Online message – Friday, March 22, 2024
Legislation | Farm handovers in agriculture and forestry: new regulations on severance pay planned (BMJ)
On March 21, 2024, the Federal Ministry of Justice (BMJ) published a draft law to reform the farm regulations. The new regulation is intended, in particular, to ensure that affected farm owners and their families can easily determine whether the farm is subject to the farm regulations – and what compensation is due upon the transfer.
Background: The farm regulations apply in the federal states
Hamburg, Lower Saxony, North Rhine-Westphalia and Schleswig-Holstein. It makes regulations for the inheritance of agricultural and forestry businesses (farms). Their core concern is to be able to hand over the farms from one generation to the next and thus create a To prevent farms from being broken up in the event of inheritance or handover.
In order to achieve this, the court regulations stipulate that only one family member is appointed as heir to the court; the remaining family members (the so-called departing heirs) only need one when the farm is transferred
Minimum severance pay receive. The draft law provides for new rules for severance pay. The reason for the new regulation is the decision of the Federal Constitutional Court from 2018, in which the uniform assessment for the assessment of property tax was declared unconstitutional.
The draft law to amend the farm regulations and to change the procedural rules for farm matters provides for the following regulations:
Determination of the farm property according to the property tax value A: In the future, the farm regulations should only apply to agricultural and forestry operations of a certain size (farms in the sense of the farm regulations). In the future, affected owners should be able to determine the properties of the farm by looking at their property tax assessment without any additional transaction costs. Farms in the sense of farm regulations have so far been those that have an economic value of at least 10,000 euros. In the future, farm ownership should be assumed if the property tax value of the agricultural and forestry business (property tax value A) is at least 54,000 euros. As before, it should also be possible to assign farm status to farms through a positive farm declaration. To date, such a farm declaration requires an economic value of at least 5,000 euros. The threshold for this is to be set at 27,000 euros in the future. From these values onwards, the profitability of the company can be assumed. It justifies the application of the special rules of the farm regulations.
Minimum compensation is set at 0.6 times the property tax value A: The farm value from which the minimum compensation for the departing heirs is calculated should in future be 0.6 times the property tax value A. This will make it Calculation of the severance payment is based on an easily determinable and sustainable value. The aim is to ensure that the departing heirs receive an appropriate share in the economic value of the farm – and at the same time the farm heir is not placed under excessive demands. It is to be expected that the new regulation will result in a significant increase in the farm value on average. If there are special circumstances in individual cases, it will continue to be possible in the future to make additions or reductions to the severance payment at our reasonable discretion (Section 12 Paragraph 2 Sentence 3 HöfeO).
Higher debt deduction:
At the same time as the expected average increase in the farm value, the draft law provides for a Increasing the debt deduction before. So far, liabilities that burden the business have reduced the farm value, which is relevant for the handover and the severance payment, by a maximum of two thirds. In the future, up to 80% of the farm value can be deducted due to liabilities. This strengthens the preservation of businesses that are profitable but have high liabilities.
A notice:
The bill is to be submitted to the parliamentary process as a government draft from the federal government. Countries and associations have the opportunity to comment on the draft until May 3, 2024. The draft is on the
BMJ Homepage
available.
Those: BMJ, press release from March 22, 2024 (il)
Location(s):
NWB CAAAJ-63347