Germany’s Federal Constitutional Court began hearing arguments Monday in Karlsruhe over a lawsuit filed by Bavaria challenging the national framework of inheritance tax, with the state seeking to regionalize the levy.
Bavarian Premier Markus Söder and Finance Minister Albert Füracker, both of the CSU, argue the federal government lacks the constitutional authority to set uniform rules for inheritance and gift taxes, which they contend should be a state competence since revenues flow entirely to the Länder. The state’s abstract norm control petition targets provisions on property valuation, tax exemptions, and rates, asserting they are unconstitutional because they have not been adjusted for inflation since 2009 and fail to account for regional differences in real estate prices. Füracker stated that rising property values, particularly in high-demand areas, have eroded the relief effect of the current €400,000 per-child exemption, forcing heirs to sell family homes to cover tax liabilities .
The court’s decision, expected in the coming months, could reshape the legal basis for inheritance taxation. Opponents, including the federal Finance Ministry and Green Party lawmakers, warn that regionalization would trigger a “ruinous tax competition” among states, with wealthier Länder like Bavaria potentially lowering rates to attract affluent families while poorer states raise them, exacerbating disparities .
