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The inheritance and gift tax in Germany: Reform potentials for tax revenue, efficiency and distribution
Martin Beznoska* 
Maximilian Stockhausen*
Maximilian Stockhausen
Affiliation: German Economic Institute, Köln, Germany
 0000-0002-6340-6142
Article | Year: 2020 | Pages: 385 - 417 | Volume: 44 | Issue: 3 Received: November 6, 2019 | Accepted: May 13, 2020 | Published online: September 1, 2020
|
FULL ARTICLE
FIGURES & DATA
REFERENCES
CROSSMARK POLICY
METRICS
LICENCING
PDF
Note: OECD statistics total tax revenue include social security contributions and therefore differ from national statistics. The value for Greece refers to 2016. Source: OECD database, own illustration.
Source: Bundesministerium der Finanzen, 2019; own calculations.
|
Tax bracket in Euro up to thousands
|
Tax class I
|
Tax class II
|
Tax class III
|
|
75
|
7
|
15
|
30
|
|
300
|
11
|
20
|
30
|
|
600
|
15
|
25
|
30
|
|
6,000
|
19
|
30
|
30
|
|
13,000
|
23
|
35
|
50
|
|
26,000
|
27
|
40
|
50
|
|
above 26,000
|
30
|
43
|
50
|
Source: German inheritance tax and gift tax law, own illustration.
|
|
Personal tax allowance
(§ 16 Inheritance tax law)
|
Tax class
(§ 15 Inheritance tax law)
|
|
For spouse and partner of a registered civil
partnership
|
500
|
I
|
|
For children and grandchildren whose parents have
died, as well as for stepchildren and adopted children
|
400
|
I
|
|
For grandchildren
|
200
|
I
|
|
For great-grandchildren; for parents and grandparents
to acquire by inheritance
|
100
|
I
|
|
For parents and grandparents in the case of gift,
for siblings, children of siblings, stepparents, children in law,
parents-in-law, divorced spouses and life partner of a cancelled civil
partnership
|
20
|
II
|
|
For all other recipients of a gift or inheritance
|
20
|
III
|
|
|
Law before
the 2016 reform
|
Law after
the 2016 reform
|
Current market valuation
|
|
Basic
interest rate (in %, 2019)
|
0.6
|
-
|
0.6
|
|
Market risk
premium (in %)
|
4.5
|
-
|
7.0
|
|
Beta factor
|
1
|
-
|
1
|
|
Capitalization
rate (in %)
|
5.1
|
-
|
7.6
|
|
Capitalization
factor (1/capitalization rate)
|
19.61
|
13.75
|
13.16
|
|
Markdown due
to limited fungibility of family owned companies
(in %)
|
-
|
30
|
35
|
|
Adjusted capitalization
factor
|
19.61
|
9.63
|
8.55
|
|
In percent of
(1)
|
|
|
44
|
|
In percent of
(2)
|
|
|
89
|
Note: Current market valuation compared to the rule of law before and after the reform in 2016 Source: KPMG (2019); own calculations.
Note: A real interest rate of 3% per annum is used for capitalisation since the year of transfer receipt. For this purpose, all bequests are expressed in prices of 2010 using country specific consumer price indices. Source: ECB, 2nd wave; own calculations.
Note: In billion euro and prices of 2010. 95% confidence intervals are calculated using multiple imputation estimates from five imputations. Source: ECB, 2nd wave; own calculations.
|
Variable
|
Coef.
|
Std. Err.
|
t-value
|
P>t
|
[95 % Conf. Interval]
|
|
Time dummy (β1)
|
8,482
|
5,530
|
1.53
|
0.125
|
-2,357
|
19,322
|
|
Treatment dummy (β2)
|
70,319
|
16,779
|
4.19
|
0.000
|
37,418
|
103,219
|
|
Timedy#treatdy (β3)
|
-67,325
|
19,401
|
-3.47
|
0.001
|
-105,408
|
-29,242
|
|
Age of hh head (β4)
|
89
|
266
|
0.34
|
0.738
|
-434
|
612
|
|
Constant (β0)
|
61,152
|
14,536
|
4.21
|
0.000
|
32,580
|
89,724
|
|
Observations
|
5,118
|
|
|
|
|
|
Note: Germany vs. France, period length = 4 years each, 3 periods before treatment. Period 1: 1996-1999, period 2: 2000-2003, period 3: 2004-2007, period 4: 2008-2011. All inheritances are measured in prices of 2010. Treatment took place in Germany. Standard errors are calculated using multiple imputation estimates from five imputations. Source: ECB, 2nd wave; own calculations.
