Cabinet - New rules for the inherited farm
The inheritance of farmsteads should be placed on a new legal basis. The Federal Cabinet therefore introduced a reform of the so-called Hofordnung on a Wednesday, which regulates the transfer of agricultural and forestry businesses in North Rhine-Westphalia, Lower Saxony, Schleswig-Holstein, and Hamburg.
The provision for the inheritance tax compensation for heirs who leave empty-handed during the transfer of a farmstead needs to be reformed. The calculation of this compensation was previously based on the so-called unit value, which had been criticized by the Federal Constitutional Court and abolished in the reform of the property tax. According to the draft law by Federal Justice Minister Marco Buschmann (FDP), which the Bundestag is now deciding on, the minimum compensation should amount to 0.6 times the value of the property tax base A in the future.
The Hofordnung should fundamentally prevent the break-up of family-run businesses, as only one family member inherits the respective farmstead, and all others receive a compensation. This provision applies, however, only above a certain farm size: Previously, the businesses had to have an economic value of 10,000 Euro; through the reform, the lower limit should be a property tax base A in the amount of 54,000 Euro. "We want the Hofordnung to be future-proof and for the generational change in agriculture to continue to be successful," explained Buschmann.
Federal Government draft law press release of the Ministry of Justice
- The farmsteads in Berlin, Hamburg, North Rhine-Westphalia, Lower Saxony, Schleswig-Holstein, and other German states are undergoing a legal reform to reevaluate the inheritance process.
- Marco Buschmann, the Federal Justice Minister from Germany's Liberal Democratic Party (FDP), has drafted a bill regarding the reform of the inheritance tax compensation for heirs who vacate during the farmstead transfer.
- The reform aims to make the Hofordnung more resilient, ensuring the smooth generational change in agriculture by preventing the break-up of family-run businesses.
- The draft law suggests that only one family member should inherit the farmstead while others receive compensation, with the provision applying to farmsteads valued above a certain size (54,000 Euro according to the proposed reform).
- The newly proposed minimum compensation for inheritance tax compensation should be 0.6 times the value of the property tax base A, as outlined in the bill introduced by Minister Buschmann.
- The Federal Cabinet's proposed reform of the Hofordnung, which governs the transfer of agricultural and forestry businesses in several German states, is currently under consideration by the Bundestag.
