EUROPEAN COMMISSION 
Brussels, 15.12.2011 
SEC(2011) 1489 final 
  
COMMISSION STAFF WORKING PAPER 
IMPACT ASSESSMENT 
Accompanying the document 
COMMISSION RECOMMENDATION 
 
regarding relief for double taxation of inheritances 
{C(2011) 8819 final} 
{SEC(2011) 1488 final} {SEC(2011) 1490 final} 
 
 
EN 1   EN TABLE OF CONTENTS 
1. Introduction and Background....................................................................................... 0 
2. Procedural issues and consulta tions of interested parties ............................................ 4 
2.1. Organisation and timing............................................................................................... 4 2.2. Consultation and expertise sought ............................................................................... 5 3. The problems to be addressed − the “WHY”............................................................... 6 
3.1. Identification of the problems that may require action ................................................ 6 3.2. Causes and drivers........................................................................................................ 7 
3.3. The scope and scale of the problem ............................................................................. 8 3.3.1. Discrimination.......................................................................................................... .... 8 
3.3.2. Unrelieved double taxation ........................................................................................ 11 3.3.3. Quantification of the problem .................................................................................... 18 3.4. Who is affected?......................................................................................................... 2 2 
3.5. How would the problem evolve if no ac tion is taken (baseline scenario)?................ 23 
3.6. Does the EU have the right to act?............................................................................. 24 4. Objectives − the “WHAT" ......................................................................................... 25 
4.1. What are the general and the more specific policy objectives? ................................. 25 4.2. Are these objectives consiste nt with other EU policies? ........................................... 25 
5. Policy options − the “HOW"...................................................................................... 26 
5.1. Definition of policy options ....................................................................................... 26 5.2. Description of policy options..................................................................................... 27 5.2.1. Policy Options A: Addressing tax discrimina tion related to cross- border inheritances27 
5.2.2. Policy Options B: Addressing unrel ieved double taxation of cross-border 
inheritances ................................................................................................................ 28 
5.3. Options discarded at an early stage............................................................................ 29 6. Analysis of impacts of the policy options.................................................................. 29 6.1. Impact of the Policy Options addressing problems of discrimination (Policy Option 
A) ............................................................................................................................. .. 30 
6.2. Impact of the Policy Options addressi ng problems of double taxation (Policy Option 
B)............................................................................................................................. ... 31 
7. Comparison of main options ...................................................................................... 32 
 
EN 2   EN 7.1. Definition of the assessment criteria.......................................................................... 32 
7.2. Comparison of Policy Options A that addres s problems of tax discrimination related 
to cross-border inheritances ....................................................................................... 32 
7.3. Comparison of Policy Options B that addr ess problems of unrelieved double taxation 
on cross-border inheritances ...................................................................................... 33 
7.4. Comparison tables...................................................................................................... 36 8. The preferred option................................................................................................... 37 9. Monitoring and Evaluation ........................................................................................ 38 
List of Annexes 
 
Annex 1: Comparison of Income/Capital Taxa tion and Inheritance/Estate Taxation ............. 39 
Annex 2: main feedback received in  the relevant public consultations ................................... 41 
Annex 3: Short overview of the established case-law of the court in the inheritance tax area 47 
Annex 4: Survey of the Domestic Rules on Taxes Levied Upon Death.................................. 49 
Annex 5: Approximate Type and Number of Inheritance Tax Questions Received by the 
"Your Europe Advice Service" During 2006 -2009 ................................................ 106 
Annex 6: SME Test.............................................................................................................. .. 107 
 
EN 3   EN 1. INTRODUCTION AND BACKGROUND  
More EU citizens than ever are moving abroad with in the Internal Market to find work, marry or 
retire, leaving family members behind in their c ountry of origin, or are purchasing property and 
investing in assets abroad. In these circumstan ces, the application of inheritance taxation to 
bequests made across borders may become an increasingly contentious issue.  
Inheritance and estate taxe s generate about 0,5 % of to tal tax revenues in the EU1. Even in countries 
where tax revenues are relatively important (lik e the United Kingdom or the United States) this 
share does not exceed one percent2. Tax literature lists several ec onomic and social advantages for 
inheritance taxation. In terms of vertical equity, inheritance taxation is advantageous since, with 
high zero-rate thresholds, it can be targeted at the rich and used fo r redistribution. It also meets the 
efficiency criterion as estates always have an acc idental component – the amount of wealth that is 
simply left over in the hands of  the owner at the time of death3. Taxation of at least this part of 
wealth has no disincentive effect . In this sense, revenue from inheritance taxes could only be 
replaced by more distortive type s of taxation. Social advantages  include increasing the labour 
supply by reducing the value of inheritances to he irs of rich people and providing an incentive for 
charitable giving. 
We have observed that some Eur opean countries have recently a bolished inheritanc e taxation. This 
may be explained by certain drawba cks in such taxes. One is that the rich often avoid them by using 
tax planning. Therefore, the pre- crisis real estate boom which pl aced middle-class testators above 
the zero-rate threshold has meant th at such testators have had to shoulder the burden of the tax as 
they typically had no access to tax planning.4 Another disadvantage is the public perception that 
taxation on death is unfair in that it  is taxing wealth that has already been taxed.  This increases the 
political costs of inheritance and estate taxation. Furthermore, as c ountries have varying inheritance 
taxation rules, the interaction of these systems often creates difficulties in cross-border situations. 
This initiative focuses precisely on these cross- border problems. While inheritance taxation even 
within a country can have significant impacts on he irs, particularly in the cases of transfers of 
business on the death of an owner of a small or me dium sized enterprise (SME), this initiative does 
not call into question the existence of inheritan ce taxes. It looks only at the difficulties that EU 
citizens can face when they inherit across borders. 
In the context of this Impact Assessment the term inheritance tax is used to mean taxes on both 
estates and beneficiaries on the occasion of the deat h of a person. Gifts are often made in order to 
anticipate later inheritan ces. Such gifts are in many Member St ates taxed under the same provisions 
as inheritances. This initiative would therefore c over cases where gifts are covered by the same tax 
provisions as inheritances.  
Note also that income taxes come within the scop e of this Impact Assessme nt only insofar as they 
apply to inheritances. In most Me mber States inheritances are taxe d under separate rules to income. 
                                                 
1  Own calculations based on Taxes in Europe database 
(http://ec.europa.eu/taxation_customs/taxation/gen_info/info_docs/tax_inventory/index_en.htm). 
2 ' The case for death duties', The Economist, 25 Oct.  2007, https://www.economist.com/node/10024733 
3 Blumkin,T. and E. Sadka,(2002),Estate taxation, CESifo Working Paper No. 558, 
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=283734 
4  Inheritance tax: It just won't die', The Economis t, 26. Aug. 2004. http://www .economist.com/node/3135923 
 
EN 4   EN Where bilateral arrangements exis t with other Member States on  eliminating double taxation on 
inheritances, they are usually separate from the bilateral arrangements on income taxation.5  
There is currently no EU-wide legislation in the area  of inheritances and EU  Member States do not 
have comprehensive ways of relieving double taxation in this area. It appear s necessary, therefore, 
to examine actual and potential problems in the a pplication of inheritan ce taxes in cross-border 
situations and see how any such  problems can be resolved.  
Furthermore, the number of problems in the i nheritance tax area is increasing. Before 2003, the 
Court of Justice of the European  Union (Court) never dealt with the inheritance tax rules of EU 
Member States but since then national courts have referred ten cases to the Court. In addition the 
European Commission has itself received many complaints and queries in this area.  
In a Communication of 2006 on "Coordinating Member States' direct tax systems in the Internal 
Market6, the Commission suggested that appropriate  co-ordination and co-operation between 
Member States can enable them to attain their tax policy goals and protec t their tax bases,. The 
Commission said that it is considering initiatives in  several areas, including inheritance tax, in this 
context.  
The recent trends in inheritanc e taxation show that several Memb er States have abolished death 
taxes in recent years while others have lowere d their effective taxation on inheritances and/or 
broadened the scope of tax reductions and exempti ons. Another important feature is the relatively 
low share that inheritance tax represents of  the overall tax revenue of all countries.7 However, 
despite these general trends, cros s-border problems for EU citizens in this area can, as will be 
shown below, be very significant and may increase over time. 
2. PROCEDURAL ISSUES AND CONSULTATIONS OF INTERESTED PARTIES  
2.1. Organisation and timing 
The Commission Work Programme for 2011 includes th e adoption of a non-legi slative initiative to 
promote coordination of inheritance taxa tion between the EU Member States.  
The Impact Assessment Steering Group was set up in April 2010 by the Taxation Services of the 
Commission with the participation of the following Commission departments and services: 
Economic and Financial Affairs, Enterprise, Justice,  Internal Market and Se rvices, Legal Service, 
Secretariat General. The Employme nt, Social Affairs and Equal O pportunities department was also 
invited and consulted. The Group has been conti nuously kept updated and consulted throughout the 
preparation of the impact assessment. It met th ree times, in April and May 2010 and January 2011.  
This Impact Assessment was reviewed by the Impact Assessment Board of the European 
Commission (the Board) and has be en significantly redrafted in or der to take the recommendations 
of the Board into account. In pa rticular, the changes requested concerned the following points: (i) 
an improved presentation of the scope and scale of the problem by more concisely describing the 
                                                 
5  See Annex 1 for a short compar ison of income and capital taxation with inheritance taxation 
6  COM(2006) 823 of 19 December 2006 
7  Guglielmo Maisto, “Death as a taxable event and its international ramification”, General report for the 2010 
Rome Congress of the International Fiscal association, Cahiers de droit Fiscal international, Vol 95b, 2010. 
Copenhagen Economics : Study on Inheritance Taxes in EU Member States and on Possible Mechanisms to 
Resolve Problems of Double Inheritance Taxation in the EU , August 2010 
 
EN 5   EN macroeconomic aspects, by elaborating examples to  show the possible consid erable effects of the 
problem for individuals and SMEs, and by further el aborating on how the func tioning of the internal 
market might be affected; (ii) a better explanation of the possible impacts that any change in the 
current regime could entail for individual cases  by providing more concre te indications in the 
examples as regards the individual tax burden; and (iii) a better explanation of why the effects on 
Member States' tax revenues are difficult to determ ine with complete certainty, and an indication of 
the Member States which could be more affected than others by changes in the current regime.  
2.2. Consultation and expertise sought 
The Commission has been consulting widely and ha s received input from va rious sources on this 
impact assessment work. 
In 2010 the Commission launched two public consulta tions on the internet. One concerned actual 
cases of double taxation8, including of inheritances. The other, which dealt exclusively with cross-
border inheritance tax issues, wa s designed to obtain views from all interested stakeholders 
(individual citizens, academic representatives, tax pr actitioners and organisati ons) on the extent of 
cross-border inheritance ta x obstacles within the EU and ideas on possible solutions9.  
The latter consultation ran from 25 June to 22 September 2010, but at the request of several 
stakeholders, the deadline was later extended to 22 October 2010. The Commission also accepted a 
number of contributions after the deadline. There were in total 232 re plies to the consultation from a 
broad range of stakeholders, including 205 indi vidual citizens (23 replied directly while 183 
responses were submitted through a newspaper with one  overlap in that one of those contributions 
was also sent directly to the Commission); 13 academics and tax practitioners individually or 
through their associations; 3 non-regi stered and 9 registered organi sations; and 2 pub lic authorities. 
Stakeholders reported on possibl e cases of discrimination, highlighting discrepancies between 
Member States' inheritance tax systems and shor tcomings of existing relief mechanisms to 
eliminate double taxation and suggested solutions.  The impact assessment work also took on board 
the replies on inheritance tax sent  in response to the more gene ral public consultation on double 
taxation problems. There were two such replies. In addition, some stake holders expressed their 
views in reply to both consultations. The main fee dback on inheritance taxes received from the two 
public consultations in summarised in an annex to the present report.10 The Commission also 
commissioned and published, as a reference documen t to the inheritance ta x consultation, a study 
by external consultants on "inher itance taxes in EU Member Stat es and possible mechanisms to 
resolve problems of double in heritance taxation in the EU11" (hereafter referred to as the 
Copenhagen Economics Study). It explor ed the nature of cross-border inheritance tax problems, i.e. 
discrimination and double taxation; the economic significance of the problems; and possible policy 
solutions to the double taxation problems identified.  
In addition, in early September 2010, inheritan ce taxation was discussed in-depth at the 64th 
Annual Congress of International Fiscal Associa tion (IFA). The Commission contributed a report 
                                                 
8  This consultation ran from 24 April to 30 June 2010. For further details see at 
http://ec.europa.eu/taxation_customs/common /consultations/tax/2010_04_doubletax_en.htm  
9  http://ec.europa.eu/taxation_customs/common/c onsultations/tax/2010_06_inheritance_en.htm  
10  See Annex 2 
11  Copenhagen Economics : Study on Inheritance Taxes in EU Member States and on Possible Mechanisms to 
Resolve Problems of Double Inheritance Taxation in the EU , August 2010. It is also  available at the website 
address mentioned under 3. 
 
EN 6   EN on the relevant case law of the court. The Genera l Report (hereafter referred to as the IFA General 
Report) on this subject concluded that furt her coordination at EU  level is necessary12.  
In the margins of the IFA conference, the Co mmission held a meeting with academics and 
practitioners on the relevant issues and possible solutions. Experts expressed the view that there 
may indeed by many cross-border inheritance tax problems that warrant the attention of the 
Commission and proposed some possible solutions. A nother expert meeting was held in December 
2010 to discuss both any possible impact on an EU -wide inheritance taxa tion initiative of the 
Commission's 2009 proposal for a Regul ation on cross-border successions13 and the possible 
technical features of an i nheritance taxation initiative. 
In November 2010 the Commission presented th e main findings of the Copenhagen Economics 
Study to Member States' tax officials at a meetin g of the Commissions' Working Party IV on Direct 
Taxation. Member States welcom ed the Commission's initiative to explore the problems but 
considered any EU-wide binding solution dispr oportionate. However, they acknowledged that 
existing unilateral double taxation relief measures could in some cases be improved.  
The Commission services have taken into account  all of above-mentioned observations in the 
present impact assessment. 
3. THE PROBLEMS TO BE ADDRESSED − THE “WHY” 
3.1. Identification of the problems that may require action 
The Commission has established th at Member States' inheritance tax rules as applied in cross-
border situations may hinder EU citizens from benef iting fully from their right to move and operate 
freely across borders within the Internal Market and create difficulties for the transfer of small businesses on the death of owners.  
The Commission's research so far indicates that  citizens and businesses can face two types of 
inheritance tax problems in cross-border s ituations. First,  they may be exposed to discriminatory 
application of a Member State's inheritance tax rules concerning the residence of the deceased 
or the beneficiary, or the location of the assets. Briefly, the term discrimi nation as used in the 
present document refers to a situation in which a Member State treats cross-border situations less 
favourably than purely internal situations, withou t this difference in treatment being justified by 
objective reasons. 
Second, there is the risk of unrelieved double or even multip le taxation of a single inheritance  
by several Member States . The absence of appropriate ways  of relieving double taxation of 
inheritances may lead to overall levels of taxation that are appreci ably higher than those applicable 
in situations that are purely internal to  one or the other Member State involved. 
An increased tax burden, as a consequence of discrimination or unre lieved double taxation, may 
negatively affect the value of an inheritance and may cause gr eat difficulties for citizens and 
                                                
 
12  Guglielmo Maisto, “Death as a taxable event and its international ramification”, General report for the 2010 
Rome Congress of the International Fiscal association,  Cahiers de droit Fiscal international, Vol 95b, 2010. 
13  Proposal for a Regulation of the European Parliament and of the Council on jurisdiction, applicable law, 
recognition and enforcement of decisions and authentic instruments in matters of succession and the creation 
of a European Certificate of Succession, COM(2009)154 fin. of 14 October 2009. 
 
EN 7   EN businesses who take advantage of the right to m ove and operate freely across borders within the 
Internal Market.  
Experts whom the Commission has consulted suggest  that wealthier EU citizens may take account 
of the risk of double taxation in planning their in ternational successions but  the same may not be 
true of less wealthy i ndividuals who may only realise the exte nt of the problems when they are 
actually facing cross-border inheritance tax bills.  
As regards the problems related to transfer of bu siness in the case of the death of an SME owner, 
the Copenhagen Economics Study noted, and some stake holders (in particular tax practitioners and 
associations) in their responses to the inheritance tax consultati on agreed, that both discrimination 
and double taxation can create barr iers to business continuity.  
Member States' tax systems must respect the fundame ntal freedoms, notably the rules relating to the 
free movement of workers, servi ces and capital and the freedom of  establishment (Articles 45, 49, 
56 and 63 Treaty on the Functioni ng of the European Union - TF EU), as well as the general 
principle of non-discrimination on grounds of nationality (Art. 18 TF EU). Nevertheless, these rules 
do not provide protection against unreliev ed double (or multiple) taxation as such14, although this 
phenomenon disadvantages cross-border situations compared to purely national situations. In this 
regard, it may also be observed that the accumula tion of taxes imposed by more than one State 
might lead to results that, in some Member States at least, would be consid ered as confiscatory and 
thus unlawful, had these results been brought about by the provisions of that State alone.15 
3.2. Causes and drivers 
The problems arise from Member States' tax laws or  private laws on inheritances, or a combination 
of both. 
As regards the discrimination problem, when indivi duals inherit property or  other assets across 
borders, they may be subject to inheritance tax rules which conflic t with the EU non-discrimination 
principle.  
The Court ruled in eight out of ten cases examined since 200316 that the inheritance tax laws at issue 
were incompatible with the EU treaty rules because the laws pr ovided for less favourable rules 
where either the assets or the deceased person/ donator or indeed the bene ficiaries were located 
outside the Member State applyi ng the inheritance taxation. Thes e Court decisions have brought a 
certain amount of clarity and certainty to this matte r. However, it is also true that Court actions may 
involve high costs for both taxpayers and administ rations. Moreover, in many instances, it may not 
be entirely clear what consequences a ruling involv ing legislation of one Member State should have 
on legislation of another Member State. The current legal approach also tends to be asymmetrical in 
                                                 
14  Case C-67/08, Block . [2009] ECR I-883. 
15  For instance in Belgium, the Wallon tax rate of 90% for non-related persons, on inherited parts exceeding a 
certain threshold, has been declared unconstitutiona l (Decision 107/2005). The German Constitutional Court 
has ruled that inheritance tax must not lead to a situ ation in which, from the perspective of an owner whose 
thinking is informed by economic considerations, the inheritance appears economically meaningless: German 
Constitutional Court, order of 22 June 1995, 2 BvR 552/91, BVerfGE 1993, pp. 165 et seq.  
16  Case C-364/01 Barbier was the first case, followed by case C-513/03 van Hilten-van der Heijden , case C-
464/05  Geurts , case C-256/06 Jager , case C-11/07 Eckelkamp , case C-43/07  Arens-Sikken , case C-67/08 
Block , case C-510/08  Mattner, case C-25/10 Missionswerk Werner Heukelbach  and case C-132/10 Halley  as 
the most recent example. 
 
EN 8   EN its effects in that, even where Member States are obliged as a result of a ruling to introduce new tax 
rules, they often do so in vastly differing ways.  
With regard to the double or even multiple ta xation problem, this can arise because of the 
significant differences in international private la ws, and in the private a nd tax laws of Member 
States, in the field of inheritanc es in addition to the widely varying rules in Member States 
concerning how an inheritance is taxed. 
First, there may be a conflict be tween Member States' rules conc erning which inheritance law is 
applicable to a succession which involves cross-border elements17.  
Second, Member States' national pr ivate laws differ considerably. There are common law and civil 
law systems and there are considerab le variations even between thos e Member States that apply one 
or other of these two systems.  A basic differenc e in concept between the civil law and common law 
systems concerns the transfer of assets. The majority of civil law countries follow the principle of direct transmission, whereby the inheritance is dire ctly transferred from the deceased person to the 
heirs who are then responsible for paying the i nheritance tax. Meanwhile, common law countries 
generally require the assets first to be transferre d to a personal representative who deals with the 
administration of the estate including the payment of  all taxes due and then transfers the net assets 
to the heirs. There is the possibili ty that tax paid by the personal re presentative may not be credited 
against inheritance tax due by anot her person in another country. So me contributors noted also the 
difficulties concerning the civil law countries' treatment of trusts, wh ich are characteristic features 
of the common law concept of inheritances.  
In addition to the differences in the relevant in ternational private law and substantive inheritance 
law rules, Member States' domestic inheritance tax systems also differ significantly, as will be seen below. Eighteen EU Member States in total levy taxes upon the death of a person while nine 
(Austria, Cyprus, Estonia, Latvia, Malta, Portugal,  Romania, Slovakia and Sw eden) have neither an 
estate tax nor an inheritance tax, although some ta x inheritances under other tax laws. All of these 
laws may clearly have an impact on cross-border  mobility of people and assets within the EU.
18 
3.3. The scope and scale of the problem 
It appears from the recent increas e in court cases and from the complaints and enquiries that the 
Commission receives, that cross-border inheritance tax issues are becoming a matter of increasing 
concern to EU citizens19. This conclusion can also be supported by the replies to the public 
consultations mentioned above  
3.3.1.  Discrimination 
In recent years, the problems of tax discrimination related to cross- border inheritances have become 
increasingly evident. The Commission has commen ced infringement proceedings against several 
Member States over aspects of their laws. Furtherm ore, the Court decided in eight out of ten cases 
                                                 
17  The Commission has proposed a Regulation which, inter alia, would ensure that a single set of rules would 
apply to an inheritance, irrespective of where the different assets are lo cated, without aiming to harmonise the 
national substantive rules on successi ons. More on the link between th e draft Regulation and the present 
inheritance tax initiative could be found under 4.2. 
18  For further details see Annex 4 a survey of these national rules on taxes levied upon death, which Copenhagen 
Economics compiled as an attachment to its Study. 
19  See Annex 5 on "Approximate type and number of in heritance tax questions  2006 -2009" received by the 
Your Europe Advice service. 
 
