Inheritance Tax Aspects of the Valuation of Private Equity Funds - Financial Yearbook 2017

The regulations of the German Inheritance Tax Law have occupied fiscal courts for many years and recently even the Federal Constitutional Court with growing intensity. For a long time, the legislature, however, did not manage to draft an inheritance tax concept capable of consensus.

On 22 September 2016, the Mediation Committee of Bundestag and Bundesrat agreed upon a compromise proposal on the inheritance tax. The German Bundestag confirmed the proposal agreed upon on 29 September 2016. The Bundesrat will deal with the amended law on 14 October 2016.

Although the discussions do not affect the valuation of participations in private equity funds, it gains more and more importance in the everyday taxation practice. Interests in private equity funds are transferred by a lifetime gift and/or by way of succession. For lack of statutory provisions on the valuation of (interests in) private equity funds, consultants and advisors are faced by some challenges – particularly as regards a multitude of private equity funds to be valued – which, however, allow some degree of discretion.