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A top official in the Ministry of Finance is said to have given tips on tax avoidance for the very wealthy at an event for tax advisors. The civil servant, Gerda Hofmann, heads Department IV D 4 in the BMF and is responsible for wealth tax, property tax and inheritance and gift tax. She also belongs to the elite circle of experts who have been determining Germany’s tax policy for years. In March 2023, Capital portrayed the most important minds in this community.

The discreet meeting was a few years ago, but it still illustrates what power some people can have if they know a complex subject well enough – as well as Matthias Lefarth, for example.

When the CDU/CSU and SPD negotiated inheritance tax reform at the beginning of 2016, the lawyer and finance graduate Lefarth, at the time chief lobbyist for the Family Business Foundation, was one of the most knowledgeable tax experts in the country. Like hardly anyone else, he knows more about assessment bases, protective assets and investment reserves. Lefarth knows which screws he has to turn if he wants to reduce the tax burden, especially for the heirs of large companies. But because he can’t do that himself, he also knows who he has to talk to so that they can turn the screws.

On February 21, 2016, Lefarth is where he needs to be: Bavaria’s Prime Minister Horst Seehofer has invited people to the State Chancellery, and Lefarth has eight requests for corrections with him. Among them: For inherited business assets, the protection limit must increase significantly – from 26 million euros to 100 million euros. This only affects one percent of inheritance and gift cases per year, but this one percent is particularly important: often family businesses with hundreds, even thousands of employees, whose existence, in the opinion of the foundation members, is threatened if the tax authorities in the event of death and wants to collect the inheritance.

Three days later, Seehofer collapsed the coalition’s compromise, and in the next few weeks he pushed through, among other things, a far-reaching exemption of assets of up to 90 million euros and, on top of that, further generous discounts for family businesses.

What Lefarth can claim to be a huge success is an example of how a small but powerful network of lawyers has been shaping German tax policy for years. These tax networkers are the absolute elite of their profession, come mainly from academia and associations and maintain excellent contacts in ministries and with members of the Bundestag. They call themselves the “tax community,” and as such they have been influencing German tax policy for years. But hardly anyone knows her outside of her specialist circles.

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