EN 9   EN examined since 2003 that the nationa l inheritance tax and gift tax ru les of the Member States in 
question breached EU rules on the free movement of capital (Article 56 EC  Treaty, now Article 63 
of the Treaty on the Functioning of the European Union – TFEU) or the freedom of establishment 
(Article 43 EC Treaty, now  Article 49 TFEU).  
The principle of non-discrimination is a central element of the Treaty freedoms.According to the 
well-established case-law of the Court, discrimination can result from treating differently situations which are comparable, or treating in the same way situations whic h are different. In order for a 
national scheme providing for a difference in treatmen t to be compatible with the Treaty freedoms, 
it must concern situations which are not objectively comparable or  be justified by an overriding 
reason in the general interest. However, these provi sions may not in any event be more restrictive 
than is necessary in order to achieve the aim pursue d; they must, in other wo rds, be consistent with 
the principle of proportionality.  
Moreover, according to the case-law  of the Court, the rules regarding equality of treatment forbid 
not only overt discrimination by re ason of nationality but also all covert forms of discrimination 
which, by the application of ot her criteria of differentiation, lead to the same result.  
The Court, in applying these principles to  Member States' inheritance tax provi sions, has stated that 
such provisions may be considered in breach  of the free movement of capital when: 
• they provide for different rules for the valuation of assets that are part of the inheritance, 
depending on whether these assets are located wi thin the taxing Member State or abroad;  
• they restrict the deductibility of debts/liabilities related to assets that are part of the 
inheritance of non-residents;  
• they provide for a higher rate  or less favourable treatment in  general with respect to non-
residents; 
• they provide for a higher rate or less favour able treatment in gene ral with regard to 
inherited assets located abroad or otherwise connected with the territories of the other 
States, for example for inheritances of fa mily undertakings which employ workers in 
another Member State, compared to family undertakings which employ workers in the same 
Member State.  
Example 1 – the Jager  case, C - 256/06 
Mr Jager, a French resident, inheri ted from his mother (a German resi dent at the time of her death) 
assets situated in Germany valued at DEM119 015 and land in France used for agriculture and 
forestry valued at FRF 5 444 666 (DEM 1 618 152) , making up together a ne t estate of DEM 1 737 
167. The German inheritance tax rule s imposed taxation on the entire estate of  a person who died 
while domiciled in Germany. Assets situated outsid e Germany were also subject to German tax, 
albeit with a credit granted for foreign inheritance tax payable on those foreign assets. The assets 
located in France were valued for German tax purposes  at their fair market value, whereas a special 
valuation procedure existed for identical German a ssets, the result of which meant a tax value of 
only 10% of their fair market value. In the presen t case such a 10% valuatio n applied to the French 
agriculture and forestry  land would have given a taxable base of approximately DEM 160 000. 
After deduction of a personal tax free amount of  DEM 400 000 no German tax would have been 
applicable to the entire inheritance.  The Cour t ruled that the German valuation provisions were 
discriminatory, stating that it is  illegal for a Member State to have a favourable mechanism for the 
calculation for inheritance tax purposes of the va lue of domestic immovable property, while setting 
the value of property si tuated abroad at the normal market value. 
Example 2 – the Eckelkamp  case, C-11/07 
 
EN 10   EN Ms Eckelkamp died in Germany. She had signed a document acknowledging a debt which she owed 
to one of the heirs and granted him a mandate to  encumber an immovable property situated in 
Belgium valued at EUR 200 000 with a mortgage as a security for repayment of that debt in the 
amount of EUR 220 000, plus EUR 11 000 in interest. Under Belgian tax legisl ation, different tax 
regimes applied for inheritance, depending on where the testator resided at  the time of his death. 
Inheritance tax was due on the valu e of the whole gathered estate if, at the time of  his death, the 
deceased was resident in Belgium. In contrast, in  the case of a person who was not resident in 
Belgium at the time of his death, transfer tax was charged on the value of immovable property 
situated in Belgium and pertaining to the gather ed estate. In the first case, debts and liabilities 
pertaining to the inheritance were  taken into account for the asse ssment of the inheritance tax. On 
the contrary, no debt and liability could be deduc ted in cases where transfer tax was due. As Ms 
Eckelkamp was not residing in Belgium at the time of her death, the Belgian tax authority refused to 
take any debts into account for the purpose of a ssessing the transfer tax due. The transfer duties 
payable were estimated at EUR 110 000. Had the Be lgian law allowed the deduction of the debt 
over the estate, the value of the estate for inherita nce tax purposes would be nil. The Court decided 
against these Belgian rules, stating that it is illegal for a Member Stat e not to allow mortgage-
related charges to be deducted fr om the value of property if at the time of death the person whose 
estate was being administered was residing in another Member State. 
Example 3 – the Maria Geurts  case, C-464/05 
Mr. Vogten was a Belgian resident living in Belgiu m at the time of his death. His heirs, who were 
also resident in Belgium, inherited shares in tw o Dutch companies. After deduction of liabilities, the 
taxable estate amounted to EUR 3 598 717.33. On  th is estate they paid tax of EUR 839 485.60. The 
Belgian tax law granted an exemption from inherita nce taxes for shares in a family undertaking but 
only on condition that the undertakings employed at least five full-time workers in the Flemish 
Region in the three years preceding the death of the deceased. The Dutch companies met the criteria 
of family business employing nine  and eighteen workers, who, howev er, were not residents of the 
Flemish Region. If they were, the exemption w ould have applied. The C ourt established that 
Member States cannot deny an exemption to inheri tances of family undertakings which employ at 
least five workers in another Member States when it would allow such an exemption from 
inheritance tax if the five workers had b een employed in the same Member State. 
The examples described above show that the tax discrimination of cross- border inheritances can 
lead to a considerably higher overall level of taxa tion. This may give rise to  significant social and 
economic impacts if the individuals concerned, w ho are unaware of the fact that the taxation is 
discriminatory and therefore illegal,  even have to take out a loan or sell the inherited property in 
order to pay the tax bills.  Some Member States provide exemptions  or special relief for transfers of 
family owned and closely held businesses upon death.20 Any such exemptions must be applied in a 
non-discriminatory way.  Indications that some of these schemes and other provisions of Member 
States' inheritance tax rules coul d contain possible discriminatory features can be found in the IFA 
General Report and in the various national Bran ch Reports discussed at the above-mentioned IFA 
Congress; in the Copenhagen Economics Study; a nd in replies to the i nheritance tax public 
consultation. The responses to the consultation mo stly concerned the tax laws of Spain, the United 
Kingdom, Belgium and Germany. The Copenhagen Ec onomics Study highlights that while Member 
States have made progress in reducing the discrimi natory elements in their national tax provisions, a 
large number of Member States still have potential discriminatory rules with respect to cross-border 
                                                 
20  See Table 2.7 on "Main tax exemptions and reliefs granted for family owned and closely held businesses upon 
death" on page 26 of the Copenhagen Economics' Study  
 
EN 11   EN inheritance taxation. In this respect, the compet ent Commission services are currently examining 
the identified problems with a view to asking Member  States to amend the relevant laws if they do 
indeed involve a conflict with the Treaty on the Functi oning of the EU.  
3.3.2.  Unrelieved double taxation 
Enormous variety of rules in Member  States' inheritance tax systems  
Different taxable person/event  Some Member States apply inherita nce tax on the heirs, so that the 
taxable event is the enrichment of the beneficiar y, while other Member Stat es apply estate tax on 
basis of the estate, in which case the taxable event is the transfer of property. (Hereafter, the term 
"inheritance tax" refers to  both types of taxes). Ther efore it is possible that for the same inheritance 
different persons can be taxed in different Member  States. Tax complications may also arise if a 
civil law Member State considers the trust or a pe rsonal representative as a different taxable person 
to the beneficiary or regards the testator as the owner of the tr ust property and charges tax on the 
trust on the death of the testator.   
 
Table 1: Inheritance and estate taxes in the 27 Member States 
 No. of 
Member 
States Member States 
Inheritance tax 16 Bulgaria, Czech Republic, Denmark*, France, Finland, Germany, Greece, 
Hungary, Ireland, Italy, Lithuania, Luxembourg, the Netherlands, Poland, 
Slovenia, Spain. 
Estate tax 3 Belgium, Denmark*, United Kingdom** 
No inheritance or 
estate tax 9 Austria, Cyprus, Estonia, Latvia, Malta, Portugal, Romania, Slovakia, 
Sweden 
*  Denmark is double counted because the Danish tax is effectively both an estate and an inheritance tax.  
**  The United Kingdom tax on inheritance is called an ‘inheritance tax’, but is de facto an estate tax. 
Source: IFA General Report (2010), AGN International (2010), Global Property Guide, Copenhagen Economics 
 
Different personal nexus rules  In the case of both taxes on estates and taxe s on beneficiaries, tax 
liability is determined on the basis of a connec ting factor or "personal nexus", which can be the 
residence, domicile or nationality  of the deceased, or the residence,  domicile or nationality of the 
beneficiary. Some countries apply more than one of these factors. This may mean that, for instance, 
an individual can be "domiciled" for inheritance tax law purposes in one country and at the same 
time be "habitually resident" under the inheritance tax law of another and even be a national of a 
third country under its inheritance ta x law. Some Member States even  apply taxation on the basis of 
the personal nexus of either  a deceased or an heir.  
 
EN 12   EN Table 2: Principles for determining the p ersonal nexus of the deceased or heir(s) 
Principle Member States using principle 
Residence 
principle Belgium, Czech Republic,* Denmark, Finland, Germany, Hungary, Ireland, Italy, Lithuania, 
Luxembourg, the Netherlands, Poland, Slovenia, Spain. 
Domicile 
principle France, Germany, Greece, United Kingdom. 
Nationality 
principle Bulgaria, Czech Republic, Greece, Hu ngary, the Netherlands, Poland. 
* Czech Republic refers to ‘permanent address’. Details on the applied personal nexus rules are contained in Annex 3 
Only Member States with an estate tax and/or inheritance tax are included in this table. Source: Copenhagen Economics based on Global Property Guide and IFA General Report (2010).  
 
Location rules  In addition to taxing on the basis of personal nexus, most Member States apply 
inheritance tax to assets located in their jurisdic tions. Tax can be applied on the basis of the location 
of the inherited property even if neither the deceased nor the beneficiary has a nexus with the 
country of location. Furthermore, the types of a ssets concerned by the "s itus" taxation rules may 
vary from country to country. 
Table 3: Scope of location rules in the domestic tax rules on inheritance 
Scope of taxations Member States 
All assets Czech Republic, France, Greece, Ireland, It aly, Lithuania, Slovenia, Spain, 
United Kingdom. 
Real estate (immovable assets) only Belgium, Bulgaria, Denmark*, Germany**, Finland, Hungary, Luxembourg, 
Poland. 
No taxation based only on the location of the inherited property  The Netherlands 
Only Member States operating an estate tax and/or inheritance tax are included in this table. 
 * The Danish location rule also applies to ‘movable  assets pertaining to permanent establishments’.  
**The German source rule does not apply to bank account in German banks.  
Source:  Copenhagen Economics based on IFA General Report (2010) and Global Property Guide. 
 
Diverging definitions of terms  Furthermore definitions and mean ings of the "personal nexus" and 
"situs" terms can differ from jurisd iction to jurisdiction, so that tw o countries using the same nexus 
(e.g. both use domicile) may both claim tax on the same  estate. In addition to  these divergences, 
stakeholders – in particular tax practitioners a nd associations -  also highlight difficulties with 
determining the tax residence of the deceased, such  as possible complications related to temporary 
residence. In addition, several Member States apply anti-abuse measures which provide for an 
extended concept of residence or domicile.  
Interaction with gift taxes  Another measure to combat tax avoidance (namely to avoid the 
circumvention of inherita nce tax upon death by gifts inter vivos)  is to levy gift taxes in addition to 
inheritance taxation. For th is purpose, many Member States a ggregate gifts made by the same donor 
to the same recipient during a certa in period of time and tax the donor or the recipient on that basis. 
Such aggregation periods vary from Member Stat e to Member State. Issues also arise with 
creditability of previously paid gi ft taxes against inheritance taxes.  In general, the problems in the 
area of gift taxes are similar to those in the field of  inheritance taxes; therefore the initiative that is 
 
EN 13   EN the subject of this impact assessment could be applie d to gift taxes as well, in particular if Member 
States' domestic provisions tax gifts and inheritances  under the same provisions. 
High tax levels in certain cases  Double taxation problems may also be exacerbated by the fact that 
some Member States apply high inhe ritance tax rates for certain bene ficiaries and the tax-free base 
amounts also vary to a considerable  extent. The rates may be higher,  reaching as much as 80%, over 
low thresholds in cases where the deceased and th e beneficiary are not related. Many stakeholders, 
mostly individual citizens, point to such inordinate ly high rates and lack of  exemptions for bequests 
to persons other than immediate family. The high e ffective tax rates in Member  States are illustrated 
in Table 4 below. The issue is not  the differences between Member St ates in effective tax rates but 
the fact that two Member States apply taxation at sometimes high levels without double taxation 
relief.  
 
EN 14   EN Table 4: Effective tax rates a pplicable in selected Member St ates in 2010/2011 (depending on 
availability)  
Country Remarks The closest family 
(spouse and/or child) Non relatives Other remarks 
   € 50 000 € 250 000 € 50 000 € 250 000  
Austria Tax on land 
transfers and 
contribution to 
private foundations  
Cyprus Tax on land 
transfers 
Estonia Various fees  
Latvia   
Malta Transfer duty 
Romania Real estate tax 
Slovakia   
Sweden No inheritance tax 
  
(Flanders) 3.00% 7.80% 41.25% 63.25%   
(Walloon) 3.50% 9.70% 46.25% 71.25%   Belgium 
(Brussels) 2.10% 10.12% 40.0% 63.50%   
Bulgaria   0% 0% 0%between 1.61% 
and 3.23% Rates set by 
municipal authorities 
Czech 
Republic   0% 0% 3.68% 5.52%   
spouse 0% 0%Denmark child 4.38% 13.75%28.29% 34.66%   
spouse 0% 8.16%Finland child 5% 11.28%13.40% 28.04%   
spouse 0%France child 0%6.54%58.09% 59.62%   
Germany  0% 0% 3.60% 27.60%   
spouse 0% 0%Greece child 0% 0.40%17.60% 26.64%   
spouse 11.00% 16.87%Hungary child 0% 0%21.00% 32.50%   
Ireland   0% 0% 14.65% 22.93%   
Italy   0% 0% 8.00% 8.00%   
Lithuania   0% 0% 4.71% 9.88%   
Luxembourg   0% 0% 6.00% 18.00%   
spouse 0% 0%Netherlands child 6.18% 13.72%28.79% 34.93%   
Poland   0% 0% 19.06% 19.81%   
Portugal   0% 0% 10.00% 10.00% Stamp duty upon 
death. Spouses and children are exempt.
Slovenia   0% 0% 15.20% 20.68%   
Spain   0% 0% 6.16% 15.55% Assuming the pre-
existing net assets of the heir do not exceed € 402 678.11 
UK   0% 0% 0% 0% A nil rate band 
applies up to GBP 
 
EN 15   EN 325 000. Above this, 
the rate is 40%  
Note:  For calculation purposes only lump sum allo wances or general exemptions are included; 
personal tax deductions, such as those dependent on age or other special f eatures are not accounted 
for. Effective tax rates may vary due to  volatility of currency exchange rates. 
Source:  Calculations based on data in IBFD Tax Surveys/Country Analyses (© IBFD, 2011, www.ibfd.org ) and  
Taxes in Europe database ( http://ec.europa.eu/taxation_customs/taxinv/welcome.do )  
  
The above-mentioned great variations in the basis for taxation (further complicated by the different 
definitions) can give rise to double taxation. Th e conflicts can be categorised as follows:  
Table 5: Types of conflicts that  may result in double taxation  
Type of conflict Description of conflict 
Personal nexus - 
Situs  The same bequest is taxed twice, first by th e Member State where it is located under its 
‘situs rule’, and then in the Member State where deceased or the beneficiary (or both) 
have their personal nexus. A frequently occurring example would be where a testator had 
a home both in the Member State in which he lived and died and in another Member 
State. Both Member States could tax the holiday home, one on the basis of personal nexus and the other on the basis of situs.    
Personal nexus- personal nexus  Differences in the personal nexus rules or in  taxation of the estate v taxation of the 
beneficiary mean that the same deceased or heir is taxable in two Member States or the deceased is taxed in one country and th e beneficiary is taxed in the other. 
Situs-Situs  Diverging rules for determining the location of an asset mean that the same asset is taxed 
by more than one Member State.  Problem most likely for intang ible assets such as shares.
Source:  based on information in Rohatgi (2005)  and Copenhagen Economics  
Limitations to existi ng tools to eliminate the double  taxation of inheritances  
At present, in the absence of a ppropriate tax relief mechanisms there is no comprehensive solution 
to the problem of double taxation.  
Limitations of existing unilateral mechanisms to  relieve double taxation 
The IFA General Report, the Copenhagen Economics  Study and a broad range of respondents to the 
public consultations  all claim that Member States  generally have inadequa te domestic mechanisms 
to relieve cross-border double ta xation of inheritances. These domestic provisions are often 
minimal, leaving much to administrative interp retation. Furthermore, as the IFA General Report 
remarks, they are often modelled on relief provisions for income tax purposes and therefore they 
may not take into full account th e specific issues regarding inheri tance taxation; several sets of 
circumstances that can give rise to double taxation of inhe ritances are not common in the area of 
income taxation.21 In general, these unilateral relief provisi ons are targeted at the "personal nexus – 
situs" conflict and the two other type s of conflicts can remain unaddressed. 
                                                 
21  See Annex 1 for more on the differences and si milarities between income and inheritance taxation. 
 
EN 16   EN Table 6: Unilateral relief for international double taxation on  inheritances provided by 
Member States applying inheritance taxation  
Method All foreign located assets* Subset of foreign located assets** 
Credit method 
Crediting inheritance taxes paid in another Member States 
against the domestic 
inheritance tax due.  Finland, France, Germany*, Ireland, 
Italy, Lithuania,  Spain, UK, the Czech Republic*** Belgium (real estate), Denmark (real estate and 
business assets attributable to a permanent establishment), Greece (movable assets), the Netherlands (real estate and business assets 
attributable to a permanent establishment) 
Exemption method 
Exemption from the 
tax base of the assets 
located in another Member State Hungary, Slovenia Bulgaria (real estate), Luxembourg (movable 
property) 
No unilateral relief Poland****  
 
* The definitions of foreign located assets differ. This has been highlighted with regard to Germany as a result of 
the Block case – see below. Unilateral relief is not normally given in cases where the assets in question would not 
be taxed under the location  rules of the Member State concerned, if they were situated in that Member State. 
**  The brackets indicate which asse ts are covered by unilateral relief 
***  The Czech Republic does not have a formal unilateral relief, but the domestic rules provide the possibility to 
deduct foreign taxes in the domestic tax.  
**** The Polish Minister of Finance has a general competence to decide to refrain from collecting taxes for a specified 
group of taxpayers. 
Source:  Rohatgi (2005), Copenhagen Economics, IFA General Report  
As highlighted above, there are many differences be tween Member States' i nheritance laws and tax 
systems. These mismatches can potentially cause double taxation which cannot be addressed 
comprehensively by existing unilateral mechanisms . The following problems arise in particular:  
Taxes and persons covered  First, these unilateral mechanisms may have a limited scope as regards 
the taxes and persons covered. Furthermore, it may not  always be possible to credit previously paid 
gift taxes on the same assets or foreign local inheritance taxes, i.e. taxes applied by political 
subdivisions at local rather than national level, or income taxes or  stamp duties on inheritances. In 
this respect, many contributors to the inheritance tax consulta tion emphasised the need for a 
pragmatic, rather than formalistic, approach regard ing the characterisation of  the foreign tax to be 
credited.  
Assets covered In addition, relief may only be granted for foreign taxes paid on certain foreign 
property, such as foreign immova ble property. Furthermore, the re lief may exclude foreign tax on 
local assets i.e. assets  located within the territory of the Member State granting relief. Some 
contributors mentioned further limitations, derivi ng from the diverging definitions between the 
different tax systems on what qualifies as immo vable or movable property. Conflicting definitions 
of creditable foreign located assets, in particular in relation to bank assets, were identified as a serious concern for stakeholders, especially for individual citizens and tax practitioners. In this 
respect a great deal of reference was made to th e Block case(Case C 67/08), where bank assets held 
abroad did not qualify as foreign located assets eligible for unilateral relief.  
Calculation rules  The significant differences between Member  States' rules for calculating the value 
of assets may also lead to divergences in the ne t amount to be taxed. Incomplete tax credit due to 
different valuation methods or th e different allocation of debts wa s widely reported as a serious 
shortcoming. So was the fact that Member States generally limit foreign tax relief to the amount of 
domestic tax due on those assets. Another constr aint can be limiting the amount of the foreign 
 
