Unternehmensnachfolge 2026: Tax Planning in 5 Steps

Why succession must be planned as early as possible

Unternehmensnachfolge is the most complex structuring task in German tax law. It combines company law, succession law, tax law and family law — and additionally places operational demands on the handover of management. Anyone starting too late loses structuring options, pays higher taxes and jeopardises the continued existence of the business.

The figures are unambiguous. According to estimates by the IfM Bonn, around 125,000 companies in Germany face the Unternehmensnachfolge question every year. About 29 % find no suitable successor. With the rest, the quality of planning decides whether taxes in the five- or six-figure range are saved or given away. A special risk group is formed by freelance practices with high owner-related goodwill — as set out in detail in the guide Inheriting a medical practice: valuation, tax and risks, without clean structuring the transferred assets can be economically devalued.

Why you should plan at least 5 to 10 years ahead is explained in the guide Nachfolgeplanung: why early action is decisive.

The 5 steps of tax-optimised succession

Step 1: business valuation

Business valuation forms the foundation of any Nachfolgeplanung. It determines the tax base for Erbschaft- and Schenkungsteuer and therefore directly influences the tax burden.

Simplified income-capitalisation method (§ 199 BewG)

The tax office applies the simplified income-capitalisation method as the standard method, unless it leads to obviously inappropriate results — the rule expressly formulates the method as a discretionary option with this limitation. The average annual earnings of the last three years are multiplied by a capitalisation factor. The capitalisation factor is derived from the basic interest rate of the Deutsche Bundesbank plus a risk premium of 4.5 %.

Qualified valuation report as an alternative

The simplified method often leads to overvaluation because it systematically ignores company-specific risks. A qualified business valuation under IDW S 1 takes account of market conditions, sector risks and dependence on the owner. According to our advisory experience, valuation report values often lie 20 to 40 % below the simplified income value. The proof of a lower common value through a valuation report is regulated by § 198 BewG.

The costs of a valuation report lie between EUR 5,000 and EUR 30,000, depending on company size and complexity. This investment pays off in most constellations: with a EUR 1,000,000 lower valuation basis and a tax rate of 19 %, the valuation report yields EUR 190,000 in savings.

Further valuation methods in practice

In addition to the income-capitalisation method, three further methods play a role. The substance value method depicts the sum of all assets less liabilities and serves as the statutory minimum value. The multiplier method uses sector-typical multipliers on EBIT or turnover and is common in M&A negotiations. The Discounted Cash Flow method (DCF) works forward-looking and is international standard, but plays only a secondary role for German Erbschaftsteuer.

Step 2: structuring

The corporate structure determines the tax options at succession. Anyone who adapts the structure in time can considerably reduce the tax burden.

Holding (German tax-optimised holding company structure, typically with Schachtelprivileg under § 8b KStG) as a succession vehicle

The use of a Holding company is one of the most effective instruments of Nachfolgeplanung. The operating company is placed under a family Holding, and the shares in the Holding are gradually transferred to the next generation.

The advantages of this structure are considerable in practice:

• Tax-privileged distributions: dividends between corporations are effectively around 95 % tax-free. The mechanism follows from § 8b para. 5 KStG, which treats 5 % of receipts as flat non-deductible operating expense.
• Asset protection: operating risks remain in the operating company; the thesaurised values gather protected in the Holding.
• Flexible succession: Holding shares can be divided more easily than shares in the operating company, without operating voting rights being fragmented.
• Structuring scope: different shareholding quotas, voting rights and disquotal profit distribution are flexibly representable within the Holding.

Details on tax optimisation can be found in the guide Holding structure: tax advantages and liability shield.

Reorganisation of the legal form

The legal form influences succession directly. With a GmbH shares are transferred, with a partnership co-entrepreneur shares. Each legal form has its own tax consequences and its own transfer routes. Typical reorganisations before succession concern the transition of a sole trader into a GmbH (allows step-by-step transfer of shares), the conversion of a GmbH into a GmbH & Co. KG (advantages in ongoing taxation) or the spin-off into operating business and real estate ownership.

