Germany Wealth Tax 2026: What SPD's Plan Means for Expats

Introduction

Germany's Social Democratic Party (SPD) has announced that wealth and inheritance tax reform will be a central political priority for the remainder of 2026. SPD General Secretary Tim Klüssendorf confirmed the party intends to raise the issue as a "key issue before the year is out" following the summer parliamentary recess. For expats living in Germany — particularly those who have built up savings, own property, run a business, or stand to receive an inheritance — this is a development worth watching closely. While no draft legislation has been published yet, the direction of travel is clear: the SPD wants wealthier individuals and estates to contribute more to public finances.

What Is the Current Situation with Wealth and Inheritance Tax in Germany?

Germany currently does not have a general annual wealth tax (Vermögensteuer). The wealth tax that existed was ruled unconstitutional by Germany's Federal Constitutional Court in 1995 and has not been levied since, though the legal basis for it technically still exists in the law.

Germany does, however, have an inheritance and gift tax (Erbschaft- und Schenkungsteuer). How much tax is paid depends on the relationship between the giver and receiver, the value of the assets, and various exemptions. For example:

• Spouses and registered partners have an exemption of up to €500,000.
• Children have an exemption of up to €400,000 per parent.
• Other relatives and non-related individuals have significantly lower exemptions.

Business assets currently enjoy substantial tax privileges, which critics — including the SPD — argue primarily benefit the wealthiest families and large estate owners.

The SPD's stated goal is to reform these exemptions and potentially revive a form of wealth tax on very high net worth individuals.

What Could Change Under SPD Proposals?

While the SPD has not yet published a detailed legislative proposal, Klüssendorf's statements point toward several likely areas of focus:

1. Reducing business asset exemptions: Current rules allow business heirs to avoid most inheritance tax if they maintain the business and its jobs for a set period. The SPD has long argued these exemptions are too generous and primarily benefit the ultra-wealthy.

2. Lowering thresholds or raising rates for large estates: Very large inheritances — particularly those worth several million euros — could face higher effective tax rates.

3. Potentially reviving an annual wealth tax: This is politically more contentious and would require broader coalition support, but the SPD has floated the idea in previous election manifestos.

It is important to note that the SPD is currently in a coalition government with the CDU/CSU (the Friedrich Merz-led administration). The CDU/CSU is broadly opposed to new wealth taxes. This means any reform will require negotiation and compromise, and the final outcome — if any legislation passes at all — may look quite different from the SPD's opening position.

What Does This Mean for Expats in Germany?

For most expats earning a regular salary and renting an apartment, immediate practical impact is limited. However, certain groups should pay close attention:

• Expats with significant savings or investments held in Germany could be affected if a new annual wealth tax is introduced with a relatively low threshold.
• Expats who own property in Germany — whether a primary residence or investment property — should be aware that property values are factored into inheritance tax calculations.
• Expats expecting to receive an inheritance from family abroad or within Germany: cross-border inheritances involving Germany can be complex, and any change to exemption levels could increase the tax liability.
• Entrepreneurs and business owners in Germany who have built up company assets should monitor proposed changes to business exemptions closely.

For now, no legislation exists and no firm numbers have been announced. The SPD's move is a political signal, not an imminent legal change.

Frequently Asked Questions

Does Germany currently tax wealth or assets on an annual basis?

No. Germany suspended its annual wealth tax in 1997 following a 1995 Constitutional Court ruling. There is currently no annual levy on total net wealth in Germany. The inheritance and gift tax does apply when assets are transferred.

If I receive an inheritance from abroad, do I owe German tax?

It depends. Germany taxes inheritance based on the residence of the deceased or the heir. If you live in Germany and receive an inheritance — even from abroad — you may owe German inheritance tax. The rules are complex and vary by country, and double-taxation treaties may apply. Consulting a tax adviser (Steuerberater) is strongly recommended in cross-border situations.

Conclusion and Next Steps

The SPD's push for wealth tax reform is a political process that will unfold over the coming months. No law has been passed or even formally proposed yet. However, expats with significant assets, property, or inheritance expectations in Germany should start paying attention. Use this period to review your financial situation with a qualified Steuerberater, especially if cross-border assets or inheritances are involved. We will continue to cover this story as concrete proposals emerge.

Source: IamExpat