EN 17   EN creditable tax to the tax paid ab road by the heir as opposed to the foreign taxes levied on the entire 
estate. 
Timing issues  Member States also vary considerably in their rules deeming when assets are 
transferred and taxes are due. This  means that payment of the fore ign tax may occur after the final 
domestic tax is levied and not all countries permit such later payment to be credited. 
Conditional relief Another issue which stakeholde rs (in particular associati ons of tax practitioners ) 
mentioned was the fact that unilateral relief was subj ected to reciprocity or to the discretion of the 
competent authority. 
Limitations of bilateral tax conventions 
Member States have few bilateral conventions in this area and they  do not seem to be negotiating 
more in recent years. In fact, there are only 33 bilateral inheritance tax treaties between Member States out of a possible total of 351
22. Furthermore, even these fe w conventions are not always 
efficient in eliminating double taxation. Stakeholders  (in particular associations of tax practitioners) 
highlighted the limited availability of treaty reli ef for foreign located pr operty and varying rules 
regarding allocation of taxing rights in those tax treaties. Another probl em is that the treaties do not 
normally cater for situations where more than tw o Member States may ha ve taxing rights over an 
inheritance (e.g. in cases where i mmoveable property is located in  one Member State, while the 
deceased was previously resident in a second Member  State and the heir is resident in a third). 
These situations can occur more frequently in this area compared to income taxation. 
Many bilateral conventions are ba sed on the OECD Model Tax Conven tion on estates, inheritances 
and gifts, which dates from 1982. The OECD Model allocates taxing rights on the basis of giving 
priority to the State of location in the case  of immovable property and movable property of 
permanent establishments or fixed bases. Otherwis e the property should be ta xed in the Contracting 
State where the deceased or the donor was domic iled at the relevant moment. The Model also 
provides for tie-breaker rules in cases where this person is regarded as domiciled in both 
Contracting States. The OECD Mo del contains both the exemption and the credit methods, leaving 
it to the Contracting States to decide which method they apply to eliminate double taxation.  
The IFA General Report notes several shortcomings  in the OECD Model, including the following:  
• The taxes covered are taxes imposed by reason of death and not on occasion of death. That 
means that registration taxes levi ed on the transfer of real esta te are outside the scope as are 
capital gains and income taxes applied on beque sts. Therefore no foreign tax credit can be 
provided in those cases.  
• In regard to the fiscal domicile rules, the Model prevents the use of any extended domicile 
provision, but provides no common solution for problems related to deaths during periods 
of temporary residence.  
• Credit for foreign taxes levied on a different ta xable person (e.g. credit against inheritance 
tax levied on a beneficiary in  respect of estate tax levi ed on the deceased in another 
country) is left for bilateral negotiations 
• Discrimination is not fully eliminated, as domes tic provisions that, inte r alia, contain more 
restrictive rules for the valuation of foreign lo cated assets or the deduc tion of foreign debts, 
compared to domestic located assets and debts, are not expressly prohibited. 
                                                 
22  27 X 26/2 double taxation treaties. Even those countries which do not have inheritance taxes would need to 
have arrangements with other countries to allow relief for  other types of taxes levied on inheritances. 
 
EN 18   EN Experts at the IFA Conference suggested that the main reasons why Member States are not 
negotiating more inheritance tax treaties may include the potential complexity of such treaties as a 
result of the different structures  of countries' inheritance tax syst ems, the priority given by tax 
administrations to more recurrently applied taxes such as income taxes, the limited magnitude of 
foreign investment made directly by individuals , and their assumption that the existing unilateral 
reliefs provide for comprehensive solutions. Above all,  the reality is that most Member States apply 
taxation to heirs rather than to the deceased's estate so the Model may no longer be very relevant. 
3.3.3.  Quantification of the problem  
The following section presents an estimate for total taxation of cross-border i nheritances in the EU. 
Discrimination is a violation of f undamental freedoms, and as such, is a problem irrespective of the 
material harm it causes. For the doubl e taxation issue, it is important  to note that, due to the relief 
provisions in place, not al l inheritances are twice taxed or are completely taxed twice. Nevertheless 
the total amount of taxes on cross-border inherita nces is indicative of the scale of the double 
taxation and discrimination problems. 
 
EN 19   EN Unfortunately, there is no EU-wid e dataset available which can 
provide specific information about the amount of inhe ritance taxes or 
the value of assets that are the subject of inheritance tax in more than one country. During the impact assessment process, the Commission asked an external consultant, the above mentioned Copenhagen 
Economics, to collect this inform ation. The public consultation also 
included questions to this effect. As these attempts to collect information were not successful, it is necessary to draw on proxies, 
namely inheritance tax revenues in Member States.  
It seems valid to assume that t hose who own property in a foreign 
country are wealthy and therefore this  type of inheritance is likely to 
involve larger values than an average domestic inheritance case. 
However, since this is but one type  of cross-border inheritance case, 
such a claim cannot be made gene rally in regard to cross-border 
inheritances. For this reason, we assume that the average value involved in cross-border inheritanc e cases equals the average value 
involved in domestic inheritance cases. 
Data is available on the average inheritance tax (that is, inheritance 
tax or estate tax or transfer duties etc. collected per death) for each 
country in 2008. The weighted aver age of inheritance tax across the 
EU determined in this way is  about EUR 5 200 (See table 7 for 
details).  
The Copenhagen Economics Study estimates the annual number of 
cross-border inheritance cases as follows: Table 7
 
Inheritance tax revenue / 
death, 2008 (EUR) 
Belgium 17975
Bulgaria 0
Czech Republic 0
Denmark 11544
Germany 5543
Estonia 0
Ireland 11972
Greece 1352
Spain 7552
France 14290
Italy 573
Cyprus * 1174
Latvia 0 
Lithuania 0
Luxembourg 14916
Hungary ** 255
Malta 0
Netherlands 13283
Austria 0
Poland 0
Portugal 0
Romania 0
Slovenia 0
Slovakia 0
Finland 13130
Sweden 0
UK 6775
Total EU 5193
Source:  Taxes in Europe, 
Eurostat, own calculations 
*Even though Cyprus does not 
apply a specific inheritance tax, 
it has provided data indicating how much revenue it derives 
from taxing estates. 
**See www.origo.hu
 for 
Hungary 
 
 
EN 20   EN Table 8: Estimate of number of cross-bord er inheritance cases p er year in the EU 
 Number of potential 
cases 
Cases due to foreign loca ted assets 32 000 – 44 000
Cases due to foreign lo cated heir 200 000 – 300 000
Cases due to foreign located deceased 75 000
Subtotal 300 000 – 400 000
Deduction due to possible double counting: 
-- 10-30 per cent of foreign located assets (10-30 per cent of mid range 
estimate of 38.000) 
-- 2-10 per cent of double counting heirs and deceased both living outside their own country (2 to 10 per cent of  mid range estimate for heirs 250.000)  Minus 4 000 – 12 000
Minus 5 000 – 25 000
Subtotal for double counting Minus 9 000-37 000
Total (rounded) 290 000 – 360 000
Source:  Copenhagen Economics  
The Impact Assessment on the proposal for a Regul ation to deal with cross-border successions 
(SEC (2009) 410 final - hereafter  the Cross-border Succession Impact Assessment) uses a higher 
estimate of 450 000 cases. However, the Copenhagen Economics Study includes the caveat that the 
methodology used is likely to underestimate the act ual figures. That is because the figures could 
only take account of cross-border case s of real estate ownership and not  of other assets such as bank 
savings.  Copenhagen Economics states that, as the financial crisis caused c onsiderable fluctuation 
in asset prices, it is difficult to draw conclusions  from the data at hand on the tendency in private 
portfolio investments.  
Therefore, we continue using the range  provided above, namely a range of 290 000-360 000 
potential cases per year as a conservative estimate . Multiplying these figures by EUR 5200 yields 
the range of EUR bn 1.5-1.9  as the upper limit for the aggregate extent of the problem of double 
taxation of inheritances per year.  
To give some indications of the distributional effects across Member States, employment-related 
migration flows are the most significant in terms of  number of people. At the same time, we can 
assume that the migration flow from North to S outh derives from individua ls who can afford to 
move in order to enjoy a pleasan t climate and are, therefore, mo re likely to own property abroad. 
Therefore, the latter migration fl ow seems to be more relevant as regards distributional effects 
across Member States.  
 
EN 21   EN  Table 9: Top 10 migration streams in the EU-27. 
Case# Citizenship of migrant Member State of 
residence Double taxation 
treaty present No. of migrants 
1 Romania Spain No  799 225 
2 Romania Italy No  796 477 
3 Italy Germany No  560 364 
4 Portugal France Yes 491 983 
5 Poland Germany No  419 555 
6 UK Spain No  375 856 
7 Ireland UK Yes 369 470 
8 Greece Germany No  306 402 
9 Germany Spain No 191 080 
10 Austria Germany No  190 150 
Total    4 500 062 
Source: Eurostat and Copenhagen Economics . 
As mentioned above, revenue from domestic and cr oss-border inheritances taxes combined account 
for less than 0.5% of total tax reve nues in EU Member States. Ther efore, cross-border cases alone 
must account for far less than that figure. Howeve r, looking at the double taxation problem at micro 
level, the Copenhagen Economics Study suggests that  double taxation, when  it happens, can have 
an enormous impact on the individuals actually con cerned. Note also that, while the tax rate in case 
of close family member heirs is low in general,  it can reach 60-80% in some Member States for 
large inheritances received by non-relatives. Thus, while at the macro level the problem appears not 
to be too critical, given the small share of total ta x revenues, at the individua l level, some citizens 
can be affected heavily.  
The following examples, based on cases reported  through the Your Eur ope Advice services 
illustrate real-life examples of effective double ta xation of cross-border inhe ritances. The examples 
show the considerable impact of the problem for the individual citizen affect ed. For reasons of data 
protection, we used false names. As taxpayers rare ly provide figures in th eir complaints, we used 
our own estimations based on research to elaborat e on the possible social and economic impacts of 
the following real-life examples. Prices of real estate are taken from the offers available on the 
market at the time of writi ng the present report.    
CASE 1 Filip, a Polish citizen resident in Poland, i nherits moveable and i mmoveable property in 
Belgium from his uncle resident in Brussels. F ilip must pay inheritance tax in Belgium on the 
property because the deceased was a Belgian resident. Belgian tax am ounts to 60% of the net assets. 
In addition Filip must pay nearly 12% of Polish inheritance tax on the assets because he is a Polish resident. There is no bilateral tr eaty in place to avoi d double taxation between the two countries. In 
addition, Poland has no domestic pr ovision to provide relief for foreign inheritance taxes.  
Assuming that the inherited prope rty was a house in Brussels valu ed at EUR 232 000 and bank and 
investment assets valued at EUR 193 000, th e Belgian tax would amount to EUR 255 000. The 
Polish tax would be a further 12% of the total valu e of the assets = 51 000. The liquid assets would 
not be sufficient to cover the tax bi lls arising in the two countries, and Filip could fi nd himself in a 
situation where he had to sell the house. Since he would be under time pressure to pay the taxes, the 
price he gets for the house might be much below th e level of valuation for inheritance tax purposes. 
CASE 2  
 
EN 22   EN Peter is a Dutch citizen pursuing his career in France. He inherited a property in France from his 
deceased life partner who was also a Dutch citizen and who had lived in France for the previous 6 
years. Their relationship had not been not formalis ed. Peter had to pay French inheritance tax in 
view of his residence in France and of the fact th at the property concerned was located in France. 
However, he also had to pay inheritance tax in the Netherlands because his deceased life partner was deemed to have been resident in that State. For the purposes of inherita nce tax, Dutch nationals 
are deemed to have resided within the national te rritory for 10 years follow ing the date they leave 
the Netherlands to live abroad. The tax applied by France amounted to nearly 60% of the net assets. 
The tax applied by the Netherlands amounted to an  additional 12.5%. Under th e legislation applied 
by the Netherlands, foreign taxes are deductible as  a liability on the inhe ritance received and, 
therefore, the tax applie d by France led to a reduction of the taxable base in the Netherlands. 
Nevertheless, double taxation was not fully elimin ated and the total tax due on the property 
concerned was higher than it would have been had the inheritance be en confined to any one of the 
two Member States concerned. 
CASE 3 Jette, a Danish national, inherited a summe r house in Portugal and a long term savings 
account in Denmark from her uncle who was domi ciled in Denmark. Jette must pay Portuguese 
stamp duty amounting to 10% of the net valu e of the summer house because Portuguese law 
subjects transfers on the occasion of death to transfer tax. Moreover, she must pay Danish 
inheritance tax on both the Danish assets and th e Portuguese summer house because under Danish 
rules, worldwide property of the deceased is subj ect to inheritance tax in the hands of Danish 
resident heirs, at a rate in her case of e ffectively 34%. The Portuguese stamp duty cannot be 
credited against Danish inheritance tax because it is a transfer tax and not strictly speaking 
inheritance tax. 
Assuming that the summer house in Portugal is va lued at EUR 125 000, and that there is EUR 75 
000 in the long term savings account, Jette might ha ve no other choice left but to either sell the 
house, in addition to liquidating the savings account, to pay the taxes due, as the Portuguese stamp duty would amount to EUR 12 500 and the Danish  inheritance tax would be around EUR 68 000. 
3.4. Who is affected? 
All EU citizens, businesses and other entities subject  to inheritance taxes are potentially affected by 
these issues.
23 EU citizens may be deterred from moving or investing abroad if they or their heirs 
will suffer from high inheritance taxes as a result of the move or investment. SME organisations24 
have pointed to the particularly damaging eff ects of inheritance taxe s on small businesses. 
However, in reality it is generally the actual a pplication of inheritance taxes to transfers of 
businesses to which SME organisations object ra ther than the application of double inheritance 
taxes. The European Family Businesses – GEEF organisation pointed out in its response to the 
public consultation that even a si ngle application of inheritance ta x can pose challenges to family 
businesses. These problems can then be aggravated in cross-border situations . As stated above, the 
present report concentrates on cr oss-border inheritance tax obstacle s and does not call into question 
the existence of inheritance taxes. However, solu tions to the cross-border difficulties identified 
would also benefit those who i nherit SMEs across borders.   
                                                 
23  Note that the main addressee of an inheritance tax is the individual citizen, not legal persons such as 
companies. 
24  See, for example, position paper for Conference "tra nsfer of Ownership in Private Business – European 
Experiences", 25-26 March, 2010: http://www.ownershiptransfer2010.org/wp-
content/uploads/2010/03/transferofownership_newsletter4_en.pdf 
 
EN 23   EN As regards third country nationals, free movement  of capital extends to flows between Member 
States and third countries. Thus, any action of th e Commission regarding the application of the rules 
on free movement of capital would normally also extend to such flows. However, third country 
nationals would not be covered by actions of the Commission to guarantee other fundamental 
freedoms, based on notions of discrimination on gr ounds of nationality, because such actions would 
be limited to nationals of Member States. It re mains of course possible for Member States to 
unilaterally extend any rights to third country nationals. As far as double taxation is concerned, 
since this is not as such incompatible with Trea ty freedoms, any action of the Commission in this 
area can be limited to intra-EU situations. 
3.5. How would the problem evolve if no ac tion is taken (baseline scenario)? 
With a steadily increasing tendency in migration and cross-border ownership of assets within the 
EU, there are clear and robust indi cations that the problems will increase in magnitude over the 
coming years. 
The Cross-border Succession Impact Assessment also concludes that the magn itude of the problem 
related to cross-border succe ssions is very likely to increase in the future.  
The following chart provides for the migration indicators25: 
Chart 1: Citizens of EU-27 resident ou tside their Member State of citizenship 
89101112
2005 2006 2007 2008 2009Millions
 
Source: Eurostat . 
 
 
Regarding cross-border ownership of  assets within the EU, several sources have concluded that the 
tendency to foreign home ownership is increasing.26 The Copenhagen Economics Study assumes 
that cross-border real estate ownership in  the EU increased by 10-50% between 2002 and 2010.27 
                                                 
25  It is worth emphasising that the nu mber of deaths of migrants (i.e. cases  due to foreign-lo cated deceased) is 
just one of the three main types of cross-border inheritance situations. Co nsequently, we took into account also 
the foreign-located heirs. 
26  See Table 4.2 on page 64 of the Copenhagen Economics' Study, on tendencies in foreign home ownership.  
27  See page 70 in the Copenhagen Economics Study.  
 
EN 24   EN Chart 2: Cross-border portfolio investments within EU-27 
20000400006000080000100000120000140000
2001 2002 2003 2004 2005 2006 2007 2008 2009Millions of 2005 USD
 
Source:  IMF Coordinated Portfolio Investment Survey, http://www.imf.org/externa l/np/sta/pi/datarsl.htm 
This chart shows a massively gr owing trend in cross- border portfolio inve stment. Given these 
indicators, we may expect cross- border inheritance tax problems to grow in the future even 
irrespective of the trends in cross-border mobility. 
With the increasing cross-border movement of EU  citizens and the growing amount of cross-border 
ownership of assets within the EU, it can be expected that the numbe r of complaints and referrals to 
the Court about discriminatory aspe cts of Member States' inheritance tax laws will increase, as will 
double taxation. Notwithstanding the tr ends towards lower general leve ls of inherita nce taxation, 
the overall tax burden arising from the interaction of different tax systems can have a significant 
impact in individual cases and this may increase in the future.  
3.6. Does the EU have the right to act?  
At the present stage of EU law,  direct taxation, such as inher itance taxation, falls within the 
competence of the Member States, in the absence of EU harmonising rules.  Nevertheless, in the 
exercise of this competence, Member States must  respect their obligations under the Treaties.  
Member States are not allowed to discriminate on the basis of nationality or to apply unjustified 
restrictions to the exercise of  the fundamental Treaty freedoms. As explained above, the Court has 
on several occasions in recent years investigated th e compatibility of Member  States inheritance tax 
provisions with the freedoms enshrined in the TFEU  and ruled that "inheritance" comes within the 
compass of Article 63 TFEU on free movement of  capital once its constituent elements are cross-
border. The Commission has a role, as guardian of the Treaties, to ensure that Member States 
comply with EU law and to launch infringement proceedings where it beli eves that EU law has 
 
EN 25   EN been infringed. Violations to fundamental freedoms must be eliminated as a matter of existing law, 
irrespective of the macroeconomic size of  the problem in monetary terms.  
Given the growing number of court cases, it is ap propriate for the Commission to carry out an EU-
wide examination of the potential and actual discri mination problems in the ar ea of the taxation of 
inheritances and consider whethe r and what kind of action might be needed, including under Article 
115 TFEU, to improve compliance with the fundame ntal freedoms in the area concerned. Such 
action could usefully complement the infringeme nt proceedings that th e Commission can, in any 
event, initiate.  
As regards double taxation, it is cl ear from the complaints received, and from the replies to the 
public consultations, that problem s of double taxation of inherita nces are not currently being 
resolved in a satisfactory manner except to the ex tent that they are addr essed by one of the few 
existing double taxation conventions  dealing with, or exending to, inheritances.. This may deter 
individuals from exercising the right to move freely within the Internal  Market. It is, therefore, also 
appropriate for the Commission, in the light of its responsibility for ensuring the smooth 
functioning of the Internal Market  and promoting the general intere st of the Union, to investigate 
the impact of the lack of appropriate mechanis ms to prevent double taxation of inheritances and 
make recommendations or propose other action if  warranted. The level of action would be 
proportionate to the objectives and could be a proposal for a Directive under Article 115, or a 
recommendation under Article 288, of the TFEU. Propor tionality has been applied as one of the 
criteria to compare the options in section 7 below. 
4. OBJECTIVES − THE “WHAT" 
4.1. What are the general and the more specific policy objectives? 
The general objective of the initiative is to allow ci tizens to exercise their ri ght to move and operate 
freely within the Internal Market and not be dete rred by cross-border inheri tance tax obstacles. To 
this end, the initiative would aim at 
• promoting the elimination of discrimination in the area of inheri tance taxation; and 
• reducing the double taxation of i nheritances within the EU, 
in particular in order to avoid an excessively high tax burden or ev en confiscatory rate of overall 
taxation.  
Translation of these into opera tional objectives would imply: 
• achieving a reduction in the number of complaints  of EU citizens and requests from national 
courts for preliminary rules concerning disc riminatory inheritance tax rules; and  
• improved scope of national prov isions relieving double taxation. 
4.2. Are these objectives consistent with other EU policies? 
Within the Internal Market, EU citizens should be  able to move and opera te freely across borders. 
In its "Europe 2020 strategy"28 for smart, sustainable and inclusiv e growth in the EU, the European 
Commission concluded that an element of putti ng the EU economy back on track consists in 
empowering EU citizens to play a full part in the single market and giving them the confidence to 
do so. In the light of this st rategy, and as announced in th e Communication on "Removing cross-
                                                 
28 http://ec.europa.eu/eu2020/pdf/COMPLET%20EN%20BARROSO%20%20%20007%20-
%20Europe%202020%20-%20EN%20version.pdf   
 
EN 26   EN border tax obstacles for EU citizens"29, the Commission wants to ad dress the most important 
unresolved tax problems faced by EU citizens in cross-border situations, including cross-border inheritance tax obstacles. It seems appropriate, therefore, to examine how these difficulties can be 
best addressed.   
An initiative addressing cross-border inheritanc e tax problems would comp lement the legislative 
proposal for a Regulation dealing with cross-bord er successions and wills which the Commission 
presented in October 2009. While that Regulation could, whether adopted or not, mean that the 
taxable beneficiaries of inherita nces would change in some cases , it would not change Member 
States' laws on taxing cross-border inheritances. Thus, whether adopt ed or not, the Regulation will 
not address the situations where citizens taking advantage of the In ternal Market are exposed to 
double taxation or to discrimina tory rules on inheritances.  
The Commission has been considering the problems  that Member States' inheritance tax regimes 
could create for SMEs since 1994
30. As explained above, it is gene rally the actual application of 
inheritance taxes per se to tr ansfers of businesses which create problems for SMEs. The present 
report concentrates on cross-borde r inheritance tax obstacles and doe s not challenge th e existence of 
inheritance taxes. However, as explained above, solutions to the discrimi nation and double taxation 
issues would be applicable and beneficial also  to those who inherit SM Es across borders.   
The present initiative would also aim at supporting and complementing the Commission's 
infringement actions against discrimi natory inheritance tax provisions.  
Furthermore, it would be in line with the fu ndamental rights recognised by the Charter of 
Fundamental Rights of the European Union (Chart er) and indeed strengthen the citizens's position 
under certain headings (cf. below ). Thus, measur es adopted in order to eliminate double taxation 
would have a positive impact on the freedom to conduct business (Article 16 of the Charter), in particular with regard to SMEs, as well as on the right to property (Article 17), which specifically 
includes the right to bequeath lawfully acquired po ssessions. They will also have a positive impact 
on free movement of EU citizens (Article 45). 
 
