de en
Nexia Ebner Stolz

Tax Advice

Inheritance tax rules for Cash GmbH's are harmful to medium-sized businesses

In or­der to ex­clude Cash GmbH's from the tax ex­emp­tion for in­heri­ted busi­ness as­sets, the pre­re­qui­si­tes for the ex­emp­tion were mo­di­fied by the Mu­tual As­sis­tance Di­rec­tive Im­ple­men­ta­tion Act [Amts­hil­fe­richt­li­nie-Um­set­zungs­ge­setz].

Spe­ci­fi­cally, the chan­ges con­cern the de­fi­ni­tion of “harm­ful” non­busi­ness as­sets, which pre­vent tax ex­emp­tion of 85% of the com­pany’s as­sets if the harm­ful non­busi­ness as­sets amount to more than 50% of the com­pany’s va­lue. Fur­ther­more, busi­ness as­sets can only be com­ple­tely tax ex­empt if the harm­ful non­busi­ness as­sets ac­count for no more than 10% of the com­pany’s va­lue.

The fol­lo­wing rule ap­plies to busi­ness as­sets ac­qui­red af­ter June 6, 2013: as­sets that re­main af­ter sub­trac­ting the to­tal va­lue of debts and are in the form of cur­rency, busi­ness cre­dits, cash re­ceivab­les or other re­ceivab­les, are coun­ted as harm­ful non­busi­ness as­sets if they ac­count for more than 20% of all busi­ness as­sets.

Me­dium-si­zed com­pa­nies also face ano­ther di­sad­van­tage. The new rule ex­empts cer­tain com­pa­nies, such as those whose pri­mary pur­pose is to fi­nance af­fi­lia­tes.

Fi­nan­cing com­pa­nies for large cor­po­rate groups will cle­arly be­ne­fit from this be­cause their sole pur­pose is to pool cash for the groups. In con­trast, the prac­tice in me­dium-si­zed com­pa­nies is ge­ne­rally for the hol­ding com­pany in which the equity in­te­rests are con­cen­tra­ted to as­sume re­spon­si­bi­lity for fi­nan­cing while also per­for­ming ser­vices re­la­ted to the com­pany’s pur­pose. The an­swer to whe­ther these com­pa­nies may also be ex­emp­ted from the tigh­ter re­stric­tions is li­kely to be ne­ga­tive in many ca­ses or lead to le­gal dis­pu­tes with the tax aut­ho­ri­ties.

In or­der to ex­clude Cash GmbHs from the list of as­sets en­tit­led to fa­vor­able in­heri­tance tax tre­at­ment, the law­ma­kers were wil­ling to ad­ver­sely af­fect me­dium-si­zed com­pa­nies. A more nu­an­ced rule whe­reby only funds that are no­nes­sen­tial in the par­ti­cu­lar case are con­side­red harm­ful non­busi­ness as­sets would have been de­si­ra­ble.

back to top