Germany’s Federal Fiscal Court (BFH) ruled on 20 November 2025 that the retroactive application of section 13b(10) of the Inheritance and Gift Tax Act (ErbStG) from 1 July 2016 is constitutionally permissible.
The case concerned a gift made on 24 July 2016, before the amended inheritance and gift tax rules were officially published on 9 November 2016. The taxpayer argued that the old rules should apply because the new law had not yet been promulgated at the time of the gift.
The BFH rejected this argument. It held that although the amendment involved genuine retroactive effect, this retroactivity was justified. According to the Court, taxpayers could no longer rely on the continued application of the old law once the German Bundestag adopted the relevant legislative proposal on 24 June 2016. From that date, taxpayers had to expect that the new rules would apply retroactively to acquisitions after 30 June 2016.
The Court also held that the later involvement of the Bundesrat and the Mediation Committee did not restore taxpayer reliance, as the relevant retroactive application rule had already been included in the Bundestag resolution.
As a result, the BFH confirmed that section 13b(10) ErbStG, as amended by the 2016 reform, applied to the gift made on 24 July 2016.
The judgment confirms the validity of the transitional rules introduced by the 2016 inheritance and gift tax reform and is relevant for gifts and inheritances occurring in the period between 1 July 2016 and the publication of the reform law on 9 November 2016.
