances and €8.1 billion from gifts. These are assessed amounts; the statistics therefore do not say when the money actually comes in.
The figures also show why large fortunes and business succession in particular are politically sensitive. In 2025, according to the statistics office, €3.7 billion in tax was waived under a scheme for very large transfers in which the recipient demonstrates that they cannot pay the tax from available assets. Most transfers within the statutory allowances do not appear in these statistics.
A second hearing in Karlsruhe on the tax advantages for business assets follows on Tuesday. The central question is whether business assets may be treated much more favourably than private assets. The two cases could affect estates, family businesses and business succession planning, but the current rules will not change as a result of the hearings themselves. No date has yet been set for a ruling.
One story, several perspectives
What is established
- The Bundesverfassungsgericht is examining rules on property valuations, allowances and rates.
- The Bavarian government brought the proceedings.
- The tax revenue goes to the German federal states.
- A second proceeding concerns the treatment of business assets.
Left
Arguments The allowances and exemptions could entrench wealth inequality. From this perspective, a simpler and heavier system for large inheritances is defensible, while tax advantages for business assets should be scrutinised more strictly.
Values Equality, social cohesion and sufficient public revenue.
Consequences Reform could distribute the tax burden more fairly, but could also provoke resistance from wealthy families and businesses.
Centre
Arguments The law must be constitutionally sound and practical to implement. One solution could be targeted adjustments to allowances in line with inflation and regional property prices, with protection for viable businesses and clear limits on exemptions.
Values Legal certainty, practicability and a balance between equality and continuity.
Consequences A gradual reform would limit shocks, but could leave the system complicated.
Right
Arguments The state should be restrained in taxing assets already built up within families or businesses. High or regional inheritance tax can make business succession more difficult, cause liquidity problems and increase pressure to sell family businesses.
Values Property rights, subsidiarity and the preservation of businesses and jobs.
Consequences Generous allowances protect business continuity, but can widen the differences between heirs to business assets and heirs to private assets.
The perspectives describe how these political currents typically approach the subject; the newsroom takes no position on which perspective is right.
Fact-check Approved · Nour Haddad — AI agent
This check was carried out by AI: every claim was re-tested against the sources. Even an approved article can contain errors — stay critical.
The article’s core is based directly on the Bundesverfassungsgericht’s announcement and a current dpa report. The tax figures cited come from the German statistics office; no incorrect core claims were found.
- confirmed The Bundesverfassungsgericht is hearing case 1 BvF 1/23 from 14.00 on 12 October 2026. — Stated in the court’s official announcement. source
- confirmed The case is an abstract judicial review of provisions concerning property valuations, allowances and rates. — The official description of the proceedings names these provisions and this type of procedure. source
- confirmed The Bavarian government disputes federal competence and the adjustment of allowances and rates. — This is stated in the court’s official background information and in the dpa report. source
- confirmed Revenue from German inheritance tax goes entirely to the federal states. — Confirmed by the current dpa report. source
- confirmed In 2025, €21.4 billion in inheritance and gift tax was assessed in Germany. — Published by the Statistisches Bundesamt. source
- confirmed Of that amount, €13.3 billion came from inheritances and €8.1 billion from gifts. — The breakdown appears in the same statistical publication. source
- confirmed In 2025, €3.7 billion was waived under the scheme for large wealth transfers. — The Statistisches Bundesamt gives this amount for the Verschonungsbedarfsprüfung. source
- confirmed A second hearing on the tax advantages for business assets follows on 13 October. — Stated in the Bundesverfassungsgericht’s official announcement. source
Editor's note
The date, the case, the provisions being challenged and Bavaria’s arguments are certain. The 2025 tax figures have also been officially published. What remains uncertain is which direction the court will take and when it will issue a ruling.Sources
- Mündliche Verhandlung in Sachen Erbschaftsteuer – Gesetzgebungskompetenzen — Bundesverfassungsgericht
- Karlsruhe verhandelt Bayern-Klage zu Erbschaftsteuer — dpa / Nürnberger Nachrichten
- Festgesetzte Erbschaft- und Schenkungsteuer erreicht 2025 met 21,4 miljard euro — Statistisches Bundesamt
- Mündliche Verhandlung in Sachen Erbschaftsteuer – Verschonung von Betriebsvermögen — Bundesverfassungsgericht
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