Caution lock-up period: after contributions into a corporation, a seven-year lock-up period applies. If the shares received through contribution are sold within this period, the contribution gain is taxed retroactively (Einbringungsgewinn I/II). Plan reorganisations therefore at least seven years before the planned transfer.

For internationally active entrepreneurs or owners considering a Wegzug (relocation abroad, triggering exit taxation on substantial shareholdings) abroad, an additional complexity arises: the Wegzugsbesteuerung (exit taxation under § 6 AStG when relocating abroad with substantial shareholdings) under § 6 AStG 2026: deferral and return can trigger considerable tax consequences when shifting residence abroad, which must be factored into structural planning.

Step 3: planning the tax exemption

§§ 13a and 13b ErbStG form the central instrument of Unternehmensnachfolge. They enable, under certain conditions, far-reaching tax exemption for qualifying business assets.

Regelverschonung (85 %)

With the Regelverschonung, 85 % of the qualifying business assets remain tax-free. Only the remaining 15 % is subject to Erbschaft- or Schenkungsteuer. In addition, an Abzugsbetrag of EUR 150,000 applies. The condition is a retention period of five years during which the business must be continued. The wage sum clause requires that the cumulative wage sum over five years reach 400 % of the initial wage sum. The administrative assets test requires a quota of at most 90 % — the relief is therefore only denied if the administrative assets dominate the substance.

Optionsverschonung (100 %)

On application, full tax exemption can be granted. This decision is irrevocable. The conditions tighten: the retention period extends to seven years, the wage sum must reach 700 % of the initial wage sum during this period, and the share of administrative assets must not exceed 20 % of the total business assets.

Qualifying under § 13b ErbStG are in particular domestic business assets, agricultural and forestry assets and shares in corporations, provided the Erblasser or donor was directly involved with more than 25 % in the nominal capital. A shareholding of exactly 25 % is expressly not sufficient — the threshold must be exceeded. With smaller shareholdings the qualifying capacity can be created through a pool agreement with other shareholders.

Comparison table: Regelverschonung vs. Optionsverschonung

Calculation example: exemption in comparison

Company value: EUR 5,000,000. Administrative assets: 15 %. Transfer to a child (tax class I, allowance EUR 400,000).

In this example the Optionsverschonung saves EUR 22,000. With higher company values the difference grows substantially. From qualifying assets of EUR 26 million onwards, the abatement model of § 13c ErbStG additionally applies, reducing the Verschonungsabschlag in stages. An in-depth look at the exemption mechanics can be found in the guide Verschonungsabschlag § 13a/13b ErbStG: up to 100 % tax-free. Calculate your individual tax burden with the Erbschaftsteuer calculator.

Source note: the administrative view on the application of §§ 13a, 13b ErbStG is summarised in the coordinated decrees of the supreme tax authorities of the federal states and is updated on an ongoing basis. The current statutory text can be found at gesetze-im-internet.de/erbstg.

Step 4: carry out the handover

The handover of the business can take place in different ways — each route has its own tax consequences and is suitable for different starting positions.

Family-internal succession

The most common form is the handover to children or other family members. The transfer can take place as a pure Schenkung, as a sale at market price or as a sale at a preferred price (mixed Schenkung). The advantages are clear: Schenkung allowances of EUR 400,000 per child and parent can be used, the exemption rules under §§ 13a, 13b ErbStG apply, and the transfer can be structured step by step — first minority shares, later the majority. In parallel, the successor can be operationally inducted.

The risks are equally obvious. Professional and personal suitability of the successor is not guaranteed, and with several children family conflicts about shareholding quotas and equal treatment quickly arise. In addition, Pflichtteil claims of departing siblings can put the business under pressure with unplanned liquidity strain. In family businesses the notarial Pflichtteilsverzicht (waiver of compulsory share) of the departing siblings is often the only clean solution to keep the substance with the successor — with market-customary compensation and full tax clarity.

