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In Brief
11. May 2026

Is retroactive application of the 2016 inheritance tax reform possible?

Time and again, the courts are kept busy with the question of the constitutional admissibility of the retroactive application of tax regulations. Currently, the reform of the inheritance tax legislation, in 2016, is under discussion.

The Federal Fiscal Court (Bundesfinanzhof, BFH), in its ruling of 20.11.2025 (case reference: II R 7/23), decided that, for acquisitions made after 30.6.2016, the retroactive application of Section 13b(10) of the German Inheritance and Gift Tax Act in the version of the 2016 Act to Amend the Inheritance and Gift Tax Act to Align with the Case Law of the Federal Constitutional Court is constitutionally permissible. In the underlying case, a limited partnership interest was transferred, on 24.7.2016, by way of a gift. The claimant objected to the application of a new regulation that was only promulgated on 9.11.2016 and asserted that this was an inadmissible genuine retroactive effect. The background to this was that the Federal Constitutional Court, in its ruling of 17.12.2014 (case reference: 1 BvL 21/12), had required lawmakers to amend the regulations by 30.6.2016; however, the legislation was not enacted until later.

The BFH did not accept the aforementioned argument. In the opinion of the court, the confidence of the taxpayers had already been shaken by the resolution of the Bundestag [lower house of German parliament] of 24.6.2016. It was sufficiently clear from this that the intention was to amend the regulations and that they would apply to acquisitions made after 30.6.2016. Therefore, taxpayers had to expect the corresponding retroactive application.

Please note

In the view of the BFH, neither the initiation of the mediation process nor the time that elapsed until the new regulations were ultimately promulgated had led to a revival of the protection of legitimate expectations. The determining factor was rather that the specific provision at issue was not affected by the subsequent amendments made during the mediation process.