Source: Federal Statistical Office (2019a); own calculations.
Source: Federal Statistical Office (2019a); own calculations.
Source: Federal Statistical Office (2019a); own calculations.
Source: Federal Statistical Office (2019a); own calculations.
|
Flat tax rate
|
10 %
|
15 %
|
20 %
|
|
|
In billion euro per year
|
|
Tax
revenue
|
7.5
|
11.2
|
14.9
|
|
Difference
to status quo
|
0.8
|
4.5
|
8.3
|
|
|
|
|
|
|
Estimated
labor supply responses for a revenue-equivalent tax cut of the income tax
|
|
|
In percent of total hours
worked
|
|
Women
|
-
|
0.10
|
0.19
|
|
Men
|
-
|
0.06
|
0.11
|
Note: Labour supply effects are evaluated at the median of the income distribution. Source: Federal Statistical Office (2019a); GSOEP data 2018 (v34); labour supply model from Stockhausen (2019); own calculations.
Note: Deciles of the distribution of household’s equivalised gross income. Source: GSOEP data 2018 (v34); microsimulation model Beznoska (2016); labour supply model from Stockhausen (2019); own calculations.
|
Variable
|
Coef.
|
Std. Err.
|
t-value
|
P>t
|
[95% Conf. Interval]
|
|
Time dummy (β1)
|
5,676
|
6,465
|
0.88
|
0.380
|
-6,994
|
18,347
|
|
Treatment dummy (β2)
|
95,888
|
34,141
|
2.81
|
0.005
|
28,954
|
162,822
|
|
Timedy#treatdy (β3)
|
-92,682
|
37,148
|
-2.49
|
0.013
|
-165,522
|
-19,843
|
|
Age of hh head (β4)
|
137
|
350
|
0.39
|
0.695
|
-554
|
829
|
|
Constant (β0)
|
61,604
|
18,443
|
3.34
|
0.001
|
25,151
|
98,056
|
|
Observations
|
3,097
|
|
|
|
|
|
Note: Germany vs. France, period length = 4 years each, 1 period before treatment. Period 1: 2004-2007, period 2: 2008-2011. All inheritances are measured in prices of 2010. Treatment took place in Germany. Standard errors are calculated using multiple imputation estimates from five imputations. Source: ECB, 2nd wave; own calculations.
|
Variable
|
Coef.
|
Std. Err.
|
t-value
|
P>t
|
[95% Conf. Interval]
|
|
Time dummy (β1)
|
6,604
|
5,805
|
1.14
|
0.255
|
-4,774
|
17,982
|
|
Treatment dummy (β2)
|
82,501
|
22,243
|
3.71
|
0.000
|
38,897
|
126,104
|
|
Timedy#treatdy (β3)
|
-79,983
|
24,078
|
-3.32
|
0.001
|
-127,219
|
-32,747
|
|
Age of hh head (β4)
|
-13
|
296
|
-0.04
|
0.966
|
-595
|
569
|
|
Constant (β0)
|
68,003
|
15,983
|
4.25
|
0.000
|
36,558
|
99,449
|
|
Observations
|
4,253
|
|
|
|
|
|
Note: Germany vs. France, period length = 4 years each, 2 periods before treatment. Period 1: 2000-2003, period 2: 2004-2007, period 3: 2008-2011. All inheritances are measured in prices of 2010. Treatment took place in Germany. Standard errors are calculated using multiple imputation estimates from five imputations. Source: ECB, 2nd wave; own calculations.
|
Variable
|
Coef.
|
Std. Err.
