Company heirs who have suffered particularly from the pandemic can now hope for leniency from the tax office.

According to the Inheritance Tax Act, they are actually threatened with an additional payment if they have benefited from the so-called exemption rule, but were not able to continue employing their employees as required.

It is usually checked after five or seven years whether they have complied with the wage bill required for the benefit.

Not only layoffs, but also periods of short-time work have a negative effect.

The federal and state governments want to use a temporary special regulation to prevent inheritance tax from becoming due later in the event of a Corona crisis - and to prevent companies that are already reeling from being additionally burdened.

Manfred Schaefers

Business correspondent in Berlin.

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The decree sent by the Federal Ministry of Finance on Thursday enables the responsible financial authorities to check whether the subsequent collection of inheritance or gift tax can be waived in individual cases.

The necessary causality between the pandemic and falling below the minimum wage can therefore be assumed if, firstly, from the beginning of March 2020 to the end of June of this year, the calculated required wage total was not reached, secondly, short-time work benefits were paid to the company and thirdly, the company belongs to an industry that was directly affected by an ordered closure.

examination on a case-by-case basis

"The above examination is to be carried out on a case-by-case basis," it says. For the cumulative existence of the aforementioned criteria, there should be no other reasons for falling below the minimum wage total (e.g. dismissal for operational reasons) and for the payment of short-time work benefits to the company. If the three circumstances are not cumulative, "it must be checked in each individual case whether the necessary causality can nevertheless be assumed". Sometimes, for example, it could be sufficient if only the first and third circumstances exist, since individual employment relationships were terminated due to the pandemic before short-time work benefits were paid to the company (e.g. in the catering trade).

Indirect effects of an ordered closure could also suffice for the assumption of the necessary causality if there were consequential effects.

Textile cleaning of hotel and catering linen, transport companies and breweries are given as examples.

According to the current agreement, a different determination or waiver of inheritance tax is generally out of the question if the calculated average wage total required to comply with the minimum wage total was not reached before the pandemic period.

“In this case, falling below the minimum wage is not exclusively due to the Covid 19 pandemic,” is the reasoning.

In order not to make the generational transition more difficult for medium-sized companies, 85 percent of company assets have been exempted from inheritance tax if the purchaser continues the business for five years.

Over this period of time, the total wages must not be less than 400 percent of the initial value.

If the company is continued for a longer period of time, full receipt of the wage bill must be proven over a period of seven years.