display
Corona alone is a severe blow for many German entrepreneurs.
Melanie Junglas-Mummert, for example, runs the temporary employment agency Armon GmbH with her twin brother Dennis Junglas, based in Koblenz - and is fighting the economic consequences of the pandemic.
In the past year, your company lost 35 percent of its turnover and the number of employees fell by a quarter.
To make matters worse, says the 41-year-old, “we are also threatened with a steep inheritance tax back payment”.
Her father died unexpectedly three years ago.
He founded the company in 1984 and the children were his successors.
If, as in such a case, business assets are inherited, a generous tax exemption rule applies - unlike with private assets.
However, only under the condition that the business is continued for at least five years and that the wage bill remains largely stable during this period.
display
With this special regulation, the legislature wants to prevent company heirs from having to sell parts of the business in order to be able to pay inheritance or gift tax.
Because the smoothest possible handover of management is also in the interests of the workforce.
But now of all times, in times of a global crisis, the exemption rule becomes an additional danger for some company successors.
Paradoxically, the due inheritance tax back payment threatens to be all the more lavish the more the company is shaken by the crisis.
Due to the lockdown and the month-long restrictions, Armon GmbH and many other companies are forced to send employees on short-time work or even fire them.
One consequence: the wage bill is shrinking.
And the more it is below the original level, the greater the company's share, which is then subject to inheritance tax.
Even in the event of bankruptcy, the tax office insists on its claim.
"Not left to the discretion of the tax authorities"
display
Economists and business associations see this as a major problem.
The economist Lars Feld, for example, warns that in a crisis like this, in which freedom of trade is severely restricted, it will be difficult to comply with the inheritance tax conditions for the exemption granted as planned.
Feld, chairman of the expert council for assessing macroeconomic development, calls for a pragmatic solution to take account of the exceptional situation.
“For this a change in the law is required.
You can't leave that to the discretion of the tax authorities, ”says the top economist.
How many company successors will have to fear an additional inheritance tax payment in the future cannot yet be said.
But 2.8 million companies and thus around 86 percent of German companies are owner-managed family businesses.
According to the Federal Ministry of Finance, between 2014 and 2018 around five percent of all medium-sized companies were transferred as part of a succession.
The potential for inheritance tax back payments is therefore likely to be considerable.
display
The President of the Association of Family Entrepreneurs, Reinhold von Eben-Worlée, therefore sees an urgent need for action.
"The legislator is responsible," says the medium-sized company.
It is absolutely incomprehensible to him why nothing has happened so far.
In the face of thin order books, short-time working and debts, many companies have their backs to the wall.
"Family businesses that are in the process of being handed over and at the same time struggle for the survival of their company with the coronavirus economic restrictions imposed by politicians must not, in addition and through no fault of their own, have an obligation to pay back inheritance tax," says Eben-Worlée.
The Ministry of Finance points out that there is a buffer in the exemption regulation.
Those who choose the 85 percent standard exemption must therefore achieve a total of 400 percent of the original wage bill in the five following years.
And whoever has chosen 100 percent exemption will have to keep 700 percent of the wage bill in seven years.
In this case there is no buffer.
The economic wing of the Union calls for a rethink
In view of the deep economic downturn in the past year and the persistently poor economic situation in many industries, the question arises whether and to whom the buffer is of any use.
The unexpected economic slump has ruined the medium-term plans of the companies.
Many companies will take a long time to regain their old strength.
Armon managing director Junglas-Mummert says: “Our company is estimated to be only worth half as much today as it was at the time of the takeover.” For a possible additional inheritance tax payment, the next generation would have to pay taxes on a company value “which it now has no longer exists ”.
And this "in times when the company has to master completely different challenges".
Your arguments are met with understanding by the economic wing of the Union.
Wolfgang Steiger, Secretary General of the CDU Economic Council, speaks of a "worrying situation".
Because the assets of family entrepreneurs are almost completely tied up in the company, any inheritance tax incurred must usually be financed from the company assets, says Steiger.
This would take away massive amounts of equity from the company, or it would have to be financed through loans.
"Both of these have consequences not only for the company's creditworthiness, but also for its ability to invest in jobs, facilities and products," warns the head of the party-affiliated economic organization.
"Here politicians must quickly take precautions so that the corona pandemic does not trigger additional negative long-range effects."
display
Union parliamentary group vice Carsten Linnemann admits there is a need for action, especially with regard to short-time work.
"The regulations of inheritance tax law do not sufficiently take short-time work into account." The fact that employers tried to save their company through the crisis with short-time work was expressly desired by politicians, says the chairman of the CDU Association of SMEs.
In that case, however, the family entrepreneurs should not be disadvantageous in terms of inheritance tax.
"That is why we should adapt the inheritance tax law so that short-time work in the two crisis years is seen as a continuation of wage payments," suggests Linnemann.
The family entrepreneurs' suggestions go even further.
Eben-Worlée demands that the wage bill rule not apply to the generation transition when applying the exemption regulation in the inheritance tax law for the two Corona years 2020 and 2021.
This is vital for many companies.
The economist Lars Feld advocates the same approach and advocates a corresponding extension of the deadline for the exemption rules.
Inheritance tax is also due in the event of bankruptcy
The inheritance tax not only threatens companies transferred by inheritance or gift, which are struggling to survive.
Even companies that have already lost this battle are not left unscathed by the tax authorities.
Because anyone who has made use of the exemption rule is obliged to continue operating for at least five years.
In the case of a 100 percent exemption, a period of seven years applies.
Even the judicial opening of insolvency proceedings within this period is a violation of the exemption rule and results in inheritance tax being levied on the company that has been transferred.
And that, although the insolvent company is no longer worth anything in case of doubt.
"In the event of insolvency, inheritance tax is also due because the exemption is retroactively eliminated," says Christian Rech from the German Association of Tax Consultants (DStV).
That is incomprehensible.
Especially since in such cases the tax must then be paid from private assets.
No company successor goes deliberately and planned into bankruptcy.
Rightly complains: "To punish entrepreneurial commitment even if the company goes down the drain is also morally questionable."
This article is from WELT AM SONNTAG. We will be happy to deliver them to your home on a regular basis.
Source: Welt am Sonntag