5. P
OLICY OPTIONS − THE “HOW" 
5.1. Definition of policy options  
Possible policy options to address the problems iden tified are listed below and briefly described.  
The preferred option could combine elements from both of these sets. 
                                                 
29  COM (2010) 769 and Staff Working Paper SEC/2010/1576 
30  Most recently, Communication from the Commission to the Council, the Eu ropean Parliament, the European 
Economic and Social Committee and the Committee of the Regions: "Implementing the Lisbon Community 
Programme for Growth and Jobs. Transfer of Business – Continuity through a new beginning" COM (2006) 
117 of 14.03.2006. 
 
EN 27   EN Definition of policy options A that address problems  
caused by tax discrimination of cross-border inheritances 
• Policy Option A1: No change. Continuation of current regime (baseline scenario) 
• Policy Option A2:  - Publication of principles for non-discriminatory i nheritance tax systems  
• Policy Option A3: Compulsory ru les on abolishing discriminatory  features of Member States' 
domestic inheritance tax legislation   
Definition of policy options B that address problems  
caused by unrelieved double taxation of cross-border inheritances 
• Policy Option B1: No change. Continuation of current regime (baseline scenario) 
• Policy Option B2: Addressing the problem by means of national legislation: Commission 
recommendation regarding (unilateral) national provisions designed to relieve double taxation 
of inheritances 
• Policy Option B3: Commission recommendation re garding relief of dou ble taxation through 
bilateral treaties between  Member States designed to relieve  double taxation of inheritances  
• Policy Option B4 – Binding rules governing bilate ral arrangements: Adoption into EU law of 
a) a single basis for determining the tax liability, such as the location of assets or the 
residence of the deceased, etc in  bilateral relations or b) mi nimum standard common rules for 
bilateral conventions  
• Policy Option B5– EU- wide mu ltilateral double tax convention 
• Policy Option B6: Binding EU-wide rules on relief  from double taxation and even on taxation 
of inheritances  
 
5.2. Description of policy options  
5.2.1.  Policy Options A: Addressing tax discriminat ion related to cross-border inheritances   
Policy Option A1 – No change. Continuatio n of current regime (baseline scenario) 
Policy Option A2 Publication of principles fo r non-discriminatory i nheritance tax systems 
Under this option, a staff working paper would be developed that w ould assemble he principles of 
non-discrimination flowing from case-law and which need to be respected by national inheritance 
tax systems. These principles ar e summarised in section 3.3.1 above . Thanks to the publication of 
these principles, EU citizens would be more aware of the rules which Member States must respect 
when taxing cross-border inheritances. The documen t could also assist Memb er States in bringing 
their inheritance tax provisions into line with EU law. This w ould also support the Commission's  
legal action against infringements in the inheritance tax area.  
Policy Option A3 - Compulsory rules on abolishing of discriminatory featur es of Member States' 
domestic inheritance tax legislation   
Under this option, as suggested by some stakehol ders in their replies to the inheritance tax 
consultation, the Commission would propose the princi ples set out in the relevant European case 
law for adoption as compulso ry rules at EU level.  
 
EN 28   EN 5.2.2.  Policy Options B: Addressing unrelieved doubl e taxation of cross-border inheritances  
Policy Option B1 – No change. Continuatio n of current regime (baseline scenario) 
Policy Option B2 –Commission recommendation regarding (unilateral) national provisions 
designed to relieve double taxation of inheritances The Commission could identify the elements 
that would make national tax rules interact more coherently with each other so as to eliminate 
double taxation in a comprehensive way and invite Memb er States to make changes to their laws on 
that basis.  The recommendation would aim to be a simple solution that would not  entail changes to 
the different systems of inheritanc e taxation. It is likely to, inter alia, cover inheri tances of both 
immoveable and moveable property and suggest an orde r of priority of taxing rights in cross-border 
cases, for example between the country of situs of  property and any other countries involved (e.g. 
that of testator and that of heir). Some existi ng unilateral provisions may already contain some of 
these elements. Transparency of information on rules could also be encouraged.  
Policy Option B3 – Commission recommendation regarding relief of double taxation through 
bilateral agreements between Member States de signed to relieve double taxation of inheritances  
The Commission could recommend th at Member States complete a full network of bilateral double 
taxation conventions on inherita nces, based either on the OECD  model convention on estates, 
inheritances and gifts of 1982 (Policy Option B3.a) or an alternative model such as an EU model 
convention (Policy Option B3.b) , or else include inheritance tax provisions  within the scope of 
existing bilateral income tax conventions (P olicy Option B3.c). B ilateral double taxation 
conventions share taxation, in the case of two count ries that have taxing rights over income, on the 
basis of a set of principles defini ng concepts such as the location of  assets or income, the basis of 
liability and the domicile or residence of the pe rsons involved. They contain dispute resolution 
provisions which are not, however, bindi ng on the two participating countries. 
Policy Option B4 – Binding rules governing bilate ral arrangements: Adoption into EU law of a) 
a single basis for determining the tax liability, such as the location of assets or the residence of 
the deceased, etc in bilateral relations, or b)  minimum standard common rules for bilateral 
conventions.  These suggestions were made by some stake holders in their reply to the inheritance 
tax public consultation, 
Policy Option B5 – EU- wide mu ltilateral double tax convention As suggested by some 
stakeholders and commentators, one  way to ensure that measures are taken to avoid double taxation 
would be for Member States to conclude a multilateral double taxation convention on estates and inheritances 
Policy Option B6 - EU-wide legislative approach 
An EU-wide binding instrument, taking the form of a Directive or a Regulation, could provide for i) 
a single harmonised basis for taxation, e.g. taxing only where the assets or the deceased were 
located ( Policy Option B6.a );  ii) a combination of common definitions plus a single harmonised 
basis (Policy option B6.b); (iii) the relief of double taxation al one, by way of a binding unilateral 
relief provision coupled with a binding dispute resolution mechanism without making any changes 
in Member States' inheritance tax rules ( Policy Option B6.c ); (iv) a combinati on of features of 
Policy Options B6.a, b and c i.e. single harmonised basi s, common definitions and a binding dispute 
settlement mechanism ( Policy Option B6.d).  
 
EN 29   EN 5.3. Options that appear less appropriate 
Policy Option B3.a - Recommendation that Member  States complete a full network of bilateral 
double taxation treaties on inhe ritances, based on the OECD model convention on inheritance 
taxes  As already indicated, the OECD Model on estates, inheritances and gifts is not up to date and 
does not deal with triangular s ituations. While the OE CD Model Convention on Income and Capital 
is constantly updated, the Model Convention on Es tates, Inheritances a nd Gifts has not been 
amended to address shortcomings identified a nd therefore would not resolve all the problems 
effectively. Another reason why the Model might not be  an ideal point of depa rture is the fact that 
the  OECD is currently considering its update. Th is process may take a considerable amount of 
time. Furthermore, it is uncertain whether Member  States would conclude  bilateral agreements 
based on the updated Model when they have not concl uded them so far. Even if Member States did 
decide to do so, finalisation of such agreements could be a lengthy process. 
Policy Option B4 - Binding rules governing bilate ral arrangements: Adoption into EU law of a) a 
single basis for determining the ta x liability, such as the location of  assets or the residence of the 
deceased, etc in bilatera l relations, or b)  minimum standard common rules for bilateral 
conventions.  Although suggested by some stakeholders , drawing up these rules would take a 
disproportionate amount of effort given that they would have to be adopted unanimously and then 
implemented via bilateral agreemen ts. The effort involved in achi eving this resu lt in bilateral 
relations, might still leave the problem of multilate ral situations unresolved, and would not solve the 
problem as long as Member States are not prepared to en ter into bilateral inhe ritance tax agreements 
in the first place. 
Policy Option B5 – EU- wide mu ltilateral double tax convention Although such an EU-wide 
instrument could address triangular  situations, where more than two Member States have taxing 
rights, it is very unlik ely that Member States would agree on such a convention given a previous 
failed attempt at such a solution for income tax31. Moreover, such a conven tion if proposed by the 
Commission could only be proposed in the form of  a Directive which would fall within Policy 
Option B.6.  
One variation of Policy Option B6 – binding EU  legislation in the format of a Regulation - would 
not be possible because the legal base (Art icle 115, TFEU) only provides for proposals for 
Directives.  
Policy Option B.6.a - a single harmonised basis for taxation -  which was suggested by some 
stakeholders would be an ineffective solution unle ss combined with common definitions such as of 
assets and with rules to deal with dual residen ce/nexus, as proposed in another sub option (Policy 
Option B.6.b). Therefore, Policy Opti on B.6.a appears inappropriate.  
6. ANALYSIS OF IMPACTS OF THE POLICY OPTIONS  
This chapter analyses the different Policy Opti ons for eliminating discrimination and reducing 
double taxation of cross-border inheri tances from the perspective of the most significant impacts.  
Given the nature of the proposed measures to address both problems, no direct environmental 
impacts are expected. Indirect environmental im pacts might materialize as a consequence of 
                                                 
31  Avant-projet 1968 de convention européenne sur la double imposition (Convention multilatérale entre les Etats 
membres des Communautés européennes, relative à la prévention de la double imposition du revenu et de la 
fortune et à l'assistance administrative mutuelle en ma tière d'impôts directs). 11414/XIV/68-F of 1 July 1968. 
 
EN 30   EN increased mobility, but that factor would not be a particular consequence of any initiative 
addressing cross-border i nheritance tax problems.  
Administrative costs imposed on citizens and businesses will not be any different following any 
changes to current regimes, because taxpayers will al ways have to make declarations to two or more 
tax authorities in cr oss border situations. That is a fact of life that w ill not change as long as 
Member States have different tax systems. Howe ver, legal costs and the time and inconvenience 
involved in making complaints would be reduced  if there was less di scrimination and double 
taxation about which to complain. For tax administ rations, again costs will not change much except 
that less cross-border inheritance tax problems w ould translate into fewer complaints and legal 
cases to handle. 
As regards budgetary impacts on Me mber States' revenues, it is unlikely that the adoption of 
solutions to address cross-border inheritance tax problems would have a significant impact at macro 
level. Although some Member Stat es could win or lose more than  others depending on cross-border 
mobility and ownership of cross-border assets, the overall effects are likely to be small given the 
low share that inheritance taxes represent of Member States' tota l revenues (see 3.3.3). Above all, as 
it is not the macroeconomic but the microeconomic im pact of the problem that  could be significant, 
it is an issue of principle that solutions should be found even if a country only has to deal with a few 
cross-border inheritance tax cases per year. As far as social and economic effects are concerned, we 
focus on the impact of the options  on the individuals concerned.  
As regards the impacts on SMEs in pa rticular, an SME test is attached.32  
Any initiative of the Commission to eliminate discriminatory, and double, taxation will have 
positive impact on the fundamental rights recognised in  the Charter, with particular regard to the 
principle of non-discrimination (Art icle 21), the right to property (Article 17), freedom to conduct a 
business (Article 16) and EU c itizens' right to move freely within the EU (Article 45). 
 
6.1. Impact of the Policy Options addressing pr oblems of discrimination (Policy Option 
A) 
Policy Option A1 - No change. Continuatio n of current regime (baseline scenario)   
(i) Fundamental freedoms: The Commission would in any event c ontinue to take actions against 
Member States that breach the non-discriminati on principles in the TFEU so the relevant 
fundamental freedoms would not be compromised. (ii) Costs to taxpayers and tax 
administrations: Relying mainly on solutions that involve court actions implies high costs for both 
taxpayers and tax administrations. (iii) Social effects:  As cross-border movement is likely to 
increase over the coming years, the remaining discri minatory features of Member States' domestic 
rules are likely to cause more pr oblems. Continuation of the current  situation is most likely to 
impact on the middle classes as th e wealthy are likely to have tax advisers and poorer individuals 
are not as likely to inherit across borders. (iv) Economic effects: Doing nothing could affect cross-
border mobility and mean that difficulties  remain for those who actually move. 
 
                                                 
32  See Annex 6 
 
EN 31   EN Policy Option A2 – Publication of principles for non-discriminatory inheritance tax systems  
(i) Fundamental freedoms:  The publication of principles fo r non-discriminatory inheritance tax 
systems would promote the respect of fundamental freedoms to a greater extent than the status quo. 
(ii) Costs to taxpayers and tax administrations: Publication of the the prin ciples applicable could 
reduce the need for court actions. (iii) Social and economic effects:  This option should bring 
increased confidence about the im plications of cross-border move ment and more trust in the 
Internal Market.  
Policy Option A3 - Compulsory rules on abolishing of discriminatory featur es of Member States' 
domestic inheritance tax legislation   
(i) Fundamental freedoms:  Compulsory rules on the design of  non-discriminatory inheritance tax 
systems would prima facie promote fundamental righ ts to an even greater extent than providing 
guidance. (ii) Costs to taxpayers and tax administrations: There should be increased legal 
certainty which could reduce the need for court actions. (iii) Social and economic effects:  This 
option should bring increased c onfidence about the implications of cross-border movement and 
more trust in the Internal Market.  
6.2. Impact of the Policy Options addressing pr oblems of double taxation (Policy Option 
B) 
Policy Option B1 - No change. Continuatio n of current regime (baseline scenario)  
(i) Fundamental freedoms: Maintaining the status quo could mean that, in an increasing number 
of cases over time, tax payers could be confront ed in cross-border inheri tance tax cases with a 
combined tax burden higher than they  would bear in a purely internal  situation. In some cases, the 
overall burden resulting from double (or multiple) taxa tion can reach levels that could be considered 
confiscatory. Although double taxation as such has b een not been considered incompatible with 
fundamental freedoms, it makes the exercise  of these freedoms mo re difficult. (ii) Costs to 
taxpayers and tax administrations: The lack of availability of reli ef can be costly  in individual 
cases, as indicated in the exam ples at Chapter 3.3.3. Member Stat es' tax revenues, on the other 
hand, will benefit from continuing with their current relief systems. (iii) Social effects:  As cross-
border movement is likely to increase over the co ming years, the absence of comprehensive double 
taxation relief is likely to cause more problems ove r time. The lack of comp rehensive solutions is 
most likely to impact on the middle classes as the wealthy are likely to have  tax advisers to help 
with tax planning and poorer individuals are no t as likely to inherit across borders. (iv) Economic 
effects:  Problems of double taxation do not  at present appear to affect  an important percentage of 
citizens but are likely to affect those citizens who ma ke use of their right to engage in cross-border 
activity. The ensuing economic c onsequences might be important  for those mobile citizens, 
depending on the individual situations. 
Policy Option B2 –Commission recommendation regarding (unilateral) national provisions 
designed to relieve double taxation  
(i) Fundamental freedoms: This option could help to reduce the number of instances in which 
cross-border inheritances are subjected to dou ble taxation, which would ease the exercise of 
fundamental freedoms. (ii) Costs to taxpayers and tax administrations: Extending the level of 
double taxation relief available in  cross-border inheritance tax cases would mean a reduction of 
costs for taxpayers and a loss of tax revenues fo r Member States.  Tax ad ministrations would also 
face the administrative costs of making changes to  their tax rules. However, fewer complaints 
 
EN 32   EN would also mean less case-handling costs. (iii) Social effects:  As cross-border movement is likely 
to increase over the coming years, the availability  of comprehensive double taxation relief is likely 
to benefit an increasing number of taxpayers ove r time, in particular the middle compared to 
wealthier classes. (iv) Economic effects:  The availability of comp rehensive double taxation relief 
for cross-border inheritances woul d certainly benefit those citizens who make use of their right to 
engage in cross-border activity.  
Policy Option B3 –Commission recommendation regarding relief for double taxation through 
bilateral agreements between Member States  
(i) Fundamental freedoms, (ii) Costs to taxpayers and tax administrations, (iii) Social effects, 
(iv) Economic effects:  Similar to Policy Option B2 b ecause both involve a Commission 
recommendation on action to be taken by Member States. 
Policy Option B6 – Binding EU legisl ation in the form of a Directive  
(i) Fundamental freedoms, (ii) Costs to taxpayers and tax administrations ,(iii) Social effects, 
(iv) Economic effects:  Binding EU legislation which would comp el Member States either to design 
their tax systems in such a way as to prevent the likelihood of double taxation, or to give double 
taxation relief, would be likely to lead to more  certain effects than the previous options.  
7. COMPARISON OF MAIN OPTIONS  
7.1. Definition of the assessment criteria  
For assessing the policy options to eliminate discrimination (Pol icy Options A), the following 
criteria will be used: 
¾ Incentive:  Incentive for Member States to change their discriminatory rules  
¾ Effectiveness : in terms of achieving the objective of enforcing EU law and increasing 
certainty regarding the types of pr ovisions that are discriminatory 
¾ Proportionality:  Going no further in terms of EU measures than is necessary to achieve the 
objective 
¾ Efficiency:  The extent to which the objectives can be achieved for a given level of 
resources/at least cost 
¾ Flexibility: Ease of adjustment to reflect change s in case law and domestic legislation 
For assessing the policy options to reduce double taxation (Policy Optio ns B), the following criteria 
will be used: 
¾ Effectiveness : in terms of achieving the objective of reducing double taxation and ensuring 
certainty in this regard 
¾ Proportionality:  Going no further in terms of EU  measures/EU harmonisation than is 
necessary to achieve the objective 
¾ Efficiency, in particular ease of implementation : The extent to which the objectives can be 
achieved for a given level of resources/at least cost, in pa rticular regarding ease of 
implementation 
¾ Flexibility:  in terms of scope, ease of adjustability to reflect changes in laws and practices 
7.2. Comparison of Policy Options A that addres s problems of tax di scrimination related 
to cross-border inheritances 
Policy Option A1 – No change Continuation of current regime (baseline scenario)  
 
EN 33   EN Incentive:  While infringement proceedings and Court deci sions in preliminary references regarding 
a given Member State may induce other Member States to make corresponding changes in their 
laws, maintaining the status quo might mean insuffi cient incentive for Member  States to do so, in 
particular in a coordinated way. Furthermore, citizens may not be sufficiently aware of the 
obligations imposed on Member States ' inheritance tax rules by EU law .  Effectiveness: For the 
same reasons, this option does not seem to ach ieve the objective set out in Chapter 4.1. 
Proportionality: It does not conflict with proportionality standards. Efficiency: With the expected 
increase in cross-border movement the number of  infringement cases and court actions may also 
increase which may lead to increases in legal and administrative costs in order to meet the objective 
of eliminating discrimination. Flexibility:  Not relevant. 
Policy Option A2 – Publication of principles for non-discriminatory inheritance tax systems 
Incentive: The publication of these principles  may make EU citizens more aware of the rules which 
Member States must respect when taxing cross-bor der inheritances. It coul d also assist Member 
States in bringing their inherita nce tax provisions into line with  EU law, in particular in a 
coordinated way . Effectiveness: The publication of such a set of pr inciples would enable taxpayers 
to better understand the implications  of EU law for Member States' inheritance tax sy stems and thus 
make it more likely that they are invoked vis-à-vis the national tax authorities in a useful manner. It 
would also improve the orientation of Member States as regards how  to design their tax systems in 
a non-discriminatory way. Proportionality: This option would improve knowledge about the 
applicable priniciples, thereby complementing a nd completingthe Commission's actions to tackle 
incompatibilities with EU law by way of infringement proceedings.  Efficiency: Better knowledge 
about the principles applicable, both on the part of  the citizens and of the Member States, could 
contribute to improving  the compatibility with EU law of Member States' le gislation and practice. 
This in turn could minimise the number of infr ingement cases and court actions in this area. 
Flexibility:  The set of principles can be adapted to cater for evolutions  in Court of Justice case law 
and new developments in Member States' laws.   Policy Option A3 - Compulsory rules on 
abolishing of discriminatory feat ures of Member States' domestic  inheritance tax legislation   
Incentive:  Setting out the principles as compulsory rules at EU level would reinforce the 
compulsory effect of fundamental freedoms. Effectiveness: Within the scope of the compulsory 
rules thus set out, complete certainty would prevai l as regards how to design tax sy stems in a non-
discriminatory way. Proportionality: Proportionality standards woul d not be compromised by 
codifying case law. Efficiency : Even though compulsory rules would make crystal clear the 
principles that Member States would have to follow in the design of their tax systems, cost-
effectiveness  would be limited by the fact that jurisprudence had not yet time to clarify the full 
range of possible problems to which the very divers e national systems could give rise. This makes it 
difficult to formulate general pr inciples through bindi ng secondary legisla tion in a way which 
would add decisive value to the existing case law as such. Flexibility:  It might not be possible to 
modify legislation in a sufficiently short timeframe to reflect evolutions in Court of Justice case law 
or new developments in Member States' tax laws. 
7.3. Comparison of Policy Options B that addres s problems of unrelieved double taxation 
on cross-border inheritances 
Policy Option B1 - No change. Continuatio n of current regime (baseline scenario) 
Effectiveness: This option would not achieve the objec tive of reducing double taxation of cross-
border inheritances within the EU. Proportionality: This option does not conflict with 
proportionality standards. Efficiency : With the expected increase in cross-border movement the 
 
