BFH; 2018-12-05; II R 9/15
Decision by national courts in the field of European Union law — ECLI:DE:BFH:2018:U.051218.IIR9.15.0
Date: 2018-12-05
Subject matter: Judicial cooperation in civil matters
Origin: Germany

82018DE1205(53)_ENG_SUMJURE
JURE summary
JURE summary
A private person (hereinafter the ‘plaintiff’) filed an action against the Finanzgericht Münster (hereinafter ‘the Court of First Instance’) seeking the reduction of an inheritance tax.
The plaintiff became the sole heir of the deceased based on her last will in the form of a notarial deed. The deceased was also the founder of a foundation under the Liechtenstein Persons and Companies Act. Under the by-laws of the foundation, the deceased was the first beneficiary of the foundation. After her death, specific amounts were to be given to the curator and for animal welfare. The plaintiff was the beneficiary of the remaining assets.
The Court of First Instance was of the opinion that the assets of the foundation, after the deduction of the amounts for the curator and animal welfare, were part of the estate under Article 3(1) of the ErbStG (1) and demanded that the plaintiff pay the inheritance tax. Within the proceedings, the Court of First Instance acknowledged other estate obligations and reduced the tax accordingly.
Subsequently, the plaintiff filed a revision with the Bundesfinanzhof (hereinafter ‘the Court of Appeal’), claiming a breach of procedural law as well as substantive law. The assets which he received as a beneficiary of the foundation were not included in the exhaustive list under the ErbStG and were, therefore, not subject to taxation.
The revision of the plaintiff was found not to be justified.
As the inheritance case had cross-border implications, it was necessary to decide which national law was applicable and whether the estate also included foreign assets. In this case, Succession Regulation No. 650/2012 (1) could not be applied due to the fact that the deceased died in July 2009 and the Succession Regulation only applied to deaths after 17 August 2015. Article 25(1) of the EGBGB (3) provides that succession law is subject to the law of the State whose citizen the deceased was, upon his/her death. In this case, it was, therefore, German law.
It was uncontentious and, from the by-laws of the foundation, evident that the deceased had such an influence over the assets brought into the foundation that, in the opinion of the Court of Appeal, those assets could still be attributed to the deceased when she was still alive. The property of the foundation was thus inheritable and subject to inheritance tax. The Court of Appeal dismissed the revision of the plaintiff.
(1) Erbschaftsteuer- und Schenkungsteuergesetz (German Inheritance and Gift Tax Act).
(2) Regulation (EU) No 650/2012 of the European Parliament and of the Council of 4 July 2012 on jurisdiction, applicable law, recognition and enforcement of decisions and acceptance and enforcement of authentic instruments in matters of succession and on the creation of a European Certificate of Succession.
(3) Einführungsgesetz zum Bürgerlichen Gesetzbuche (Introductory Act to the Civil Code).
(4) Bundesfinanzhof (BFH), judgment of 28 June 2007 - II R 21/05.