Beneficiary assets in the case of a rental company

The tax authorities are sticking to their previous criteria for the preferential treatment of operating assets of a rental company.

For inheritance tax purposes, business assets are favored, while asset management companies are taxed normally. The German Federal Fiscal Court (Bundesfinanzhof) had come to the conclusion that apartments rented to third parties by an apartment rental company are only taxed as business assets for inheritance tax purposes if, in addition to the rental, the company also provides additional services as part of a commercial business operation that exceed the usual level for long-term rentals. The tax authorities have now announced that they do not intend to apply this ruling beyond the individual case decided. Thus, it remains the case that a rental company can have tax-privileged business assets if it has an economic business operation.