EN 34   EN cases of unrelieved double taxation in international successions may also increase. Member States 
may make changes to their domestic  relief provisions or enter into  bilateral arrangements on double 
taxation relief but this a ppears unlikely on the basi s of practice to date. Flexibility and Ease of 
implementation:  not relevant.  
Policy Option B2 –Commission recommendation regarding (unilateral) national provisions 
designed to relieve double taxation  
Effectiveness: Member States already gene rally apply double taxation re lief provisions under their 
domestic law but these are not comprehensive, and therefore im provements to these provisions 
would help to meet the objective set out in Ch apter 4.1. This option would not, however, impose 
any binding obligation on Member St ates to eliminate double taxation. Proportionality: No 
proportionality issue would arise,  since this option would not i nvolve harmonisation of Member 
States' laws. Efficiency, in particular ease of implementation : A recommendation for  appropriate 
self-regulation may achieve the de sired results without protracted, time-consuming discussions in 
the Council. For Member States, changing their own laws is obvious ly the most easily achievable 
target. It may well be that they could provide for a less formalistic approach to credit for foreign taxes on an inheritance by mean s of administrative guidance ra ther than by changing laws. 
Flexibility:  This option should be designed to ensure th at unilateral double taxa tion relief measures 
would have a sufficiently broad scope, would be eas ily adjustable to reflect changes in laws, and 
would allow administrative  interpretation and a non-formalistic approach so  as to ensu re that double 
taxation is eliminated. 
Policy Option B3 –Commission recommendation regarding relief of double taxation through 
bilateral agreements between Member States  
Policy Option B.3.b
 - The Commission could recommend that  Member States complete a full 
network of bilateral double taxation treaties on i nheritances, based on an a lternative model to the 
OECD model tax treaty draw n up as an EU model treaty 
Effectiveness:  If a comprehensive network of relevant  double taxation treaties existed between 
Member States, this would help meet the objective outlined in Ch apter 4.1. This option would not, 
however, impose any binding obligation on Memb er States to eliminate double taxation. 
Proportionality: No proportionality issue would arise, since this option would not involve 
harmonisation of Member States' laws. Efficiency, in particular ease of implementation : The 
Commission would first, in cons ultation with Member States, ha ve to draw up a model double 
taxation treaty. This might take a considerab le amount of time and it is uncertain whether 
agreements based on the model convention would then effectively be concluded when Member 
States have not concluded them so far. Even if Me mber States did decide to do so, their finalisation 
could be an extremely lengthy process. Flexibility:  Tax treaties would requi re regular updating to 
reflect changes in laws if they are to eliminat e double taxation successfully. Furthermore, bilateral 
tax treaties might not be capable of addressing problems resulting from taxation by more than two 
countries or and might be insuffici ently flexible to respond quickly to unforeseen circumstances.   
Policy Option B.3.c  – The Commission could recommend the inclus ion of inheritan ce tax provisions 
within the scope of existing bilateral inco me tax treaties (Policy Option B3.c).  
Effectiveness:  If inheritance tax provisions were incl uded in a comprehensive network of double 
taxation treaties between Member States, this would help meet the objective of reducing double 
taxation of cross-border inheri tances within the EU. However, this would assume that the 
provisions would be sufficiently comprehensive whic h might not be possible given that they would 
 
EN 35   EN be included in a treaty with a different scope. Furthermore, th is option would not impose any 
binding obligation on Member States to eliminate double taxation. Proportionality: This option 
would be in line with proportionality standards.  It would not involve harmonisation of Member 
States' laws. Efficiency, in particular ease of implementation : Member States would have to reopen 
their bilateral tax treaties to incl ude inheritance tax provisions whic h could be time-consuming. It is 
not, therefore, realistic to believe that this option could be put in place quickly. Flexibility:  Tax 
treaties require regular updating to reflect changes in laws if they are to eliminate double taxation 
successfully. Furthermore, bilateral tax treaties  might not be capable of addressing problems 
resulting from taxation by more than two countries or  insufficiently flexible  to quickly respond to 
unforeseen circumstances.   
Policy Option B5 –Binding EU legislation 
Policy Option B6.b  - A Directive introducing common defini tions and a single harmonised basis for 
taxation  
Effectiveness:  If such common definitions and a single harmonised basis for taxation were agreed, 
the objective outlined in Chapte r 4.1 would be largely met. Proportionality: This option would 
involve substantial changes to Me mber States tax laws which woul d not be proportionate to the 
objective to be achieved, particularly given that  some Member States do not currently have 
inheritance taxes. Efficiency, in particular ease of implementation : Agreement on such vast changes 
to Member States' inheritance tax laws would take  considerable time and, given the unanimity rule 
for adoption of tax proposals, is most likely unrealistic.  Flexibility:  Such an instrument would have 
to be renegotiated if it prove d insufficient in any way.  
Policy Option B6.c  – A Directive providing  for  binding unilateral relief coupled with a binding 
dispute resolution mechanism  
Effectiveness:  If such an instrument were agreed, th e objective outlined in Chapter 4.1 should be 
completely met. Proportionality: This option should not involve s ubstantial changes to Member 
States' inheritance tax laws as it would deal only with the inte raction of these diverse laws. 
However, it may not be necessary  to meet the objectives sought. Efficiency, in particular ease of 
implementation : Agreement on this legal measure could take considerable time and, given the 
unanimity rule for adoption of tax proposals, might not be realistic. Flexibility:  Such an instrument 
would have to be renegotiated if it proved insuffi cient in any way. Nevertheless, this provision 
could be made more flexible than the previous op tion. It would not deal with  the details of Member 
States' inheritance tax laws so might be broad enough in scope to cater for later developments in 
those laws. 
Policy Option B6.d  – A Directive providing for a combinati on of features of Policy Options B6.b 
and c  
Effectiveness:  This option would fully meet the objective outlined in Chapter 4.1. Proportionality: 
This option would involve substantial changes to Member States tax laws which would probably be 
disproportionate to the obj ective to be achieved, particularly given the scale of the problem and 
given that some Member States do not currently have inheritance tax laws. Efficiency, in particular 
ease of implementation : Agreement on such vast changes to Member States' inheritance tax laws 
would take considerable time and, given the unanimity rule for adop tion of tax proposals, is most 
likely unrealistic. Flexibility:  Such an instrument would have to be renegotiated if it proved 
insufficient in any way.  
 
EN 36   EN 7.4. Comparison tables 
The following tables provide a comparison of the ra tings of the policy options  as negative, neutral 
or positive. 
Table 10  – Comparison of policy options A that address problems caused by tax 
discrimination of cross-border inheritances 
Criteria 
 A1 – no 
change A2 – 
publication 
of a set of 
principles A3 - 
legislation 
Incentive to change law 
Effectiveness Proportionality Efficiency Flexibility  0 
0 
+ 
- 
n/a 
 + 
+ + + + + 
+ 
0 0 0 
Conclusion:  As regards policy options A, the preferred option is Policy Option A.2 . This option, 
by supporting the Commission's infringement actions , would address the curre nt tax discrimination 
problems efficiently, flexibly and in a cost-effective way. 
Table 11 – Comparison of policy options B th at address problems caused by unrelieved 
double taxation of cross-border inheritances 
 
Criteria B1  
no 
change B2 
improved 
unilateral 
relief B3.b  
Inheritance 
tax treaties 
based on EU 
Model B3.c 
Income tax 
treaties with 
inheritance 
provisions B6.b  
Binding 
common 
definitions 
and basis B6.c 
Binding 
relief plus 
dispute 
settlement B6.d  
B6.b 
+ 
B6.c 
Effectiveness 
Proportionality Efficiency/ease 
implementation 
Flexibility - 
0 0 
n/a + 
+ 
++ 
++ + 
+ 
-- 
- + 
+ 
-- 
- ++ 
- - - - 
- - ++ 
- - 
- 
 ++ 
- - - - 
- - 
Conclusion:  As regards policy options B, the preferred option is Policy Option B.2 as an 
effective and certainly proporti onate way to tackle the probl em. Other options would be 
significantly less cost-effective and there is a ques tion mark over their political feasibility, given 
Member States' reactions during rele vant discussions. This preference is also in line with the view 
 
EN 37   EN of the experts consulted.  Option B .6.c is one that may be considered at a later date if necessary in 
the light of the review of the implementation of Option B.2. The preference for Option B.2 over 
Options B3.b and B3.c, both of which concern solutio ns via bilateral actions by Member States, is 
also based on the fact that Member States do no t seem to prioritise the conclusion or revision of 
double taxation treaties on inheritances. 
 
8. THE PREFERRED OPTION  
The preferred solution to deal w ith the two problems identified is a combination of policy options 
A.2 and B.2 and is, in brief:  
The principles flowing from the case-law on inheritanc e taxes that should govern the design of 
inheritance tax systems could be assembled in a single, published document.  As explained above, 
Member States are obliged to take action to rem ove discrimination but they sometimes adapt their 
laws to take account of the Court's decisions in an  incomplete way, or in a way that worsens the 
positions of taxpayers. The publication of these pr inciples would improve the operation of the 
fundamental freedoms  by assisting Member States in bringing their inheritance tax rules into line 
with EU law and by making EU citizens aware of th e principles which Member States must respect 
when taxing cross-border inheritances. This w ould support the Commission' s  legal action against 
infringements in the inheritance tax area. The prin ciples would, for example, describe the types of 
rules which the Court has identifi ed as breaches of the fundame ntal freedoms - see 3.3.1 above.  
The publication of these principles could help to  ensure that EU citizens who are caught up in 
complicated cross-border inheritance disputes are in formed in a quick and efficient way about their 
legal position. This could ma ke it easier for them to invoke their rights vis-à-vis the tax authorities 
at an early stage, which in turn could help to reduce the incidence of these matters on the 
lenghtiness of any legal proceedings.   It could, he lp to ensure that problems of  EU citizens, 
confronted for example with a significantly hi gher tax burden through  not qualifying for an 
exemption or for more beneficial valuation rules b ecause either the assets or the deceased and/or the 
beneficiary were located outsi de the taxing Member State, are solved more rapidly.  
In addition, the Commission could adopt a Reco mmendation identifying the elements that would 
make the very disparate national ta x rules interact more coherently with each other, without in any 
way harmonising those laws, so as to elimin ate double taxation in a comprehensive way. The 
Recommendation would sugge st that Member States make changes to their domestic mechanisms 
for double taxation relief on that basi s. It could suggest an order of priority of taxing rights in cross-
border cases, for example between the country of s itus of property and any other countries involved 
(e.g. that of the deceased and that of the heir);  it could propose a less form alistic approach to credit 
for foreign taxes on an inheritance e.g. credit to be allowed to an heir subject to inheritance tax for 
foreign tax imposed on the basis of the estate; it could suggest credit for all foreign taxes on an 
inheritance irrespective of the type  of tax and of whether it is app lied at national or local level; and 
it could propose retroactive credit for foreign inheritance taxes ap plied at a late r date on an 
inheritance. The ultimate aim c ould be to ensure that the ove rall tax burden on a cross-border 
inheritance would not be higher than  in an internal situation.  
Assuming the existence of this unilateral relief m echanism, the taxpayers referred in our examples 
in 3.3.2 would only bear tax compar able to a domestic situation. 
 
EN 38   EN Member States all subscribe to th e international principle that doubl e taxation is to be avoided and 
already under their domestic law apply a measure of  relief for foreign inheritance taxes. They 
appear to do so withou t reference to budgetary imp lications. Therefore the impact of making these 
already-existing unilatera l reliefs work better in practice s hould neither be considerable nor 
objectionable. In addition, as explained above, improving the existing unilateral relief provisions 
might not even involve changes in  the legislation of Member St ates, as the objective might be 
achieved by means of administrative guidance interpre ting the relevant provisions. In relation to the 
distributional effects across Member States, while the migration flow from the North to the South 
seems to be of particular relevanc e, it is an issue of principle th at Member States with few cross-
border inheritance complaints per year should also apply relief in those individual cases. 
While the adoption of the Regulation on cross-border  successions would be he lpful in clarifying the 
civil law background, it would not address the probl ems presented in this report. In addition, the 
preferred solution outlined in th is report would not interfere with the underlying private law 
divergences as it would not inco rporate any private law concep ts. The Recommendation would, 
therefore,  have no impact on the outcome of the future Regulation. 
The combination of the two options is appropri ate to deal with cro ss-border inheritance tax 
problems comprehensively.  
While administrative costs will not change considerably on the basis of  this initiative, the legal costs 
and the time and inconvenience for both taxpayers and tax admini strations would certainly be 
reduced if there was less discrimination a nd double taxation about which to complain.  
9. MONITORING AND EVALUATION  
In order to monitor the success of the pr inciples eliminating discrimination and the 
Recommendation on reducing double taxation, the Co mmission could prepare regular evaluation 
reports based on monitoring Member States' releva nt domestic practices in  areas covered by the 
initiatives. The first evaluation could be carried ou t 3 years after adoption of the initiatives. Member 
States could be asked in the meantime to r ecord cross-border inheri tance tax revenues and 
complaints and inform the Commission of any cha nges made to their domestic inheritance tax laws. 
There are two broad areas where refined and sy stematic data collecti on appears necessary.  
First, the overall extent of the problem could be monitored. Data s hould be collected on an annual 
basis on cross-border migra tion; cross-border ownership of asse ts (including fina ncial assets and 
immovable property); and domes tic inheritance tax rates. 
Second, the legal background to cross-border inhe ritance cases could be examined. This would 
cover the amendments to Member States' domestic  law to remove discrimination and reduce double 
taxation; the evolution of bilateral ag reements; and relevant Court cases.  
Regular expert meetings could take place to discuss the current state of play and possible 
implementation problems. The Commission's right to present a legislative propos al in the future, if 
deemed appropriate, would, of course, remain unaffected. 
  
 
EN 39   EN ANNEX 1: COMPARISON OF INCOME /CAPITAL TAXATION AND 
INHERITANCE /ESTATE TAXATION  
 
The taxation of inheritances and estates presents  problems which have no exact counterpart in 
income/capital taxation. 
 
In general terms, income/capital taxation is impos ed on the income or capital gains of a taxable 
person, while inheritance and estate taxes are levied on the assets included in  an inheritance, which 
is transferred from one  person to another.  
 
In the first case, the taxable event is the receipt of income by a taxable person. In the second case, 
the taxable event is either the transfer of propert y from one person to another (estate tax) or the 
enrichment of a person on the death of another (inheritance tax).  
 
The peculiar nature of inheritance/estate taxes enta ils that, in the great majority of cases, they are 
levied on individuals, while income  taxes are levied on both indivi duals and companies (where the 
revenue generated from companies are the most relevant). 
 
Another important difference lies in the connecting factors that are normally  used by countries to 
establish a link between one person and their territo ries with a view to exercising their taxation 
rights on that person. In accordance with interna tionally accepted principles, income/capital taxes 
are levied by countries on persons who are resident in their territor ies (residence principle) as well 
as on income that is sourced in their territories (source principle) . Normally, residents are taxed on a 
worldwide base (i.e. on all thei r income, regardless of the source), while source State taxation is 
limited to the specific type of income that can be considered as sour ced in that State.  
On the other hand, in the case of inheritance/estate taxes the pers onal nexus may vary considerably 
from one country to another (residence, domicile, nationality, etc.) and may apply with respect to 
the deceased, the heir or both. Countri es also apply a territorial nexus  and therefore tax assets that 
are situated in their territories. In principle, if  the personal nexus is satisfied, taxing rights are 
exercised on a worldwide base, while the territori al link gives rise to ta xation solely on assets 
situated in the territory of  the State. However, some countries ex empt foreign real estate even in the 
presence of a personal nexus. 
The lack of uniformity of connecting factors in the area of inheritance/estate taxes, unlike 
income/capital taxes (where conn ecting criteria are more or less similar and follow international 
practice), give rise to potential exposure of i nheritances to double or even multiple taxation and 
justifies different solutions in the two fields. Moreover, also in general terms, it seems that rules in the inheritance/estate tax area vary much more from one Member  State to another than in the 
income tax area. 
 
Relief from double taxation is provided, in both cas es, by means of unilate ral mechanisms or by 
negotiating bilateral tax treaties.  
Domestic rules on foreign tax credit in the field of inheritance/estate ta x are generally modelled on 
relief provision laid down for income tax purpos es. However, while the provisions related to 
 
EN 40   EN income taxes are normally very detailed and/or accompanied by administrative guidance clarifying 
their scope and functioning, the do mestic rules concerning unilate ral relief in the field of 
inheritance/estate taxes are very  basic and there is very littl e guidance on them. Moreover, the 
reliance on income tax provisions is problematic because the different c onnecting factors and tax 
legislation give rise to double taxation issues whic h are very peculiar to the inheritance/estate tax 
field and not common to income/capital taxes. 
As far as double taxation treaties are concerned, it  should be noted that the differences between 
inheritance/estate taxes as opposed  to income taxes led the OECD  to draw up a Model Convention 
on Estates and Inheritances (MCE I) which constituted a self-contai ned document with no reference 
to its Model Convention on In come and Capital (MCIC).  
While the rationale behind the two Models is the same (i.e. sharing of taxation powers between the 
two Contracting States), there are important differences, for example: 
-  the MCIC refers to "persons" whil e the MCEI refers to "the deceased"; 
- the connecting factors mentioned in the MCIC ar e "residence" and "source", while the   MCEI 
refers to "domicile" and "source"; 
-  the MCIC is much more  detailed than the MCEI. 
Of course, there are also some similarities, such  as the following provisions that are included in 
both Models: 
-  tie-breaker rules; -  exchange of information; -  non-discrimination; -  methods for eliminating double taxation. 
However, it should be noted that while the netw ork of bilateral income tax treaties is almost 
complete and the relevant MCIC is kept updated, there are only fe w bilateral conventions between 
Member States in the inheritance ta x area (there are, in fact, only 33 bilateral i nheritance tax treaties 
between Member States out of a possible tota l of 351) and the MCEI dates back to 1982.  
 
EN 41   EN ANNEX 2: MAIN FEEDBACK RECEIVED IN THE RELEVANT PUBLIC CONSULTATIONS  
 
In 2010 the Commission launched a public consultati on on the internet to obtain views from all 
interested stakeholders and indivi duals on the extent of cross-border inheritance tax obstacles within 
the EU and ideas on possible solutions. Stakeholders  were also invited to comment on any actual or 
potential cross-border inheritance tax problems of which they are aw are and to suggest solutions to 
these problems. The consultation pa per listed possible solutions alre ady mentioned in literature and 
commentaries, such as guidance on interpretation of EU case law to help Member States in 
designing their inheritance tax syst ems in a way that is compatible  with EU law; and unilateral, 
bilateral and EU-level solutions to the problem of double taxation. 
The key questions to which stakeholders we re invited to reply were the following: 
1) Have you any information on cross-border inherit ance tax problems in th e EU that you would 
like to provide? 
2) Which or which combination of the above outlined approaches do you consider as most 
appropriate to tackle any cross-border inheritan ce problems that exist? Why do you prefer that 
option? 
3) Would you prefer a completely different solu tion and if so what solution do you suggest? 
4) What, if anything, else do you think could be  done at European level to overcome any 
difficulties that exist in th e area of inheritance taxes? 
5) Do you have knowledge of cross-border inherit ance tax problems faced by SMEs and, if so, do 
you think that the above-mentione d or different solutions are n eeded for any such problems? 
6) Do you have any other comment or thoughts to share as regards  cross-border inheritance tax 
issues? 
The Commission published, as a reference document in connection with this  consultation, a study 
by external consultants on inheritance taxes in EU Member States and possible mechanisms to 
resolve problems of double inheritance taxation in the EU33. The study explored the nature of cross-
border inheritance tax problems, i.e. discrimination and double taxa tion; the economic significance 
of the problems; and possible polic y solutions to the problems.  
The consultation ran from 25 June to 22 September 2010, but at the request of several stakeholders, 
the deadline was later extended to 22 October 2010. The Commission also accepted a number of 
contributions received after the deadline.  
There were in total 232 replies to the consultation from a broad range of stakeholders, including 205 
individual citizens (23 replied di rectly while 183 responses were  submitted through a newspaper 
with one overlap in that one of those contributi ons was also sent directly to the Commission), 13 
academics and tax practitioners i ndividually or through their associ ations, 3 non-registered and 9 
registered organisations, and 2 public authorities. 
This summary also takes account of the replies on inheritance tax sent in response to the more 
general public consultation on double taxation problems that the European Commission conducted 
                                                 
33 Copenhagen Economics : Study on Inheritance Taxes in EU Member States and on Possible Mechanisms to Resolve 
Problems of Double Inheritance Taxation in the EU , August 2010. 
 
