Government announces tax decisions
Additional tax concession for intergenerational transfer of farms and businesses revoked and tax rates for inheritance and gift taxes down by 3 percentage points in all tax scales in the first tax bracket
Additional concession on inheritance tax for intergenerational transfers revoked
This Government?s aim is to encourage the intergenerational transfer of farms and businesses by means of tax measures to secure jobs and overall wellbeing. To this end, a Government proposal is currently being handled in Parliament. During the parliamentary process, however, it has transpired that current legislation makes it very difficult to promote intergenerational transfers by means of tax relief on inheritance and gift taxes. Tax concessions for intergenerational transfers werel last increased by the previous government in 2004. Both the original model proposed by the Government and the revised options for concessions on inheritance and gift taxes for intergenerational transfershave proven to be either constitutionally complicated or not very feasible.
Most experts consulted by the Committee for Constitutional Law were of the opinion that to raise the tax concession from 60% to 80% would be problematic from the viewpoint of constitutional equality. The revised models for tax concessions were based on the idea that in some cases it would be possible to separate certain types of wealth in balance sheet, making balance sheets more detailed. However, the experts concluded that such alternatives might in fact result in unanticipated and possibly even worse situations for companies than at present.
The Government has therefore concluded that it is not possible to achieve the Government objectives of better employment prospects and business opportunities by means of honing inheritance and gift taxes.
Thus the Government has decided to withdraw from Parliament its proposal on tax concessions for intergenerational transfers.
A 3 percentage point reduction in everyone's inheritance and gift taxes
Instead of additional tax concessions for just intergenerational transfers, the Government has decided to pursue the line of easing inheritance taxation in general. Thus all inheritance and gift tax scales will be lowered by 3 percentage points in the first tax bracket. This means that taxation on not only intergenerational transfers but also on inheritances and gifts will ease. Moreover, the existing tax concessions on intergenerational transfers remain in force.