|
t-value
|
P>t
|
[95% Conf. Interval]
|
|
Time dummy (β1)
|
-6,040
|
11,301
|
-0.53
|
0.593
|
-28,189
|
16,110
|
|
Treatment dummy (β2)
|
70,439
|
16,771
|
4.20
|
0.000
|
37,553
|
103,324
|
|
Timedy#treatdy (β3)
|
-67,024
|
19,166
|
-3.50
|
0.000
|
-104,646
|
-29,402
|
|
Age of hh head (β4)
|
180
|
247
|
0.73
|
0.467
|
-307
|
668
|
|
Period 1 dummy
|
-36,169
|
16,847
|
-2.15
|
0.032
|
-69,193
|
-3,146
|
|
Period 2 dummy
|
-17,868
|
18,519
|
-0.96
|
0.335
|
-54,169
|
18,434
|
|
Constant (β0)
|
71,233
|
18,056
|
3.95
|
0.000
|
35,821
|
106,646
|
|
Observations
|
5,118
|
|
|
|
|
|
Note: Germany vs. France, period length = 4 years each, 3 periods before treatment. Period 1: 1996-1999, period 2: 2000-2003, period 3: 2004-2007, period 4: 2008-2011. All inheritances are measured in prices of 2010. Treatment took place in Germany. Standard errors are calculated using multiple imputation estimates from five imputations. Source: ECB, 2nd wave; own calculations.
|
Variable
|
Coef.
|
Std. Err.
|
t-value
|
P>t
|
[95% Conf. Interval]
|
|
Time dummy (β1)
|
4,418
|
5,097
|
0.87
|
0.386
|
-5,573
|
14,408
|
|
Treatment dummy (β2)
|
62,168
|
16,410
|
3.79
|
0.000
|
29,988
|
94,349
|
|
Timedy#treatdy (β3)
|
-51,079
|
19,985
|
-2.56
|
0.011
|
-90,486
|
-11,671
|
|
Age of hh head (β4)
|
102
|
262
|
0.39
|
0.697
|
-413
|
617
|
|
Constant (β0)
|
61,510
|
14,492
|
4.24
|
0.000
|
33,026
|
89,995
|
|
Observations
|
4,981
|
|
|
|
|
|
Note: Germany vs. France, period length = 3 years each, 4 periods before treatment. Period 1: 1997-1999, period 2: 2000-2002, period 3: 2003-2005, period 4: 2006-2008, period 5: 2009-2011. All inheritances are measured in prices of 2010. Treatment took place in Germany. Standard errors are calculated using multiple imputation estimates from five imputations. Source: ECB, 2nd wave; own calculations.
|
Variable
|
Coef.
|
Std. Err.
|
t-value
|
P>t
|
[95% Conf. Interval]
|
|
Time dummy (β1)
|
-2,392
|
7,905
|
-0.30
|
0.762
|
-17,887
|
13,102
|
|
Treatment dummy (β2)
|
73,343
|
35,500
|
2.07
|
0.039
|
3,764
|
142,923
|
|
Timedy#treatdy (β3)
|
-76,710
|
40,648
|
-1.89
|
0.059
|
-156,395
|
2,975
|
|
Age of hh head (β4)
|
929
|
497
|
1.87
|
0.062
|
-45
|
1,903
|
|
Constant (β0)
|
33,968
|
23,540
|
1.44
|
0.149
|
-12,181
|
80,118
|
|
Observations
|
1,906
|
|
|
|
|
|
Note: Germany vs. France, period length = 4 years each, 3 periods before treatment. Period 1: 1996-1999, period 2: 2000-2003, period 3: 2004-2007, period 4: 2008-2011. All inheritances are measured in prices of 2010. Treatment took place in Germany. Standard errors are calculated using multiple imputation estimates from five imputations. Source: ECB, 2nd wave; own calculations.
|
Variable
|
Coef.
|
Std. Err.