EN 42   EN from 24 April to 30 June 201034. There were 2 such replies and so me stakeholders expressed their 
views in reply to both consultations. 
The consultation paper and the ex ternal study can be accessed at: 
http://ec.europa.eu/taxation_customs/comm on/consultations/tax/ 2010_06_inheritance_en.htm   
2. G ENERAL COMMENTS  
In general, respondents expresse d their appreciation at the launc h of this public consultation 
initiative and emphasised that th ere was a strong need to tackle tax obstacles to cross-border 
inheritances. The majority of repl ies also concurred with the main findings of the ex ternal study and 
with the Commission's own research.  
Some stakeholders, including tax pract itioners and associations, also drew attention to the in-depth 
discussion of cross-border inheritance tax issues at the 64th Annual Congress of the International 
Fiscal Association (IFA) in Rome in September. Several contributors empha sised that as people 
increasingly move across borders within the EU, the problems related to cross-border inheritance 
taxation can only increase in the future. Stakeholders therefore welcomed the Commission's efforts 
to put this issue on the political agenda. 
 
3. K EY ISSUES  
A. Evidence of the existence of cross-border inheritance tax problems within the EU 
1) The discrimination problem  
Many respondents of all types (individual citizens , academic representatives , tax practitioners and 
organisations) reported on possible discriminato ry provisions of domestic inheritance tax 
legislation. The competent Commission services ar e currently examining th ese complaints about 
discrimination with a view to asking Member States  to amend the relevant laws if they do indeed 
involve a conflict with the Treaty on the functioning of the EU.  
 
2) The double taxation problem  
In the recent public consultation on actual cases of  double taxation, including of inheritances, some 
contributors, including tax practitio ners and citizens provided real-l ife examples of double taxation 
of inheritances. Others provided simila r responses to the present consultation. 
The majority of the replies desc ribed as the underlying causes of this phenomenon the various types 
of mismatches between different  national inheritance rules. 
Many pointed out that, to start w ith, Member States differ consider ably both as regards their civil 
legislation and their tax legislat ion in the field of inheritances. The basic difference in concept 
between the civil law and common law systems con cerns the transfer of assets. While civil law 
                                                 
34 http://ec.europa.eu/taxation_customs/common /consultations/tax/2010_04_doubletax_en.htm  
 
EN 43   EN countries follow the principle of direct transmission, where the inhe ritance is directly transferred 
from the deceased person to the heirs, under comm on law the assets, rights and obligations are first 
transferred to a personal representative who deals with the administration of the estate and then 
transfers the net assets to the heirs. Some cont ributors, including tax prac titioners and lawyers, 
noted also the difficulties concerning the civil la w countries' treatment of trusts and personal 
representatives, which are charact eristic features of the common la w concept of inheritances. For 
instance, double taxation may arise if a civil law Member State considers th e trust or a personal 
representative as a differe nt taxable person to the beneficiary or regards the testator  as the owner of 
the trust property and charges tax on the trust on the death of the testator.   
Respondents also pointed to discrepancies between Member States' inheritance tax systems as there 
are great varieties in the rules, leading to diffe rent taxable persons, different taxable events and 
different bases of taxation.  
Some Member States apply a tax on  the heirs, while other Member St ates apply a tax on the basis of 
the estate.  In both cases tax liability is determin ed on the basis of a connecting factor or "nexus", 
which can be the residence, domicile or nationality of the deceased, or the residence, domicile or 
nationality of the beneficiary, or the location of the inherited prope rty, or a combination of these 
factors. Furthermore definitions and meanings of these terms can differ from jurisdiction to 
jurisdiction, so for instan ce an individual can be "domiciled" fo r inheritance tax law purposes in one 
country and at the same time be "habitually reside nt" under the inheri tance tax law of another. In 
addition, several Member States ap ply anti-abuse measures which provide for an extended concept 
of residence or domicile. Difficu lties with determining the tax residence of the deceased were also 
highlighted, such as possible complicati ons related to temporary residence.  
Other significant differences between Member States' rules that respondents emphasised were 
different valuation methods regard ing real estates, and usufruct of personal assets and business 
assets; and the diverging conditions for deducti ng debts and liabilities. Double taxation problems 
could also be exacerbated by the fact that some Member States apply high inheritance tax rates for 
certain groups of beneficiarie s. Many stakeholders, mostly i ndividual citizens,  pointed to 
inordinately high rates a nd the lack of exemptions  for non-relatives or dist ant relatives. This was 
particularly a problem in regard to stepchildren.  
As for the existing mechanisms in place to elimin ate double taxation of cross-border inheritances, 
the situation is far from ideal in  the view of stakehol ders. They complained  about the very low 
number of bilateral tax treaties concluded betw een Member States for the avoidance of double 
taxation on estate and inheritance ta x (there are, in fact, only 33 bilateral inheritance tax treaties 
between Member States out of a possible total of 351) and they al so pointed out that the current 
OECD Model Convention on Inheritance and Esta te Tax has not been updated since 1982. Limited 
availability of treaty relief for foreign located property and varyi ng rules regarding allocation of 
taxing rights in those tax treaties we re also mentioned as shortcomings in the existing bilateral tax 
relief mechanisms.  
Turning to the limitations of the current measures  of double taxation relief under domestic law -the 
so-called unilateral relief mechanisms - many mism atches were pointed out which lead either to 
incomplete or non-availability of  relief. Mismatches can also o ccur as a result of differences 
between common law and civil law systems. There can be different characterisations of the transfer 
of assets, and there can be different tax rules in place regarding what is a taxable event and who is 
the taxable person.   
 
EN 44   EN In addition, unilateral reliefs may have a limite d scope as regards the taxes covered, such as 
applying only to inheritance or es tate tax and not, for example, to  income taxes on inheritances. In 
this respect, many contributors emphasised the importance of clear rules regarding the 
characterisation of taxes which apply on death.  
Furthermore, it may not always be possible to cred it foreign local inheritance taxes, i.e. taxes 
applied by political subdivisions at local rather than national level.  
In addition, unilateral reliefs ma y not cover all cases of double taxation, for instance due to the 
narrow definition of "foreign located assets" used in  the domestic provisions for granting tax credit. 
In this regard, the conflicting defi nitions of domestic and foreign lo cated assets, in particular in 
relation to bank assets, were identifie d s a serious concern for stakeholders35.  
Another general problem pointed out was the limita tion of credit to fore ign tax paid on foreign 
property, thereby excluding foreign tax on assets located within the territory of the Member State granting relief.  
Many contributors mentioned further limitations of th e existing tax credits concerning the material 
scope. This included divergence between the diffe rent tax systems regarding the definition of 
immovable versus movable property, or when  relief is limited only to real estate.  
Incomplete tax credit due to different valuation me thods or the different allocation of debts was also 
widely reported as a serious shortcoming.  
Relief that was subject to reciprocity or to the discretion of the compet ent authority was also 
considered problematic. 
As a general remark concerning the above-men tioned problems of double taxation of a single 
inheritance, some stakeholders, in cluding individual citizens and ta x practitioners also pointed out 
that expert advice is highly needed, wh ich can prove costly and time consuming.  
 
3) Miscellaneous  
A large number of individual citizens expressed th eir frustration with the substantive inheritance 
law applicable to their cross-border successions. Their particular concern is about the forced heirship rules under civil law that allow test ators less freedom about whom to make their 
beneficiaries. 
In this context, it is worth noting that on 14 October 2009 the Commission presented a legislative 
proposal for a Regulation dealing with  cross-border successions and wills
36. This Regulation would 
provide for the use of a single basis for determin ing the competent authorities and the applicable 
law that would apply in the case of a succession. It would also enable citizens living abroad to 
                                                 
35 In this respect a great deal of reference was made to the Block  case (case C-67/08 Block ), where bank assets held 
abroad did not qualify as foreign located asset for being eligible for unilateral relief. Nevertheless, the CJEU 
stated that Member States are not obliged to eliminate double taxation on inheritance based on a parallel 
exercise of two tax jurisdictions.  
36 Proposal for a Regulation of the European Parliament and of the Council on jurisdiction, applicable law, recognition 
and enforcement of decisions and au thentic instruments in matters of succession and the creation of a 
European Certificate of Succession, COM(2009)154 fin. of 14 October 2009. 
 
EN 45   EN choose to have the law of their country of nationa lity made the law applicable to their entire 
succession.  
The proposed Regulation does not d eal with tax matters so would not, therefore, reduce the number 
of situations where citizens taking advantage of the Internal Mark et are exposed to  double taxation 
or to discriminatory rules on inhe ritances. In this respect, some stakeholders pointed out that a 
proposal to address cross-border inheritance tax obstacles would be a timely initiative. 
 
B. Possible approaches to cross-border inheritance tax problems 
1) Solutions to the discrimination problem  
To tackle the discrimination problem, some stake holders agreed that it could be helpful if the 
Commission provided the Me mber States with guide lines on how to bring their inheritance tax 
systems into line with EU law. Some also suggest ed that the principles set out in the relevant 
European case law should be established as compulsory rules at EU level.  
 
2) Solutions to the double taxation problem 
Stakeholders were asked for their views on the most  appropriate solution or solutions to address the 
issue of unrelieved double or multiple taxation of  a single inheritance. Many suggested several 
different solutions. 
A quarter of the opinions on the suggested soluti ons concerned the unilate ral relief mechanisms. 
Even though some contributors, including tax practitioners, pointed  out possible shortcomings of 
such a system (for instance its in ability to address all double taxation problems), the vast majority 
advocated the need to improve  such unilateral solutions.  
Many of them envisaged unilateral solutions as shor t term measures, or as complementary solutions 
to completing the gaps in the relevant bilateral treaty network.  
In addition, some stakeholders , including tax practitioners, sugge sted introducing either an EU 
model relief provision or an EU-wide st andard in the form of a Directive. 
A third of the opinions on the suggested approach concerned bilateral solutions. Some expressed the 
view that it would be unrealisti c to expect Member States to co mplete the releva nt treaty network. 
On the other hand, more stakeholde rs, including individual citizens, tax practitioners, organisations 
and a public authority, argued for a comprehensive treaty network in this area, stressing the 
effectiveness of such a network, even if the negotiation and conclusion of such treaties could be 
time-consuming. Some contributors also explic itly expressed a prefer ence for greater treaty 
coverage, either by the update of the OECD M odel Convention on Inheri tance and Estate Tax 
which has remained unchanged since 1982, or by drawing up an EU Model Treaty. A few argued 
for including inheritance tax provisions within the scope of bilateral income tax treaties. Another 
idea suggested was to establish EU minimum st andard common rules for bilateral conventions. 
Around half of the opinions on the suggested approach concerned so lutions at EU level. While a 
few stakeholders, including associ ations, considered that the intr oduction of binding mechanisms in 
this area was not an EU competence, many contribut ors suggested EU wide solutions to cover all 
 
EN 46   EN situations which unilateral or bilateral soluti ons could not address. Many argued for harmonised 
common concepts and definitions – such as for locat ion (situs) of inheritances or for the residence 
or permanent residence of the testator/benefic iary. Some suggested in troducing an Arbitration 
Convention or a Multilateral Treaty . The majority of stakeholders, including individual citizens, 
academics, tax practitioners, orga nisations and a public authority advocated the establishment of 
common rules to determine the basis of taxation. Mo st of these were in favour of common rules 
regarding taxation on the basis of  the location of the assets of an inhe ritance, though some 
suggested adopting as the basis of taxation that of the (last perman ent) residence of the deceased, 
with in some cases an exception for immovable property.  
As for the form of any possible EU-wide binding m echanism, more explicitly favoured a Directive 
than a Regulation. In addition, some stakeholders, including tax practitioners, raised the abolition of 
inheritance taxes as a possible so lution to elimin ate double taxation. 
 
3) Miscellaneous  
Some stakeholders, including tax pract itioners and associations suggested  that a future initiative on 
inheritance taxation should cover gift taxes as well. 
In other contributors' views, any upcoming propos al should also address the tax treatment of 
usufructs, donations and distributio ns out of trusts and foundations.  
Other stakeholders, including also tax practitioners and associati ons, pointed out that improved 
transparency in this area would be very helpful; to  this end, several suggestions were made, such as 
a relevant website or setting up "consulates" in  charge of cross-borde r inheritance issues. 
 
C.  Cross-border inheritance tax problems fa ced by small and medium-sized enterprises 
(SMEs) and possible solutions  
As regards the problems related to transfer of bu siness in the case of the death of an SME owner, 
many stakeholders expressed the view that both discriminati on and double taxation can create 
barriers to continuity.  
Possible discriminatory issues in Belgium and Germany were reported in this regard, and the 
difference in the level of tax exemptions ava ilable in the various Member States was also 
highlighted.  
As for tackling cross-border inhe ritance tax obstacles for SMEs, the suggested so lutions in the 
majority of replies did not differentiate between th e position of individual citizens and businesses.  
Nevertheless, some contributors, including tax practitione rs and organisations suggested particular 
solutions for SMEs, such as a common EU framew ork for business property  relief which could be 
set out in EU-wide harmonised exem ption rules; or including a prov ision on the transfer of business 
into an EU Model Conve ntion on inheritances.  
 
 
 
EN 47   EN ANNEX 3: SHORT OVERVIEW OF THE ESTABLISHED CASE -LAW OF THE COURT IN THE 
INHERITANCE TAX AREA  
 
Inheritance/gift tax cases where the Court ruled against Member States  
The Court ruled in the Barbier  case (Case C-364/01) that a Memb er State cannot apply inheritance 
tax rules which would allow a certain  deduction from the value of an estate if the testator lived in 
that Member State at the time of  death but would deny it if the testator reside d in another Member 
State prior to death. 
The court established in the Maria Geurts case (Case C-464/05)  that Member States cannot deny an 
exemption to inheritances of family undertakings which employed at least five workers in another 
Member State when it would allow such an exempti on from inheritance tax if the five workers had 
been employed in the same Member State.  
In the Jager case (Case C-256/06), the Court ruled that the free movement  of capital provisions of 
the Treaty prohibited Member States from a pplying for inheritance tax purposes a special 
favourable valuation system and partial exemption for assets located in that Member State while 
calculating the value of assets situated in other Member States according to normal fair market 
value rules. 
In the Eckelkamp  and Arens-Sikken cases (Cases C-11/07 and C- 43/07 respectively) the Court 
found incompatible with the free movement of capital  the application of diffe rent tax rules for the 
assessment of inheritance and transfer taxes payabl e in respect of assets, depending on whether the 
deceased resided in that Member State or  abroad at the time of his/her death.  
In the Mattner  case (Case C-510/08), the Court decided th at a German gift tax provision according 
to which the tax allowance for non-residents is smaller than that for residents is in breach of the free movement of capital.  
In the Missionswerk Werner Heukelbach case (Case C-25/10)  the Court decided that a Member 
State granting certain inheritance tax advantages to domestic charities has to apply the same tax 
treatment to foreign chariti es if the foreign charities satisfy th e conditions laid down in that Member 
State for the granting of tax advantages. 
In the Halley case (Case C-132/10) the Court found it discri minatory to set different limitation 
periods for the valuation of registered shares fo r inheritance tax purposes depending on whether the 
centre of effective management of the issuing company, in which the deceased was a stakeholder, was situated in the taxing Member State or in another State. 
Inheritance/gift tax cases where the Cour t ruled in favour of Member States  
The Court decided in the Hilten-van Der Heijden  case (Case C-513/03) that the free movement of 
capital provisions of the EC Tr eaty did not prevent a Member Stat e from taxing the estate of a 
national of that Member State who lived abroad at  the time of death, under rules allowing taxation if 
the testator dies within 10 years of  ceasing to resident in that Member  State. The provisions at issue 
were not considered discriminatory because they did not apply different ru les concerning property 
depending on the place where the deceased was reside nt or depending on the location of the assets.  
 
EN 48   EN In the Block case (Case C-67/08) the Court concluded that  Member States are not under any legal 
obligation to avoid double taxation  on inheritance which arises from  the exercise in parallel by 
Member States of fiscal sovereignty or, therefore,  to set inheritance tax pa id abroad against their 
own inheritance tax.  
Other relevant cases 
As a result of the Stauffe r and Persche  cases (Cases C-386/04 and C- 318/07 respectively), it can be 
concluded that national provisions imposing higher inheritance or gift  duties for legacies and gifts 
made to charities established in other Member St ates, or that provide fo r tax exemptions from 
inheritance/gift tax on condition that  the recipient is a domestic charit y, may be contrary to EU law.  
   
 
EN 49   EN ANNEX 4: SURVEY OF THE DOMESTIC RULES ON TAXES LEVIED UPON DEATH  
 
This attachment established by the Copenhagen Economics provides an overv iew of some of the 
domestic rules on taxes levied upon death in the 27 Member States. Th e survey is limited to taxes 
that are levied exclusively in event of death implying that ta xes levied both upon death and under 
other circumstances are not covered by the survey.  
The first section focuses on the Member States with inheritance or estate taxes, i.e. taxes that are 
levied upon death from the deceased or the heirs.  
The second section focuses on the Member Stat es with no inheritan ce or estate taxes. 
A) Member States with inheritance or estate taxes 
The survey has revealed that 18 of the 27 Memb er States of the European Union have an 
inheritance or estate tax on the domestic tax rules.  Most Member States have  inheritance taxes, and 
few have estate taxes. Denmark has as the only Memb er State an estate tax as well as an inheritance 
tax, cf. Table 1. 
Table 1: Inheritance taxes in the 27 Member States 
 Member States 
Inheritance 
tax Bulgaria, Czech Republic, Denmark, Finland, France, 
Germany, Greece, Hungary, Ireland, Italy, Lithuania, Luxembourg, the Ne therlands, Poland, Slovenia, 
Spain.  
Estate tax Belgium, Denmark, United Kingdom* 
Note: * The United Kingdom tax on inheritance is called  an ‘inheritance tax’, but is de facto an 
estate tax. Source: Maisto (2010), AGN International  (2010) and Global Property Guide. 
 
This section provides a brief overv iew of the domestic rules on inheritance and estate taxes in these 
18 Member States. 
 
EN 50   EN Belgium 
 Description 
Taxes levied  
• Estate tax Belgium has an estate tax called the ‘estate duty’ for re sidents and ‘right 
of transfer upon death’ for non-resident s. The tax is coll ected locally by 
the regions Brussels, Flemmish and Walloon.  
• Inheritance tax - 
• Other taxes - 
Connecting factors  
• Personal nexus 
rule The residence principle : The fiscal residence is the place where the 
deceased had his actual residence in th e last 5 years before his death. If 
he resided in more than one region du ring these 5 years; the region where 
he resided most of the time is his tax residence. 
• Source rule For non-residents a source applies to Be lgian real estate, where the tax is 
chargeable on the gross value of the estate without any deductions. 
 
