Under the proposals, which have still to be ratified by both houses of the German parliament, heirs will retain a 100% tax break if they keep the firm going for at least seven years and maintain the previous employment level.  However, exemptions for businesses worth more than €90m (£77m) will be abolished and preferential treatment for businesses worth over €26m will be reduced.

The method for valuing companies will also be adjusted: in future, companies will be valued at a maximum of 13.75 times their annual profit, compared to the 18 times currently used. The rules concerning the period over which the taxes must be paid have also been tightened, with those struggling to pay inheritance tax allowed to defer the due tax interest-free for seven years instead of the current 10 years.

The conciliation committee’s deal also states that companies with up to five staff are automatically exempted from inheritance tax. At present, companies with fewer than 20 staff enjoy this preferential treatment.

About 90% of German businesses are family-owned, but there has been growing concern that the current inheritance rules promote inequality. A high court case found that business owners were receiving preferential treatment compared to other taxpayers, which triggered the negotiations over changes.

German inheritance tax revenue rose by an annual 15.4% to a record €6.3bn in 2015.