|
t-value
|
P>t
|
[95% Conf. Interval]
|
|
Time dummy (β1)
|
-5,691
|
8,114
|
-0.70
|
0.483
|
-21,594
|
10,212
|
|
Treatment dummy (β2)
|
98,578
|
51,256
|
1.92
|
0.054
|
-1,882
|
199,039
|
|
Timedy#treatdy (β3)
|
-101,722
|
56,015
|
-1.82
|
0.069
|
-211,519
|
8,075
|
|
Age of hh head (β4)
|
969
|
577
|
1.68
|
0.093
|
-162
|
2,099
|
|
Constant (β0)
|
35,655
|
26,692
|
1.34
|
0.182
|
-16,697
|
88,007
|
|
Observations
|
1,585
|
|
|
|
|
|
Note: Germany vs. France, period length = 4 years each, 2 periods before treatment. Period 1: 2000-2003, period 2: 2004-2007, period 3: 2008-2011. All inheritances are measured in prices of 2010. Treatment took place in Germany. Standard errors are calculated using multiple imputation estimates from five imputations. Source: ECB, 2nd wave; own calculations.
|
Variable
|
Coef.
|
Std. Err.
|
t-value
|
P>t
|
[95% Conf. Interval]
|
|
Time dummy (β1)
|
-29,450
|
21,293
|
-1.38
|
0.167
|
-71,184
|
12,284
|
|
Treatment dummy (β2)
|
77,108
|
37,865
|
2.04
|
0.042
|
2,893
|
151,322
|
|
Timedy#treatdy (β3)
|
-78,869
|
41,919
|
-1.88
|
0.060
|
-161,042
|
3,305
|
|
Age of hh head (β4)
|
1,210
|
452
|
2.68
|
0.008
|
323
|
2,097
|
|
Period 1 dummy
|
-70,068
|
40,394
|
-1.73
|
0.083
|
-149,239
|
9,102
|
|
Period 2 dummy
|
-28,646
|
38,051
|
-1.02
|
0.310
|
-113,223
|
35,932
|
|
Constant (β0)
|
49,616
|
29,682
|
1.67
|
0.095
|
-8,569
|
107,801
|
|
Observations
|
1,906
|
|
|
|
|
|
Note: Germany vs. France, period length = 4 years each, 3 periods before treatment. Period 1: 1996-1999, period 2: 2000-2003, period 3: 2004-2007, period 4: 2008-2011. All inheritances are measured in prices of 2010. Treatment took place in Germany. Standard errors are calculated using multiple imputation estimates from five imputations. Source: ECB, 2nd wave; own calculations.
|
Variable
|
Coef.
|
Std. Err.
|
t-value
|
P>t
|
[95% Conf. Interval]
|
|
Time dummy (β1)
|
-3,970
|
10,892
|
-0.36
|
0.715
|
-25,318
|
17,378
|
|
Treatment dummy (β2)
|
71,151
|
17,373
|
4.10
|
0.000
|
37,082
|
105,220
|
|
Timedy#treatdy (β3)
|
-64,576
|
19,262
|
-3.35
|
0.001
|
-102,388
|
-26,765
|
|
Period 1 dummy
|
-34,731
|
15,962
|
-2.18
|
0.030
|
-66,020
|
-3,441
|
|
Period 2 dummy
|
-15,400
|
18,045
|
-0.85
|
0.393
|
-50,773
|
19,973
|
|
Age groups (ref.: 16-30)
|
|
|
|
|
|
|
|
Age 31-45
|
59,955
|
21,593
|
2.78
|
0.006
|
17,527
|
102,383
|
|
Age 46-60
|
57,262
|
15,970
|
3.59
|
0.000
|
25,845
|
88,680
|
|
Age 61-75
|
42,944
|
14,381
|
2.99
|
0.004
|
14,185
|
71,702
|
|
Age 76+
|
39,859
|
16,015
|
2.49
|
0.013
|
8,401
|
71,318
|
|
Constant (β0)
|
29,656
|
14,614
|
2.03
|
0.043
|
933
|
58,379
|
|
Observations
|
5,118
|
|
|
|
|
|
Note: Germany vs. France, period length = 4 years each, 3 periods before treatment. Period 1: 1996-1999, period 2: 2000-2003, period 3: 2004-2007, period 4: 2008-2011. All inheritances are measured in prices of 2010. Treatment took place in Germany. Standard errors are calculated using multiple imputation estimates from five imputations. Source: ECB, 2nd wave; own calculations.
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