Indirect donation of business assets

The indirect gift of business assets is not favored for gift tax purposes because it is not business assets themselves that are transferred, but only a monetary amount subject to a condition.

In order for an inheritance or gift to qualify for tax relief on business assets, the assets acquired must be tax-privileged business assets for both the testator or donor and the acquirer. According to a decision of the German Federal Fiscal Court, this requirement is not met if the acquirer receives a sum of money with the condition that it be used to acquire shares in a company or a business. Such an indirect gift is therefore not eligible for tax relief.