Overview
- The Bundesverfassungsgericht held two hearings in Karlsruhe on Monday and Tuesday, October 12–13, 2026, with the first day focused on Bavaria’s abstract challenge to federal rules and the second on a private complaint about privileges for business heirs.
- Bavaria argues the federal government lacks competence for parts of inheritance law and says personal tax-free allowances set in 2009 are outdated given regional spikes in property prices, a point it used to demand regional or higher Freibeträge.
- A private complainant says company heirs are advantaged because the law allows an 85 percent tax exemption if a firm is kept for five years and full exemption under stricter seven-year rules, while the needs test for very large transfers let recipients escape roughly €3.7 billion in tax relief in 2025.
- Judges may confirm the rules, strike specific provisions, or declare parts unconstitutional while temporarily leaving them in force and giving Parliament time to amend the law, a range of outcomes that would create legal uncertainty and could affect recent or planned transfers.
- The case has clear political fallout: the SPD offers a ‘FairErben’ plan with a €5 million allowance for business transfers and steeper taxation above that, the Union defends protections for family firms, and any court ruling would likely trigger major legislative debate into 2027.