How can inheritance tax on business assets be reduced?
September 14, 2023 | 45,00 EUR | answered by Alwin Widmann
Dear tax consultant,
My name is Katrin Lang and I am facing a complex tax issue regarding inheritance tax in relation to business assets. My father recently passed away and left me his company. Now that I am running the business, I am aware of the tax implications that come with this inheritance.
My father built the company over many years and it is of great importance to me to preserve and continue this legacy. However, I am concerned about the amount of inheritance tax that could be levied on the business assets. I have heard that business assets can be favored in inheritance tax, but I am unsure of how to take advantage of this favoritism and how to minimize the tax burden.
So my question to you is: How can I reduce the inheritance tax on business assets? Are there any specific regulations or strategies that I can use to minimize the tax burden? I would like to learn more about possible solutions and options to best protect my company and my father's legacy.
Thank you in advance for your support and advice.
Sincerely,
Katrin Lang
Dear Mrs. Lang,
Thank you for your inquiry regarding inheritance tax in relation to business assets. It is understandable that you are concerned about the tax implications of taking over your father's business. I will now outline various ways in which you can reduce inheritance tax on business assets.
Firstly, it is important to know that business assets can be favored for inheritance tax purposes. This means that business assets can be partially or fully exempt from inheritance tax under certain conditions. One way to reduce the tax burden is through the so-called "relief for business assets" according to § 13a of the Inheritance Tax Act.
This regulation allows business assets to be 85% exempt from inheritance tax under certain conditions. One requirement is that the business must be continued for at least five years after the inheritance and that jobs within the business are maintained. Additionally, the business assets must not consist mainly of "private" assets, such as securities or real estate.
To claim the relief, you must submit an application to the tax office and provide the necessary documents. It is advisable to seek professional support from a tax advisor to ensure that all requirements are met and the tax burden is kept as low as possible.
Furthermore, there are other ways to reduce inheritance tax on business assets, such as creating tax-optimized company structures or using exemptions and tax benefits. An experienced tax advisor can assist you in developing individual solutions for your business.
Overall, it is important to plan for the inheritance of business assets early and seek professional advice to minimize the tax burden and protect your business as much as possible.
I hope this information is helpful to you and I am available for any further questions.
Best regards,
Alwin Widmann
