German court strikes down inheritance tax breaks for companies, orders new rules by 2016

MarketsAssociated Press

Germany's highest court has struck down breaks on inheritance tax that benefit companies and ordered the government to come up with new rules.

The Federal Constitutional Court said Wednesday that rules meant mainly to exempt family-run companies from most, even all, of the inheritance tax due when firms pass on to heirs can unfairly benefit big companies.

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It said the government is entitled to allow small and medium-sized companies tax breaks "to secure their existence and preserve jobs" but told it to come up with new rules by June 2016. In the meantime, the current rules will apply.

The court said 4.3 billion euros ($5.4 billion) in inheritance tax was paid in 2012 while exemptions to the tune of nearly 40 billion euros ($50 billion) were granted.