German Wealth Tax Guide German Wealth Tax Guide

German Wealth Tax Guide

German Wealth Tax Guide & Risk of Reintroduction (Historical & Current View)

1. Historical development & Constitutional Court ruling

Germany had a formal wealth tax (Vermögenssteuer) in place until 1996. The law was rooted in earlier forms of wealth-based taxation dating back to the 19th and early 20th century (e.g. Prussian Ergänzungssteuergesetz). On 22 June 1995, the Federal Constitutional Court (Bundesverfassungsgericht) issued decision 2 BvL 37/91, declaring the existing form of the wealth tax unconstitutional. The court found, among other things, that the valuation methods for different types of assets (notably real estate vs. financial assets) violated the principle of equality under the Basic Law (Grundgesetz, Art. 3). Also relevant was the concept of the “imputed yield” (Soll-Ertrag), which the court said must serve as a basis rather than taxing pure wealth substance. After the ruling, the wealth tax was effectively suspended. In 1996 the law still technically existed but was no longer applied (last collection took place in 1996).

2. Current debate & public opinion

The idea of reintroducing a wealth tax resurfaces regularly in German political debate. Parties such as SPD, The Greens, and The Left have included proposals in their programs. Opponents argue about fairness, valuation difficulties, economic impact, and the risk of capital flight. Since around 2019, surveys have shown a consistent majority of the German population supporting a reintroduction, especially for high-net-worth individuals. Examples:
  • In a Forsa survey for Stern in July 2024, 62 % of Germans supported a wealth tax on private and corporate wealth above €1 million.
  • According to ARD-Deutschlandtrend (April 2025), 69 % of respondents favored additional levies/taxes on “high” wealth.
  • A 2019 survey among people with more than €100,000 in assets found that 76 % supported a wealth tax for those with more than €1 million, according to Handelsblatt.
Public opinion therefore appears relatively stable: a majority across political affiliations, though support levels and preferred details (thresholds, rates, included assets) vary.

3. Possible forms & features

  • Thresholds / Exemptions: Likely only very high net wealth (e.g. > €1 million, or significantly more) would trigger the tax.
  • Valuation base: Real estate, financial assets, business interests; uniform valuation is critical, given past constitutional concerns (1995 ruling).
  • Rate structure: Could be flat or progressive, with special rules for business assets to avoid damaging productive capital.
  • Recurring vs one-off: Some proposals discuss an annual wealth tax; others consider a one-time “wealth levy” (Vermögensabgabe).
  • Reporting & compliance: More transparency, better data; tracking domestic/foreign assets; treatment of legal entities; reducing valuation disputes.

4. Implications for asset/wealth owners

  • Potentially higher tax burdens for owners of real estate, business shares, and financial portfolios.
  • Illiquid assets (e.g. real estate, art, collectibles) could create cash flow challenges if the tax is recurring.
  • Requirement for detailed documentation and valuation of assets; risk of disputes with tax authorities.
  • Possible shifts in investment strategies toward assets easier to value or located outside Germany.
  • Legal and structural planning could mitigate some risks (holding companies, trusts, valuation strategies).

5. How to prepare in advance

  • Take stock of your assets: what you own, where, in what form (real estate, business, financial, luxury goods, etc.), and how they are currently valued.
  • Consider restructuring ownership (legal entities, jurisdictions) for more efficient valuation and reporting.
  • Ensure sufficient liquidity to meet potential wealth tax liabilities.
  • Work with tax/legal advisors who understand both German and international regulations.
  • Monitor legislative proposals: thresholds, rates, and definitions. Assess the impact early if draft laws emerge.

6. Possible Action Steps

Given the historical precedent, the constitutional framework, and the stable public support, there is a significant possibility that some form of wealth tax in Germany may be reintroduced in the future. It makes sense to prepare now—so that asset owners are not caught off guard.
Consult our tax experts now or use our Wealth Tax Exposure Calculator to estimate the potential impact on your portfolio.

Disclaimer: This guide provides general information. It is not legal or tax advice. Always consult us with your specific circumstances and stay updated on new legislative developments.