The inheritance tax levied under the Inheritance Tax Act covers the extraordinary asset acquisition by the purchaser. The subject of taxation is the free transfer of assets upon death. In addition to inheritance tax, there is also gift tax and substitute inheritance tax. The latter was introduced by the inheritance tax reform in 1974; it subjects the assets of family foundations and family associations to inheritance tax every 30 years.
The inheritance tax is according to the way it is levied (Survey procedure) an inheritance tax. It therefore covers the enrichment of the acquisition through inheritance or donation. In contrast, an estate tax would directly affect the entire estate. The inheritance tax is systematically assigned to the transaction taxes (traffic and consumption taxes), since it taxes the transaction process of the free transfer of property. In economic terms, however, it is classified as a tax on assets because of the burden on dormant assets.
In particular, the protection of marriage and the family must be taken into account. Inheritance tax law favors close family members through a more favorable tax bracket (see Section 15 ErbStG), higher allowances (see Section 16 ErbStG) and the tax exemption for personal property. With the Annual Tax Act In 1997 the inheritance tax was reformed. The needs assessment for real estate was introduced, business assets benefited from inheritance tax, personal allowances increased and tax classes and tax rates redesigned.
With the Tax Relief Act 1999/2000/2002, § 35 EStG was repealed without replacement. This standard regulates the tax reduction in cases in which the income determination is based on acquisitions based on an inheritance. Inheritance and gift taxes are core areas of comprehensive succession planning.