Based on the most recent data from the ECB's Household Finance and Consumption Survey, the project models the future household-level
wealth distribution in five selected EU member countries (Finland, France, Germany, Ireland, and Italy) to derive inheritances
based on different demographic and wealth projection scenarios. On this basis, various inheritance tax scenarios are simulated
to estimate potential inheritance tax revenues for a projection period of 30 years. Our results indicate that multiple factors
coincide in favouring a growing revenue potential for inheritance taxation in the medium-term. Wealth accumulation and appreciation
lead to higher average wealth levels. The shift of the baby boomer generation out of the labour force results in an increase
of the older population both in absolute and relative terms. Eventually, this will lead to a rise in the number of deaths
and the number of inheritances. Additionally, low fertility rates lead to a reduction of the average number of successors
and thereby decrease the importance of exemption thresholds, as individual inheritances become larger. Overall, our simulations
show that the future revenue potential of inheritance taxes may be substantial. In practice, it can be expected that the theoretical
revenue potential demonstrated by our simulations will be reduced by tax avoidance, real responses, and general equilibrium
effects on other taxes. A review of the empirical evidence shows that behavioural responses to inheritance taxes are less
pronounced compared to a net wealth tax.