EN 51   EN Tax rates Tax rates vary according to:  
 
1. The degree of kinship between the beneficiary and the deceased,  
2. The net share inherited by each of the heirs 
3. The Region where the inheritance is opened.   
 If the deceased was a resident, the inheritance is opened in the region where his last fiscal domicile was located.   If the deceased was not a resident, the inheritance is opened, in principle, 
in the Region where the estate is located.   Brussels Region:  Inheritances between li neal relatives, between spouses and between 
cohabitants: 
Bracket of the net share in € Tax rate in %
From  to (including) Upon lineal relatives and between spouses
                              0.01                            50,000 3
                          50,000                          100,000 8
                        100,000                          175,000 9
                        175,000                          250,000 18
                        250,000                          500,000 24
                  More than                          500,000 30
  
Inheritances between br others and sisters: 
Bracket of taxable amount in € Tax rate in %
From  to (including) between brothers and sisters
                    0.01                    12,500 20
                12,500                    25,000 25
                25,000                    50,000 30
                50,000                  100,000 40
              100,000                  175,000 55
              175,000                  250,000 60
         More than                  250,000 65
  
Inheritances between uncles or  aunts and nephews or nieces: 
Bracket of taxable amount in € Tax rate in %
From  to (including) between uncles or aunts and nephews or nieces
                    0.01                   50,000 35
                50,000                 100,000 50
              100,000                 175,000 60
         More than                 175,000 70
  
Inheritances between  any other persons: 
Bracket of taxable amount in € Tax rate in %
From  to (including) between any other persons
                    0.01                    50,000 40
                50,000                    75,000 55
                75,000                  175,000 65
         More than                  175,000 80
  
Flemish Region: 
 Inheritances between li neal relatives, between spouses and between 
cohabitants: 
Bracket of the net share in euro Tax rates in %
From  To Upon lineal relatives and between spouses
                           0.01   50,000                                         3
                       50,000   250,000                                         9
               More than   250,000                                       27
  
 
Inheritances between brothers and sisters or between “others”:
Bracket of taxable amount in euro Tax rates in %
From  To  Between brothers 
and sistersBetween “others”   
                          0.01                              75,000 30 45
                          75,000                       125,000 55 55
                  More than                            125,000 65 65
  
 
 
 
EN 52   EN Tax rates (continued) Walloon Region: 
 Inheritances between lineal  relatives, between spouses and between legal 
cohabitants: 
Bracket of the net share in € Tax rates in %
From  to (including)   Upon lineal relatives and between 
spouses and legal cohabitants
                              0.01                       12,500.00 3
                     12,500.01                       25,000.00 4
                     25,000.01                       50,000.00 5
                     50,000.01                     100,000.00 7
                   100,000.01                     150,000.00 10
                   150,000.01                     200,000.00 14
                   200,000.01                     250,000.00 18
                   250,000.01   500,000.00 24
                  More than                     500,000.00 30
  
Inheritances between collateral re latives and between non-relatives: 
Bracket of the net share in € Tax rate in %
   
From     
to (including)Between brothers 
and sisters   Between uncles or 
aunts and nephews or 
nieces   Between all 
other persons  
                    0.01               12,500.00 20 25 30
           12,500.01               25,000.00 25 30 35
           25,000.01               75,000.00 35 40 60
           75,000.01             175,000.00 50 55 80
      More than             175,000.00 65 70 90 (*)
  
Inheritances of dwelli ngs between lineal relatives, spouses or legal 
cohabitants (preferential rate): 
Bracket of the net share (€) Tax rate in %
   
from     
to (including)Between lineal relatives, between spouses  
and between legal cohabitants  
                    0.01                     25,000.00 1
           25,000.01                     50,000.00 2
           50,000.01                   175,000.00 5
         175,000.01                   250,000.00 12
         250,000.01                   500,000.00 24
         More than                   500,000.00 30
  
Exemptions Personal exemptions:  
• Legacies in favour of the region wh ere the deceased has his fiscal 
residence are tax exempt.  
 Objective exemptions: 
• Social rights in Undertakings for Collective Investments in 
Transferable Securities 
• (UCITS) investing in service flats for elderly people, if 
recognised by the Flemish government.  
• Certain land of ecological intere st in Flanders and Wallonia  
• Forests in Flanders. 
Allowances Brussels region: 
• The spouse, direct de scendants and direct ascendants are entitled 
to a tax-free allowance of €15,000 each.  
• For children below 21 years of age, the allowance is increased by 
€2,500 for each year below the age of 21.  
• For other beneficiaries, i nheritances not exceeding €1,250 are not 
taxable. 
 Flemish region: 
• No allowances.  
 
Walloon region: 
• The spouse, direct de scendants and direct ascendants are entitled 
to a tax-free allowance of 
€12,500 each. The allowance is 
increased to €25,000, if the inheritance does not exceed €125,000. 
• For children below 21 years of age, the allowance is increased by 
€2,500 for each year below the age of 21.  
• For other beneficiaries, inheri tances not exceeding €620 are tax-
exempt. 
 
EN 53   EN Deductions Residents: All debts are deductible as well as the cost of the funeral.  
 Non-residents: Debts are de ductible to some extent. 
Transfer of family-
owned and closel y held 
businesses Tax exemptions (full or partial) appl y for this type of businesses, given 
some conditions on e.g. the deceased’s  participation in the business, 
capital requirements etc. are fulfilled.   
 The conditions vary from region to region. 
Double taxation relief  
• Unilateral relief The credit method: Applies to foreign inheritance and estate taxes, but 
only for taxes levied on foreign real estate. 
• Bilateral treaties*Estate tax treaties are in force between Belgium and the following 
Member States: Sweden (1958), and France (1960). 
Compatibilit y with EU 
law The following potential conflicts  have been identified:  
• Belgium taxes on Belgian real estate in the estate of non-residents 
on the gross value have different time limitation rules for foreign 
and domestic moveable assets.  
• There is no provision for deductib ility of over-endowment debts 
for non-residents. 
Tax revenue in% of 
total  tax revenue 1.23% in 2008. 
Note: * Years in bracket is the year where the treaty entered into force.  
Source: Maisto (2010), Deblauwe (2010), AGN International (2010 ) and Global Property Guide. 
 
 
EN 54   EN Bulgaria 
 Description 
Taxes levied  
• Estate tax - 
• Inheritance tax The inheritance tax is payable by the heirs by respect to their own 
inheritance. The tax rates are set by the municipalities within the limits of 
the law. 
• Other taxes - 
Connecting factors  
• Personal nexus 
rule The nationality principle : Bulgarian nationals are liable to inheritance 
tax on all inherited property in Bulgaria or abroad, inherited by will or by law.   
• Source rule For foreign nationals in Bulgaria, inheritance tax is levied on all property 
within the territory of the country. 
Tax rates The applicable tax rates, set by the municipalities within the limits of the 
law, depend on their relationship to the deceased and the value of their inheritance.   
The rates vary between 0.4% and 0.8%  on inheritances  received by 
relatives in the lateral line. For all other beneficiaries, the rates vary between 3.3% and 6.6%. 
Exemptions The surviving spouse and relatives in the direct line are not liable to pay 
inheritance tax on thei r own inheritance. 
Allowances The first BGN 250,000 (€ 128,995) is exempt from taxation. 
Deductions The debts of the deceased, as evidenced  to the tax authorities and certain 
funeral expenses up to BGN 1,000 (€ 516) are deductible. 
Transfer of family-owned and closel
y held 
businesses - 
Double taxation relief  
• Unilateral relief The exemption method : Applies to properties outside Bulgaria, which is 
inherited by a Bulgarian national. 
• Bilateral treaties No inheritance tax treaties are in force between Bulgaria and other 
Member States. 
Compatibilit y with EU 
law The following potential conflic ts have been identified: 
• It is not clear how immovable pr operty abroad, except from real 
estate, should be valued, whic h could create a potential for 
differential treatment. 
•  It is not clear whether rights and receivables transferred to a 
foreign state are deductible.  
• Only domestic charities are exempt from the inheritance tax. 
However, charities established in an EU/EEA Member State are 
treated as local charities  for inheritance tax pur poses, so it is not 
clear if differential treatmen t exists under this provision.  
Tax revenue in% of 
total  tax revenue Not available. 
 
EN 55   EN Source: Survey by Deloitte, AGN International (2010) and Global Property Guide. 
 
 
EN 56   EN Czech Republic 
 Description 
Taxes levied  
• Estate tax - 
• Inheritance tax Inheritance tax is levied on the acqui sition of the deceased’s estate upon 
death. Subject to certain exemptions, inheritance tax is chargeable on the 
net value of all assets. 
• Other taxes - 
Connecting factors  
• Personal nexus 
rule The nationality and permanent address principle:  If at the time of his 
death the deceased:  
1. Was a national of Czech Republic and had his permanent address 
therein, tax shall be levied on all property, regardless of whether the property is located in Czech Republic or abroad.  
2. Was a national of Czech Republic but did not have his permanent 
address therein, the tax shall be levied on his movable property 
located in Czech Republic.  
3.  Was not a national of Czech Republ ic, tax shall be levied only on 
his movable property located in Czech Republic.  
 
As regards real estate, Czech Republ ic does not levy inheritance tax on 
real estate situated abroad.  
• Source rule For non-nationals and persons without a permanent address in the Czech 
Republic, the inheritance tax is only chargeable on assets (both movable 
and immovable) located in the Czech Republic. 
 
EN 57   EN Tax rates Heirs are classified according to the relationship to the deceased person 
into the following three groups:  
i. Direct family members (parents, children) and spouses.  
ii. Secondary relatives (siblings, nephews, nieces, aunts, uncles) and 
persons living with the descendent in a common household.  
iii. Other individuals and organizations. 
 
No inheritance tax is payable by the first two categories.   
 Progressive rates apply for transfers to persons in the third group as 
follows: 
 
TAX BASE, C ZK (€)                      TAX RATE
Up to 1  million (€48,91 6)   7% 
1  million – 2 million (€97 ,833)  9% 2 million – 5 million (€244,583)  1 2% 5 million – 7 million (€342,41 6)  1 4% 7  million – 1 0 million (€489,1 65)  1 8% 1 0 million – 20 million (€97 8,330)  21 % 20 million – 30 million (€1 ,467 ,495)  25% 30 million – 40 million (€1 , 956,660)  30% 
40 million – 50 million (€2,445,825)  35% 
O ver 50 million (€2,445,825)   40% 
 
 
The resulting amount is multiplied by a coefficient of 0.5 to get the final 
sum of inheritance tax. 
 
EN 58   EN Exemptions Personal exemptions: 
• Parents, children, spouses, siblings, nephews, nieces, aunts, 
uncles and persons living with the descendent in a common 
household.  
 
Objective exemptions (partial): 
• Acquisition of movable persona l belongings of individuals 
(unless these things were included  into the descendant’s business 
property within a year prior to the acquisition).  
• Acquisition of deposits by banks or  branches of foreign banks 
operating in Czech Republic (except for deposits on business accounts), financial means in Czech or foreign currency and securities in Czech Republic as  well as on proportionate parts 
paid out from such property to  heirs and on proportionate parts 
derived from the jointly owned assets of spouses which ceased to exist upon the death of one of them. More conditions apply.  
• Acquisition of property by state- registered churches, religious 
societies, political parties, foundations and endowment funds, 
insurance companies for the funds of public health insurance.  
• Acquisition of property by Cz ech Republic, local regional 
authorities, voluntarily associated municipalities, public research 
institutions and universities, public non-profit health care 
institutions and regional c ouncils of solidarity’s region. 
Allowances - 
Deductions The following items are regarded as tax deductible for inheritance tax 
purposes:  
• Documented debts of the decedent transferred to his/her heirs. 
• Value of property that is exempt from inheritance tax pursuant to 
Czech tax law.  
• Adequate expenses related to  the decedent’s funeral.  
• Notary’s remuneration in connectio n with inheritance proceeding 
and other duties levied in inheritance proceeding and documented 
inheritance dues paid to another state in respect of inheritedproperty there, if such property is also liable to inheritance tax in 
Czech Republic. 
Transfer of family-owned and closel
y held 
businesses Exemption from inheritance tax is provided for the first free-of-charge 
acquisition of a property share in a co -operative (housing or agricultural) 
between relatives in the direct line of descent, si blings or a spouse as well 
as other persons within fam ily or similar relationship. 
Double taxation relief  
• Unilateral relief (Credit method) : The tax rules does not ha ve a clear rule, but it 
provides the possibility to deduct th e documented inheritance taxes paid 
to another state in respect of inherite d property there, pr ovided that such 
property is also liable to i nheritance tax in Czech Republic.    
 
EN 59   EN • Bilateral treaties*Inheritance tax treaties are in fo rce between Czech Republic and the 
following Member States: Austria (1996). 
Compatibilit y with EU 
law The following potential conflicts  have been identified:  
• Czech Republic’s tax-exemptions for private pension 
contributions do not cover those paid abroad.  
• No tax-exemption applies for fore igners in the third tax category 
to an acquisition of a property shar e in agricultural co-operatives.  
Tax revenue in% of 
total  tax revenue 0.02% in 2008.  
Note: * Years in bracket is the year where the treaty entered into force.  
Source: Maisto (2010), Zoubek (2010), AGN In ternational (2010) and Global Property Guide. 
 
EN 60   EN Denmark  
 Description 
Taxes levied  
• Estate tax A tax is levied on the estate as a whol e, but the spouse of the deceased is 
not liable to this tax. 
• Inheritance tax A tax is levied on inheritance to all other than immediate family and 
certain other people with a closer de fined relationship with the deceased. 
• Other taxes - 
Connecting factors  
• Personal nexus 
rule The residence principle: If the deceased was resident in Denmark at the 
time of his death, all property worl dwide belonging to his estate is 
subject to estate tax. 
• Source rule Yes, if the deceased was not resident in Denmark at the time of death, 
estate tax is due on immovable prop erty including property accessory to 
immovable and movable business property of permanent establishments situated in Denmark. 
Tax rates Estate tax is a flat rate of 15%  on the net value of the estate.  
Inheritance tax is a flat rate of 25% on the computed taxable inheritance.  
 The estate tax is paid first and afterwards the inheritance tax is paid on that amount with a maximum estate and inheritance tax payable of 36.25%.  
Exemptions Personal exemptions:  
• The spouse of the deceased is not  liable to the estate tax.  
• The spouse and certain close relati ves (children/ stepchildren, and 
their descendants, spouses of ch ildren/ stepchildren, parents) are 
not subject to inheritance tax. 
 Objective exemptions:  
• Running payments from  life insurance.  
• Gifts to non-profit organizations. 
Allowances DKK 264,000 in 2010.  
 This basic amount is deducted from th e tax-liable inheritance including 
the tax-liable inheritance from a deceas ed resident abroad whose estate is 
subject to limited tax liability in Denmark. 
Deductions All liabilities are allowed as deductions. 
Transfer of family-
owned and closel y held 
businesses Denmark has no specific rules (e.g. exemption) concerning transfers 
upon death of going concerns or par ticipations in fa mily-owned or 
closely-held businesses. 
Double taxation relief  
• Unilateral relief The credit method: Applies  for real estate locate d in foreign countries 
where a foreign estate/inheritance ta x is also imposed. The foreign tax 
 
EN 61   EN credit cannot exceed the Danish estate tax on the relevant assets.  
• Bilateral treaties* Estate and inheritance tax treaties are in force between Denmark and the 
following Member States: Italy ( 1968), Finland (1989), and Germany 
(1996). 
Compatibilit y with EU 
law No potential conflicts identified. 
Tax revenue in% of 
total  tax revenue 0.42% in 2006. 
Note: * Years in bracket is the year where the treaty entered into force.  
Source: Maisto (2010), Michelse n (2010), AGN International ( 2010) and Global Property Guide. 
 
 
 
EN 62   EN Finland 
 Description 
Taxes levied  
• Estate tax - 
• Inheritance tax The inheritance tax is payable to the state by the heirs and any 
testamentary beneficiaries. The benefi ciaries of the deceased are liable to 
pay inheritance tax on thei r portion of the estate.  
• Other taxes - 
Connecting factors  
• Personal nexus 
rule The residence principle: Inheritance tax will be payable to Finnish tax 
authorities, if decedent, heir or a testate beneficiary was a resident in Finland at date of death. The inher itance tax concerns both movable and 
immovable property, and both domestica lly and foreign-located property.
• Source rule Yes, real property of non-residents is taxable. A stock of  a corporation is 
to be equated with real property if mo re than 50% of the assets are made 
up of it.  
Tax rates Beneficiaries are taxed differently, depending on their relationship with 
the deceased: 
 
1) Category I - Spouses, children, spous e’s children, adopted children, 
parents, adoptive parents, and direct heirs of children or adopted children, 
betrothed in certain circumstance s, and common-law spouses if the 
couple has been married before or if they have had a child. 
Value of Taxation 
Property (EUR) Basic Tax 
Amount Plus Percent on 
the Excess 
20,000 - 40,000 1 00 7
40,001 - 60,000 1 ,51 0
60,001 - over 3, 51 3 
 
2) Category II - Other relatives and strangers.  
Value of Taxation 
Property (EUR) Basic Tax 
Amount Plus Percent on 
the Excess 
20,001 - 40,000 1 00 20
40,001 - 60,000 4, 12 6
60,001- over 9, 33 2  
Exemptions Personal exemptions: 
• If there has been a life insurance contract, and the beneficiary is a 
close relative, he or she can receive €35,000 as a tax-deductible 
indemnity for death. If the life  insurance is going to a more 
distant relative, the payment will be taxed as capital gains, assessed at the 28% rate. 
• If the beneficiary is the spouse, he  or she can receive half of the 
entire indemnity payment, or al ternatively, at least €35,000 as tax-
deductible. 
• Decedent’s and his family’s usual home furniture and chattel are 
tax-free up to €4,000. 
 
EN 63   EN  
Objective exemptions: 
• Annuities, pensions and entitlements to be paid to someone are 
not taxable if stated in the will or testament. 
• If the testate beneficiary is a stat e, county, municipality, parish or 
other religious community or sc hool, no inheritance tax will be 
levied on the received assets.  
• Non-profit associations or founda tions do not pay tax on received 
assets. 
 
EN 64   EN Allowances The surviving spouse is en titled to a deduction of €60,000 (concerns 
spouses in marriage and partne rs equated with spouses).  
 An heir under 18 years of age is entitled to a deduction of 
€40,000 if he 
or she is the decedent’s lineal descendant. 
Deductions The following deductions apply: 
• All decedent’s debts at date of de ath as well as funeral costs, 
expenses for drawing up the Deed of Inventory, and for 
purchasing a tombstone. 
• Burdens associated with the assets received by an heir/beneficiary 
as well as the profit de rived from using another person’s property.
• For non-resident descendents, onl y debts and burdens directly 
related to taxable real  property in Finland. 
• Gift tax for gifts given to the heir during three years preceding 
date of death. 
• See also other deductions mentioned under ‘Exemptions’. 
Transfer of family-
owned and closel y held 
businesses A partial exemption of inheritance tax will be granted for transfers of 
(domestic and foreign) businesses and agricultural/forestry entities if:  
• Taxable inheritance includes a farm, other business or 
participation. 
• Beneficiary will go on conducting business or practicing 
agriculture/forestry with assets received.  
• The amount of relevant inherita nce tax would be more than €850 
considering the proportions of busin ess or farm assets in relation 
to other inherited assets.  
 
If the form of legal entity is corpor ate, exemption can only be granted if 
the heir receives at least 10%. As a further relief, the maximum of five 
years of interest-free payment time  will be granted to the part of 
inheritance tax related to business or farm assets. 
Double taxation relief  
• Unilateral relief The credit method: It applies to heirs reside nt in Finland. Maximum 
credit will equal the Finnish inheri tance tax payable on the same receipt 
of assets. 
• Bilateral treaties*Inheritance tax treaties are in force between Finland and the following 
Member States: Netherlands (1955), France (1959) and Denmark (1992). 
The credit method is applied in the tr eaty with Denmark in contrast to the 
treaties with the Netherlands and France, which rely on exemptions.  
Compatibilit y with EU 
law The following potential conf lict has been identified: 
• Finland restricts deductions of debt s pertaining to the estate of 
non-residents.    
Tax revenue in% of 
total  tax revenue 0.81% in 2008 (incl. revenue from both  inheritance and gift tax. In 2006, 
the share of inheritance tax was estimated to be about 84% of the total 
 
EN 65   EN revenue from inheritance and gift tax). 
Note: * Years in bracket is the year where the treaty entered into force.  
Source: Maisto (2010), Finland (2010), AGN International ( 2010) and Global Property Guide. 
 
EN 66   EN France 
 Description 
Taxes levied  
• Estate tax Estate taxes are due in respect of all conveyances of properties resulting 
from death, whether the conveyance is made pursuant to statutory devolution rules or provisions of a will (universal bequest, general or special bequest). 
• Inheritance tax - 
• Other taxes - 
Connecting factors  
• Personal nexus 
rule The domicile principle: The tax is due in France in the following 
instances:  
• All transfers in which the dece dent or donor is domiciled in 
France. 
• All transfers if the beneficiary is domiciled in France and has 
been domiciled in France for at least six years during the last ten 
years.  
• Source rule A source rule applies to all tran sfers covering French Property or 
property located in France if the deceas ed was not resident in France at 
the time of death.   The term “French Property” broa dly covers immovable property, 
amounts due by a French debtor, investment securities issued by a French company as well as interests in co mpanies holding immovable property. 
Tax rates Estate taxes are calculated in three stages on the net fraction accruing to 
each heir or legatee. The duties ar e calculated taking into account any 
gifts made beforehand by the decedent,  except however for gifts made 
more than six years earlier:  
 
1. Application of deductions to th e net share of each taxpayer.  
2. Calculation of the taxes on the ba sis of a price scale whose rate 
varies according to the relationship existing between the decedent and the beneficiary.  
3. Where applicable, reduction of the estate taxes. 
 
Tax rates for direct-line heirs (2010):
 
 
EN 67   EN TAXABLE INHERITANC E (€)                   TAX RATE
Up to €7,699    5% 
€7, 6 9 9  t o  € 11, 5 4 8    10 %  
€11, 5 4 8  t o  € 15 , 19 5    15 %  
€1 5,1 95 to €526,760   20% 
€526,760 to €861 ,050   30% 
€861 ,050 to €1 ,722,1 00   35% 
O ver €1 ,722,1 00   40%  
 
Tax rates for siblings (2010):  
TAXABLE INHERITANC E (€)                   TAX RATE
Not  exceeding €24,069  35%  
Beyond   45%  
 
Tax rates for others (2010):  
TAXABLE INHERITANC E (€)                   TAX RAT E
B e twe e n re la tive s  to the   
Fourth degree inclusively:  55%  
Bet ween parent s beyond t he 
Fourth degree and between 
Persons who are not  relat ives: 45%  
Exemptions Objective exemptions: 
• Conveyances upon death of certain agricultural properties (land 
and forests, interests in forest ry groupings, inte rests in land 
property groupings, rural properties leased for the long term) may 
be partly exempt from estate taxes, if numerous conditions are 
satisfied. 
• Bequests made to the State, to local  authorities, to scientific and 
educational State agencies and to institutions exclusively engaged 
in support and welfare endeavours. 
• Certain associations and foundations serving the public and 
general interest. 
Allowances Allowances (2010): 
• Ascendants and children: €156,974 
• Grandchildren and great grandchildren: €1,570 
• Siblings: €15,697 
• Nephews and nieces: €7,849 
• Other beneficiaries: €1,570 
Deductions Domiciles: The decedent’s (domestic a nd foreign) liabilities are deducted 
from the estate, on the basis of supporting documentation submitted by the heirs.  
 
