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Countries have sharp criticism of Bavaria

Thursday, September 7th, 2017 | World News

Bavaria goes a special way in the taxation of company inheritances. The rest of the federal states is a thorn in the eye. They demand from the Free State to stick to the agreements.

In 15 out of 16 federal states the assets of company heirs are to be taxed higher. The highest financial authorities of the countries had agreed. The free state wants a special way of taxing. This is on resistance in the other countries.

According to information from the German Press Agency, which refers to the information provided by the finance minister Doris Ahnen (SPD), the finance ministers of all the federal states have asked Freistaat Bayern to levy the inheritance tax as in the other federal states – on the basis of commonly agreed principles. The appeal of the Finance Ministers' Conference is "a one-time case and an untenable condition", ancestors criticized on Thursday.

"Scandal" and "one-time operation"
In the autumn of 2016, the provisions of the inheritance tax law and the gift tax law had been amended – under pressure from the Federal Constitutional Court. At the end of July 2017 it became known that Bavaria would take a special path in the implementation of the amended regulations. The provisions on the implementation of the amended tax privileges for company heirs thus apply only to the tax authorities in the other 15 Länder.

Doris Ahnen (SPD), a Rhineland-Palatinate finance minister, criticizes the Free State of Bavaria for his new arrival in tax policy. (Archive image) (Source: Fredrik von Erichsen)

 Ancestors called the procedure easy to read: "It is about the erosion of the inheritance tax in Bavaria by the back door." The Federal Ministry of Finance had previously spoken of "a one-time process".

Söder justifies Bavaria
Bavaria's Finance Minister Markus Söder (CSU) countered: The inheritance tax was a pure land tax, its rise alone to the countries. Thus each country is responsible for its execution. "Bavaria wants a law application as it corresponds to the wording and spirit of the law," Söder said. The free-market is a compromise to inheritance tax law: "But we do not want a burden on the family business through the back door."

Some countries wanted to apply the law "against the spirit of the compromise", Söder criticized further. In addition, Bavaria is calling for a further regionalization of taxes, the proceeds of which alone are due to the Länder – in addition to the inheritance tax, this is also the basic income tax.

Countries are making a front against the Free State
During the lengthy compromise search between the federal government and the federal states, Bavaria had tried to defuse the new requirements for the economy and family businesses. Critics suspect that the treasury in Bavaria could interpret the new rules less strictly.

The inheritance tax is not a federal tax, nor a community tax. It is collected by the countries. The government in Berlin therefore has no control over the Freistaat's special route.

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