In cooperation with ZEW Mannheim (Dr. Simona Murmann and Lena Füner)
Initial situation/policy problem
The retirement of the previous owner represents a critical moment in the development of family businesses. Finding a suitable successor is crucial to the long-term success of the family business. The decision on who this person should be is influenced by the Inheritance and Gift Tax Act (ErbStG), because it provides strong incentives to transfer the business to one's own descendants free of charge. The use of the exemption allowances under the ErbStG is subject to conditions relating to the wage bill and the retention period. These conditions significantly interfere with the entrepreneurial freedom of the next generation.
Research goals/approach
The aim of the project is to investigate how the use of exemption regulations affects the long-term development of transferred family businesses (e.g., in terms of growth or innovation capacity). Methodologically, this can be done by comparing companies that are as similar as possible and that have been transferred within the family with those that have been sold outside the family. The Mannheim Business Panel (MUP) serves as the empirical basis, making it possible to clearly identify realised intra-family and -external transfers of companies. Although the MUP does not contain any information on the use of exemptions, it can be assumed that companies above a certain size make use of them because alternatives (non-use or paid or partially paid solutions) are more expensive. Another advantage is that the MUP can be linked to the IAB Establishment Panel and the Establishment History Panel, allowing a wide range of additional characteristics to be included in the analysis.