Management-Buy-Out (MBO)

In an MBO the existing management acquires the company. For tax purposes a purchase price is paid; the exemption rules do not apply due to the absence of a gratuitous transfer. The seller realises a capital gain whose taxation depends substantially on the legal form. With partnerships § 16 para. 4 EStG provides an allowance of EUR 45,000 — but only for taxpayers who have completed their 55th year of age or who are permanently incapacitated for work. Under the same personal conditions the reduced tax rate under § 34 para. 3 EStG comes into consideration; without these conditions only the one-fifth rule under § 34 para. 1 EStG remains. With corporations the Teileinkuenfteverfahren applies (40 % tax-free) or — when sold via a Holding — the effectively roughly 95 % tax exemption under § 8b KStG.

Management-Buy-In (MBI)

An external manager takes over the business. The tax treatment corresponds to the MBO, but onboarding and operational handover usually take considerably longer. The seller also bears a higher business risk because the MBI candidate must first learn the business model and customer relationships. An earn-out component in the purchase price is standard in this constellation.

Foundation solution

The transfer of the business to a Familienstiftung (family foundation under German private law, often used for asset protection over generations) safeguards continuity across generations. The Stiftung becomes the owner; the family receives benefits from the income. This solution is particularly suited where no suitable family-internal successors are available or where the business is to be preserved long-term as a closed unit. All conditions and tax consequences — including the Erbersatzsteuer due every 30 years — can be found in the guide Setting up a Familienstiftung: conditions and costs.

Step 5: securing and retention periods

After the handover, succession is not concluded. The retention periods and wage sum rules must be complied with for five or seven years, otherwise considerable subsequent taxation looms.

Wage sum clause in detail

The wage sum clause only applies to businesses with more than five employees. The initial wage sum is the average of the last five years before the transfer. The required minimum wage sum is staggered by number of employees:

If the wage sum is undershot, the tax exemption is reversed proportionally (Regelverschonung) or fully (Optionsverschonung). The shortfall amount is calculated proportionally to the wage sum undershooting — a shortfall of 12.5 % of the required wage sum reduces the exemption by the same percentage.

Retention periods and harmful disposals

Within the retention period the following actions lead to retroactive subsequent taxation:

• Sale of the business or essential parts of the business assets
• Cessation of the business or change to a non-qualifying activity
• Excess withdrawals over EUR 150,000, cumulated since the transfer
• Essential structural changes such as conversion into an asset-managing company

In the case of Regelverschonung, subsequent taxation is time-proportional: anyone who has complied for four out of five years loses one fifth of the relief. With Optionsverschonung the exemption falls away in full — a single breach in the seventh year can trigger a six-figure tax back-payment.

Timetable: when to start?

Nachfolgeplanung is a multi-year process. Depending on the starting position, different time horizons arise:

Why two 10-year cycles are ideal

Anyone starting at age 50 and wanting to hand over at age 70 can use the Schenkung allowances twice. With a parental couple and two children, that means up to EUR 3,200,000 in tax-free transfer of private assets, in addition to the exemption rules for business assets. Anyone only starting at 65 has only one 10-year cycle left. That halves the tax-free transfer potential for private assets and considerably shortens the time for reorganisations and lock-up periods.

When the family-internal successor is missing: external routes

In around 29 % of succession cases no suitable family or employee successor is available. For these constellations, established external routes have emerged: the succession exchanges of the Chambers of Industry and Commerce, the nationwide platform nexxt-change (run by BMWK, KfW and Chambers) and specialised M&A advisers connect buyers and sellers in the Mittelstand (German mid-sized business sector). The SME calculator of the Free State of Saxony also offers a low-threshold initial indication for business valuation.

For tax purposes, an external sale runs like a classic business sale. The exemption rules under §§ 13a, 13b ErbStG do not apply due to the absence of a gratuitous transfer. The reliefs for capital gains under §§ 16, 34 EStG (with the familiar age requirement of 55) or the Holding solution under § 8b KStG come into play. Anyone failing to find a family-internal solution should start the search for external buyers at the latest three years before the planned exit — serious sales processes experientially take twelve to eighteen months from the first letter of intent to closing.

Current developments 2026

The legal position on Unternehmensnachfolge remains largely stable in 2026. The coordinated state decrees on §§ 13a, 13b ErbStG are continuously adjusted in response to BFH case law, in particular on the delimitation of administrative assets and the treatment of young financial assets. Watch the administrative practice on young financial assets (held under two years), which since the 2016 Erbschaftsteuer reform have been excluded from the qualifying assets and often hide underestimated risks in mid-sized structures. Before any transfer, the current administrative position should be checked through a specialised adviser.

