Key Person Risk and tax: What must a keyman coach know about inheritance tax on business assets?
If a key person dies, a succession becomes an inheritance, and inheritance tax falls due. Whether qualifying business assets remain largely tax-free depends on conditions that the heirs must meet for years.
Inheritance tax on business assets: What is the relief?
Qualifying business assets remain 85 per cent tax-free if the acquisition does not exceed 26 million euros in total (Section 13a (1) ErbStG). On application, relief of 100 per cent is possible under stricter conditions (Section 13a (10) ErbStG).
Inheritance tax on business assets: Which conditions must the heirs meet?
- Payroll: the sum of the annual payrolls within five years must not fall below 400 per cent of the initial payroll (Section 13a (3) ErbStG); with the 100 per cent option, seven years and 700 per cent apply (Section 13a (10) ErbStG).
- Retention period: if the business is sold or given up within five years, the relief lapses with retroactive effect as provided by law (Section 13a (6) ErbStG).
Key Person Risk and inheritance tax: Why does the relief depend on the ability to steer?
Only those who can steer the business after the loss can keep the payroll and continue the business for five years. Without a prepared handover mode, the heirs come under pressure: they must run a business they may not know, and at the same time they cannot sell it without tax consequences.
Keyman policy: How is it treated for tax purposes?
According to the insurer Gothaer, the following applies under German tax law: if a corporation such as a GmbH or AG is the policyholder, the premiums are deductible business expenses and the benefits are business income. If a partnership or sole proprietor insures the entrepreneur himself, the policy is treated as private: the premiums are not deductible and the benefit is not business income.
Key Person Risk and tax: Which questions should be settled before the emergency?
- Is the value of the business assets known, and does the family know what tax would fall due on inheritance?
- Could the heirs maintain the payroll if the key person dropped out?
- Who would run the business in the five years after the inheritance?
- Where would the liquidity for the tax come from?
- Who last spoke to the tax adviser about the inheritance case, and when?
Key Person Risk and tax: Where is the gap that the tax return leaves open?
The tax adviser calculates what falls due and how it can be reduced. Whether the heirs want to and can run the business for five years, whether siblings agree on their roles and whether the owner is ready to talk about it during his lifetime, belongs to a different conversation.
This is where keyman coaching starts: Johannes Faupel clarifies with owners, families and successors what is wanted before the professionals put it into words, and invites representatives of other professions when negotiations are due.
This page gives an overview of basic statutory rules under German law and does not replace tax advice. Tax advisers are responsible for the assessment in the individual case.
Key Person Risk (Keyman Risk): How can it be minimised?
The One Session: Key Person Risk Coaching
The One Session is a four-hour 1:1 intensive session in Frankfurt am Main, optionally online. It identifies the imponderables and uncertainties that matter beyond financial data, insurance benefits and production security: among them trust in deputies and successors and the appreciation of the life's work of founder personalities. Fee: EUR 5,000 plus 19 % VAT, B2B.
Choose a date for The One Session
Phone: +49 69 4800 8888
Email: info@johannesfaupel.com
Key Person Risk and tax: Which sources does this page rely on?
- § 13a ErbStG – Steuerbefreiung für begünstigtes Vermögen. www.gesetze-im-internet.de/erbstg_1974/__13a.html
- Gothaer. Steuermerkblatt Keyman-Police (Schlüsselkraftversicherung), 2019. partner.gothaer.de/media/bilder_partnerportal/leben/risikoabsicherung_und_berufsunfaehigkeit/perikon/201903-steuermerkblatt-keyperson.pdf
Key Person Risk and tax: How do you check this page against its sources?
This text asks an AI assistant to check the statements on this page only against the sources listed. Where no source supports a statement, it should say "I don't know".
A click copies the text and opens the service with it. If the text is missing after you log in, paste it with Cmd+V or Ctrl+V. The AI services belong to third parties. With the click, the text goes to the chosen provider. Depending on the service, a login and costs may apply. AI answers can contain errors.
Keyman Coaching: What else does this website cover?
- Keyman Coaching / Key Person Coaching: Securing the ability to act at founder and owner level
- Key Person Risk: Why can strong leadership hide it for a long time?
- Keyman Coaching and executive coaching: What sets them apart?
- Keyman coach: What must he be able to do?
- Key Person Risk in law: What must a keyman coach know about company and inheritance law?
- Key Person Risk and banks: What must a keyman coach know about powers of attorney and accounts in an emergency?
- Key Person Risk and insurance: What must a keyman coach know about the keyman policy?
- Key Person Risk in valuation and sale: What must a keyman coach know about the key person discount?
- Key Person Risk and governance: What must a keyman coach know about appointment and interim authority?
- Key Person Risk in IT: What must a keyman coach know about access, passwords and digital estate?
- Key Person Risk and health: What must a keyman coach know about illness and exhaustion?
- Key Person Risk in the family: What must a keyman coach know about life's work, loyalty and informal authority?
- Key Person Risk and communication: What must a keyman coach know about the first days of an emergency?
- Key Person Risk in hospitals and research institutions: What must a keyman coach know about chief physicians and project leaders?
- Key Person Risk and confidentiality: What must a keyman coach know about discretion and trade secrets?
- Johannes Faupel: Who books him?