Professor: This is how inheritance taxation should be eased

The vast majority of Finns’ inheritances are tax-free, as they are worth less than the lower limit of 20,000 euros.

The lower limit was last raised in 2009. Should the lower limit be raised?

“Typical inheritances are often apartments, and there may be problems in not being able to realize the tax immediately. There will be trouble with relatively small inheritances. I think it would be quite natural that at some point that nominal lower limit be raised, at least now with the general price level,” says the professor, member of the Council for the Evaluation of Economic Policy chairman Niku Määttänen In the Market Council.

In connection with the generational change of companies, inheritance tax can now be paid for 10 years without interest. CEO of the Association of Family Businesses Minna Vanhala-Harmanen however, considers the fact that such relief is not available for the gift tax to be a significant casting defect.

“Yes, then the generational change has failed if it is passed on as an inheritance. These are long processes that are carried out little by little. A ten-year payment period for gift tax would be much more meaningful than for inheritance tax.”

Executive director of the Social Democratic Kalevi Sorsa Foundation Lauri Finér considers that the inheritance tax should be changed to be more progressive.

“The percentages of the largest inheritances are not that high in Finland. Most inheritances accrue to people aged 60 and older, who do not necessarily need that wealth,” he says.

“The population is getting older, so this in itself is a good tax for strengthening public finances as well.”

The Prime Minister’s Party from the coalition was presented earlier this week that inheritance and gift tax would be halved for two years. This idea does not get support from the Market Council.

“I’m not terribly enthusiastic about such a deadline. That would create a very strong incentive to schedule donations as an advance inheritance for a period of two years,” says Professor Määttänen.

“I don’t really understand why the public authority would want to strongly control this timing in this way.”

Vanhala-Harmanen of the Association of Family Businesses, who speaks in favor of abolishing the inheritance tax, agrees.

“Taxation should be predictable. The will was probably good, but this method didn’t quite hit the mark. Gender changes are long processes, they are done with care. It doesn’t sound good for this to come to such a jolt.”

See the entire discussion in the attached video link.