Frequently asked questions

What does professional succession advice cost?

The costs depend on the complexity of the corporate structure. An initial consultation with stock-taking typically lies between EUR 300 and EUR 500. A full succession structuring with company agreements, tax modelling and implementation support costs between EUR 5,000 and EUR 30,000. To this add EUR 5,000 to EUR 30,000 for a qualified business valuation report. These investments are usually in no proportion to the tax savings achievable, which in mid-sized businesses quickly become six-figure.

Can I choose the Optionsverschonung retroactively?

No. The application for Optionsverschonung must be made in the tax return and is irrevocable. If the Optionsverschonung is chosen and a breach of the retention periods or wage sum clause occurs, the tax exemption falls away in full. With Regelverschonung the subsequent taxation is at least proportional. The decision between Regelverschonung and Optionsverschonung should therefore be modelled together with the Steuerberater (German tax advisor) — particularly in volatile sectors with wage sum risks.

What happens if I do not meet the wage sum?

With Regelverschonung the tax exemption is cut proportionally to the wage sum undershooting. Example: the required minimum wage sum of 400 % is only reached at 350 %. The undershoot is 50 out of 400 percentage points, i.e. 12.5 %. The 85 % tax exemption is cut by 12.5 %, i.e. to around 74.4 %. With Optionsverschonung any undershoot leads to total loss of the tax exemption.

How is the business valued for Erbschaftsteuer?

The tax office first applies the simplified income-capitalisation method under § 199 BewG, unless it leads to obviously inappropriate results. The average annual earnings of the last three years are multiplied by a capitalisation factor. Alternatively, the taxpayer can submit a qualified valuation report under § 198 BewG proving a lower common value. In practice the valuation report value often lies significantly below the simplified method value.

What are administrative assets and why are they relevant?

Administrative assets comprise items not serving the main purpose of the business: securities, rented real estate (with exceptions), works of art, cash and receivables above certain thresholds. The administrative assets quota determines whether the Optionsverschonung is possible (max. 20 %) and whether the Regelverschonung even applies (administrative assets test: max. 90 %). With administrative assets too high, the business is treated for exemption purposes like a pure asset-management vehicle.

Can I sell the business tax-free to an external buyer?

The exemption rules under §§ 13a, 13b ErbStG only apply for gratuitous transfers — Schenkung or succession event. With a sale at market price a capital gain arises that is subject to income tax. Relief follows §§ 16, 34 EStG, but with age limit 55 or in the case of permanent incapacity to work. With sale via a Holding structure the effectively roughly 95 % tax exemption under § 8b KStG applies, which makes the sale tax-optimal in many cases.

Which lock-up period must be observed for reorganisations?

After contributions in which a business or co-entrepreneur share has been contributed at book values into a corporation, a seven-year lock-up period applies. If the shares received are sold or further transferred within this period, the contribution gain is taxed retroactively (Einbringungsgewinn I or II). The period begins with the contribution date. Reorganisations before succession should therefore be completed in good time — best at least seven years before the planned transfer.

Conclusion: succession is a chief's task

Unternehmensnachfolge is too complex and too consequential to postpone or delegate. Anyone planning early reduces the tax burden considerably, secures the continued existence of the business and avoids family conflicts.

Three concrete steps for today: first determine the rough company value via the Erbschaftsteuer calculator to gain an initial orientation on the potential tax burden. Then check whether a Holding structure or a Familienstiftung makes sense as a structuring vehicle. Finally draw up a realistic timetable — how many 10-year cycles do you still have available for Schenkungen?

Experience from mandates shows: anyone starting ten years before the planned handover has the most structuring options. Anyone starting five years ahead can still optimise much. Anyone only coming a year ahead is left with the basics. A second opinion at the Steuerberater can in this phase decide on six-figure differences.

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You are planning succession in your business? As a Steuerberater (German tax advisor) with a focus on succession planning, I support you in tax-optimised structuring. Arrange an obligation-free Erstgespraech.