 
EN 68   EN Non-domiciles: Only those liabilities  related to the property located in 
France may be deducted.  
Transfer or family-owned and closel
y held 
businesses Heirs or legatees are exempt from  estate taxes up to 75% of the 
enterprise’s value (without any lim itation applicable to the amount), 
given that they agree not to sell  the enterprise’s shares is.  
 Tax reduction is given on the following items: 
• Companies (regardless of the appl icable tax rules) conducting 
industrial, commercial, crafts , agricultural or professional 
operations covered by a collective commitment in accordance with the above terms.  
• Shares or interests of intermediary companies.  
• Movable and immovable property.  
• Tangible and intangible assets ear marked for the operation of a 
sole proprietorship engaged in industrial, commercial, crafts, 
agricultural or professional activities. 
Double taxation relief  
• Unilateral relief The credit method: It applies to, against the estate and gift taxes due in 
France, the corresponding duties paid in a foreign country.  
 The foreign tax may only be applied against the French tax within the 
limit of the said tax related to movable and immovable property located aboard. The foreign tax may not be applied against the French tax, if it covers French property proper. 
• Bilateral treaties*Estate tax treaties are in force be tween France and the following Member 
States: Finland (1959), Belgiu m (1960), Spain (1963), UK (1964), 
Austria (1994), Italy (1995), Sw eden (1996), and Germany (2006) 
Compatibilit y with EU 
law The following potential conf lict has been identified: 
• The preferential rule of exempti on in favour of the reversion of 
life annuities between s pouses or relatives in  direct line do not 
apply to property located abroad.   
Tax revenue in% of total  tax revenue 2.31% in 2008 (covers both estate and gi ft conveyance taxes of aggregate 
state’s revenues. Estate taxes comprise around 90% in 2008).  
Note: * Years in bracket is the year where the treaty entered into force.  Source: Maisto (2010), Monassier  (2010), AGN International ( 2010) and Global Property Guide. 
 
 
EN 69   EN Germany 
 Description 
Taxes levied  
• Estate tax - 
• Inheritance tax An inheritance tax is applicable to th e transfer of property. If a person 
makes a gift, this transfer is regulat ed by the inheritance tax as well. The 
inheritance tax is reduced if the es tate is divided among more heirs.  
• Other taxes - 
Connecting factors  
• Personal nexus 
rule The residence and domicile principle: It is applied on a worldwide 
basis to all foreign prop erty if a person has a re sidence or domicile in 
Germany. 
  Residence is defined as the possess ion of housing space. A domicile is 
given when a person stays continuous ly for more than six months in 
Germany.  
 For emigrants and German officials abro ad, their nationality is a criterion 
for determining tax liability. Every Ge rman official, e.g. diplomat or 
soldier, who receives remuneration from a German governmental body, 
is taxable in Germany on a worldwide basis regardless of her place of residence. Inheritance tax applies to a broader concept of tax liability in 
the first 10 years after the emigration of a German citizen.  
 Not all assets being effectively situated in Germany are taxable, but only 
those named in Section 121 BewG. These assets are mainly real estate situated in Germany, business assets  located in Germany, shares in a 
corporation if the company has its se at or place of principal management 
in Germany and the decedent or donor , either alone or together with
persons closely connected with him in terms of Section 1 Subsection 2 
AStG, holds directly or indirectly at  least 10 % of the nominal or share 
capital of the company, as well as some immaterial rights. 
• Source rule For non-residents a source applies only to assets situated in Germany. 
Bank accounts with German banks, for example, are not subject to taxation because of situs. 
Tax rates There are three different tax classes.  The closer the re lationship to the 
deceased is, the lower is the tax burden is.  
• Tax Class I: Spouses, children, st epchildren, grandchildren, great 
grandchildren, parents and grandparents.  
 
EN 70   EN • Tax Class II: Brothers, sisters, nephews, niec es, stepparents, sons-
in-law, daughters-in-law, parent s-in-law and divorced spouses 
and, in the case of gifts, parents and grandparents.  
• Tax Class III: All other persons, including legal entities and same 
sex partners. 
 
Basis of assessment   
up t o and including... Tax C lass I   Tax C lass II   Tax C lass III 
€75,000   7%   15%   30% 
€300,000   1 1 %   20%   30% 
€600,000   1 5%   25%   30% 
€6,000,000   1 9%   30%   30% 
€1 3,000,000   23%   35%   50% 
€26,000,000   27%   40%   50% 
>€26,000,000  30%   43%   50%  
 
The above rates apply for the entire ac quisition of the heir and are not 
taxed at progressive rates. 
 
EN 71   EN Exemptions Personal exemptions (for definition of  Tax Class I, II and III, see under 
‘Tax rates’): 
• Tax Class I: There is a special exemption for household property 
of up to €41,000 and for other moveable assets of up to €12,000. 
Children in Tax Class I get a special allowance. 
• Tax Class II and III: The exemption for all current assets is 
€12,000. 
• For the surviving spouse or the sa me sex partner (after the civil 
partnership act), an additiona l exemption of €256,000 is given. 
• Self-occupied houses or apartments can be transferred tax-free to 
spouses, same sex partners and children if the new owner 
immediately uses the house for his own residence purposes. 
• For spouses (and same-sex partners) living under the statutory 
regime of joint ownership, an in crease in the capital value of 
assets during marriage is tax-free. 
 
Objective exemptions: 
• Art, art collections, science collec tions, libraries and archives are 
60% tax free if the objects are im portant for the arts, history or 
science and the regular income fr om these objects is lower than 
the costs. 
• Foundations can be tax-free depending on whether they are 
charitable or not. 
Allowances Personal allowances  
Spouse and same sex partner of a civil partnership: €500,000 C hildren:     €400,000 G randchildren:    €200,000 
O ther persons taxable in Tax C lass I:   €1 00,000 
Persons taxable in Tax C lass II:  €20,000 
Persons taxable in Tax C lass III:  €20,000 
 
In the case of taxation based on the lo cation of the assets, the allowance 
is €2,000, unless a double taxation treaty provides otherwise. 
Deductions The heir can deduct all debt of th e deceased that has a connection to 
assets subject to the inheritance tax. Without any proof, an amount of 
€10,300 can be deducted for the costs of the funeral. Furthermore all 
bequests and liabilities ar ising because of the de ath can be subtracted. 
 Non-residents can deduct only debt that has an economic connection to 
the assets taxed under the provisions of the German inheritance tax.  
Transfer of family-
owned or closel y held 
businesses Business relief is applicable to all sole proprietorships, participation in 
partnerships and forestry/a gricultural businesses.  
 
 
EN 72   EN Shareholdings are subject to business relief if the deceased holds more 
than 25% of the corporation’s shar e capital. Shareholders can form a 
share pool to achieve the threshol d of 25%. There is no minimum 
participation for partnerships.  
 The business relief requires that no t more than 50% of the business 
property is invested in non-operating property. Furthermore, the 
aggregate wages for the next five y ears must be at least 400% of the 
average aggregate wages during the last  five years before the transfer.  
 The acquisition of business property for which the business relief is 
applicable always falls under the ta riff of Class I, regardless of the 
relationship between the deceased and the heir. 
Double taxation relief  
• Unilateral relief The credit method : Foreign estate taxes, as well as foreign inheritance 
and gift taxes, can be credited agai nst the German tax (except from the 
Canadian capital gains tax, the Aust rian withholding tax, stamp duties 
and inheritance taxes incl uded in income taxes).  
 The foreign tax has to be levied on foreign assets. For every foreign 
country, the maximum credit is calculated in accordance with the following formula: Max tax credit = German tax * (foreign estate / worldwide estate). 
• Bilateral treaties* Inheritance tax treaties are in force between Germany and the following 
Member States: Greece (1910), Sw eden (1995), and Denmark (1997). 
Compatibilit y with EU 
law The following potential conflict has been : 
• Grants to foreign charities are only exempt from the inheritance 
tax if the two governments have ex changed notes that reciprocity 
is guaranteed and, thereby, does not  allow the taxpayer to bring 
the necessary information about the activities of the foreign 
charity. 
Tax revenue in% of total  tax revenue 0.48% in 2008. 
Note: * Years in bracket is the year where the treaty entered into force.  
Source: Maisto (2010), Watrin (2010), AGN International ( 2010) and Global Property Guide. 
 
 
EN 73   EN Greece 
 Description 
Taxes levied  
• Estate tax - 
• Inheritance tax An inheritance tax is levied on the tr ansfer of property and is imposed on 
each beneficiary of the estate.  
• Other taxes - 
Connecting factors  
• Personal nexus 
rule The nationality and domicile principle:  Greek nationals or people 
domiciled in Greece at the time of their death are liable to inheritance tax on all their assets, both those loca ted in Greece and abroad. Immovable 
property situated in a foreign State is not subject to Greek inheritance 
taxation. 
• Source rule Yes, a source applies to all esta te assets (movable and immovable), 
which at the time of succession are situ ated in Greece, irrespective of the 
nationality and domicile of the decedent or the heir/legatee.  
Tax rates The net value of each particular heir's or legatee's share in the estate is 
subject to taxation at flat or progressive tax rates depending on the degree 
of kinship with the decedent. They  are grouped into three classes: 
• Class A includes spouses, children, grandchildren and parents.  
• Class B includes other ascendants and descendants, brothers and 
sisters, step brothers and stepsisters, nephews and nieces, uncles 
and aunts, foster parents, childre n from a previous marriage of the 
spouse, and sons or daughters in law.  
• Class C includes all other benefici aries not contained in Classes A 
and B.  
 
Class A and Class B benefi ciaries are taxed at flat rates, which vary 
depending on the type of estate asse ts whereas Class C is still taxed 
according to a system of tax brackets. 
 Tax rates for Class A and B:
 
 
Real St ock s, shares             Non-listed st ocks All other
 Propert y  and bonds             and shares est at e asset s 
Cl a s s  A  1%  0 . 6 %              1. 2 %   10 %  
C lass B 1 % 1 .2%              2.4%  1 0%  
 
Tax rates for Class C : 
 
EN 74   EN  
TAXABLE AMOUNT           TAX RATE
Up to €6,000  nil 
€6,000 – €72,000  20% 
€72,000 – €267,000  30% 
O ver €267,000  40%  
Exemptions Personal exemptions:  
• Transfer of crop and livestock faring land.  
• Acquisition of first house. 
• Reduction in tax rate for gifts (d epends on the beneficiary’s class 
and physical mobility). 
• Spouses or underage children ar e further tax exempt for an 
amount of € 400,000.  
 
Objective exemptions:  
• The State and municipalities, churches, monasteries, the 
community of the Holy Sepulchre, the monastery of Mount Sinai, 
the Orthodox Church of Albani a and legal persons governed by 
public law.  
• Non-profit making legal entities established or  to be established 
in Greece, provided that they ar e shown to be pursuing charitable 
or educative purposes, or purpos es of national interest.  
• Foreign natural entities wher e exemption is provided for by 
international agreement, subjec t to there being reciprocity.  
• Greek political parties provided that they are recognised by 
Parliament.  
• Universities and public hospitals. 
• Any person expressly exempted by legal provision.  
• A reduction in parental provisi on for immovable property on 
minor islands. 
Allowances • Class A (spouses, children, gra ndchildren and parents): €95,000   
• Class B (ascendants and descenda nts, brothers and sisters, 
stepbrothers and stepsisters, nephews and nieces, uncles and 
aunts, foster parents, children from a previous marriage of the 
spouse, and sons or daughters in law): €20,000 
• Class C (all other beneficiaries): €6,000 
 
In case the estate consists of more than one type of assets and its entire 
value exceeds the before mentioned th reshold, the tax-free amount is first 
allocated to real property, second, to stocks or shares, and then to all 
other estate assets. 
Deductions Both liabilities and charges can be deducted from the value of the estate: 
• Liabilities include outstanding debt s incurred prior to death, tax 
 
EN 75   EN debts of the decedent, expenses for hospital and medical care for 
the decedent in the last 6 months, claims by the spouse for participation to profits and gains as well as the value of the legacy. 
• Charges allowed for deduction in clude expenses of probate 
proceedings, expenses for the issuance of an inheritance 
certificate, expenses incurred for performing an inventory of the 
decedent's estate, expenses for declaring the decedent legally dead (death in absentia), expenses incurred for the administration of estate assets located in a fore ign country and funeral expenses. 
Transfer of family-
owned or closel y held 
businesses No favourable treatment applies fo r family-owned or closely held 
businesses per se. Instead, tax incen tives rely on the degree of kinship 
between the transferor and the tran sferee rather than on the business 
characteristics. 
Double taxation relief  
• Unilateral relief The credit method: Foreign movable assets in the event of death of the 
decedent can be credited. There is no formal requirement that the foreign tax to be credited must be of the same nature as domestic inheritance tax but have to fulfil certain requirements. 
• Bilateral treaties* Inheritance tax treaties are in fo rce between Greece and the following 
Member States: Germany (1910), Spain (1919), and Italy (1964). 
Compatibilit y with EU 
law The following potential conflic ts have been identified: 
• The descendant’s children or surv iving spouse have to have lived 
in Greece for one full year to get the tax exemptions on house or 
land acquired by virtue of successi on, in case th ey do not own 
real property that is sufficient for their dwelling needs. 
• The favourable tax regime is de nied to transfers upon death of 
shares in foreign companies, which are then taxed at regular rates.
Tax revenue in% of 
total  tax revenue 0.20% in 2008. 
Note: * Years in bracket is the year where the treaty entered into force.  
Source: Maisto (2010), Tsouroufli s (2010), AGN International ( 2010) and Global Property Guide. 
 
EN 76   EN Hungary 
 Description 
Taxes levied  
• Estate tax - 
• Inheritance tax Inheritance tax is levied on property tr ansferred on the basis of an estate, 
a legacy or will, an acquisition of a mandatory share of an estate and a 
donation in the event of death. 
• Other taxes - 
Connecting factors  
• Personal nexus 
rule The nationality and residence principle: Estate located in Hungary as 
well as moveable property located outside Hungary is subject to 
inheritance tax if the heirs are either  nationals or resi dents in Hungary.  
• Source rule Yes, a source applies to all proper ty located in Hungary for all non-
nationals and non-residents.  
Tax rates Inheritance tax rates depend on the pr oximity of the deceased to the 
beneficiary, and the amounts of tax due  are calculated on the basis of the 
applicable rate and the net value of the estate.  
 
 
 
In the case of inheritance of vehicl es (including rights with monetary 
value regarding vehicles), the resp ective transfer tax rates are doubled. 
Exemptions Personal exemptions: 
• Any property inherited by the desc endants or ascendants of the 
deceased person  
• Inheritance of an estate by the spouse of the deceased person up 
to the net value of HUF 20 million. 
• Inheritance of a right to use a re sidential property or a right to 
profit on a residential propert y by the surviving spouse. 
• Estate where the deceased was a minor and the beneficiary is Category 
    General rate 
   Rate in cases of re sidential
 
property
 
If the heir is the foster child/ 
spouse/foster parent   U
p-to 18 million HUF –
 11
%  U
p-to 18 million HUF –
 2,5%
 
   From 18 million HUF to 35 million HUF
 –
 15
% From 18 million HUF to 35 million  
 HUF – 
  6% 
  
     From 35 million HUF –
 21
%  From 35 million HUF –
 11
% 
        
Siblings 
     U
p-to 18 million HUF –
 15
%  U
p-to 18 million HUF –
 6%
 
From 18 million HUF to 35 million HUF
 –
 21
% From 18 million HUF to
 35 million
 HUF – 
  8% 
  
From 35 million HUF –
 30
%  From 35 million HUF –
 15
% 
  
Other legate  es 
   U
p-to 18 million HUF –
 21
%  U
p-to 18 million HUF –
 8%
 
From 18 million HUF to 35 million HUF
 –
 30
% From 18 million HUF to 35 million  
 HUF – 
  12
%   
From 35 million HUF –
 40
%  From 35 million HUF –
 21
% 
 
EN 77   EN his/her parent. 
 
Objective exemptions: 
• Estates donated for national scientific, artistic, educational, 
cultural or social purposes. 
• Inheritance of certain interests in  business associations (excluding 
shares) and savings deposits. 
• Inheritance of movable pr operty up to HUF 300,000 per 
beneficiary (excluding vehicles).  
• Inheritance of land suita ble for constructing a residential property 
or inheritance of rights with m onetary value on such land if the 
beneficiary builds a residential pr operty on it within four years. 
• Beneficiaries of inherited art, cu ltural property, collections or any 
of part of a collection in the ca se of a donation to the state, a 
municipality or an instit ution of highe r education. 
 
In addition, lower rates apply for inhe rited agricultural land or rights with 
monetary value.  
 
EN 78   EN Allowances - 
Deductions The following items are deductible from the fair market value when 
establishing the net value of the estate:  
• Funeral costs of the deceased. 
• Costs of acquiring, securing and handling the estate as well as the 
public notary’s costs (administration of the estate). 
• The deceased’s debts/obligations and obligations relating to the 
forced share rules. 
• Liabilities based on legacies and enjoinders.  
• Debts/obligations relating to  guardianship/administration. 
Transfer of family-
owned or closel y held 
businesses The inheritance of a number of busine ss assets, such as business shares, 
is currently exempt. Special rules ap ply if agricultural land is inherited. 
Double taxation relief  
• Unilateral relief The exemption method: There is no explicit unilateral relief. However, 
movable property located outside H ungary and rights on it that are 
inherited by a Hungarian citizen or a non-Hungarian citizen who lives in 
Hungary are only subject to inheritance tax if no such tax is levied in the 
respective foreign country. No tax is payable on the inheritance of 
immovable property located abroad. 
• Bilateral treaties* Inheritance tax treaties are in force between Hungary and the following 
Member States: Sweden (1938), Ro mania (1949), and Austria (1976). 
Compatibilit y with EU 
law No potential conflicts identified. 
Tax revenue in% of 
total  tax revenue 0.1% in 2008. 
Note: * Years in bracket is the year where the treaty entered into force.  
Source: Maisto (2010), Csikós and Löcsei (2010), AGN Internati onal (2010) and Global Property 
Guide. 
 
 
EN 79   EN Ireland 
 Description 
Taxes levied  
• Estate tax - 
• Inheritance tax A tax called the ‘Capital Acquisitions Tax’ is levied on inheritances in 
Ireland and is charged on property passing on death. It also consists of a gift tax charged on lifetime gifts. The be neficiary is liable to pay the tax.  
• Other taxes - 
Connecting factors  
• Personal nexus 
rule The residence principle: If either the donor or the beneficiary is a 
resident or ordinarily resi dent in Ireland at the date of the inheritance the 
taxable inheritance consists of th e whole of the property taken by the 
successor. A foreign domiciled person is only considered to be a resident 
if he/she has been resident in Irel and for the five consecutive tax years 
prior to the inheritance.  
• Source rule For non-residents a source applies to  all assets situated in Ireland. 
Tax rates A flat rate of 25% applies to any taxable assets over the threshold (see 
‘Allowances’). 
Exemptions Personal exemptions: 
• Inheritances and gifts taken by one spouse from the other.  
• Normal and reasonable expendi ture by a disponer on his/her 
immediate family. 
 
Objective exemptions: 
• Heritage property, that is houses, gardens, articles of national 
scientific, historic or artistic significance which fulfil certain conditions.  
• A dwelling house which has been occupied by the recipient 
subject to certain conditi ons being complied with.  
• An inheritance taken for public  or charitable purposes.  
• Payments and pensions to retired employees.  
• Certain government securities and interests in certain unit trusts 
when taken by foreigners.  
• Moneys payable under a qualifying insurance policy to the extent 
that such monies are used to pay inheritance tax.  
• Payments to permanently incapacitated individuals from trust 
funds contributed by means of public subscriptions.  
Allowances  
Gr o u p   Threshold (€) Relat ionship 
G roup A  434,000 Son/ daughter/
foste r-c hild  
G roup B  43,400 Parent/ niece/ neph
ew/ brot her/ sist er/
grandchild  
G roup C   21 ,700 Stranger/ cousin 
  
Deductions The following deductions apply:  
• Liabilities (not further specified). 
• 90% of the market value of agri cultural land and buildings taken 
by a donee or successor who is a farmer.  
 
EN 80   EN • 90% of the market value of trees and underwood.  
• 90% of the market value of relevant business property.  
Transfer of family-
owned and closel y held 
businesses - 
Double taxation relief  
• Unilateral relief The credit method: It applies to foreign taxe s, which arises upon the 
death of a person. It concerns proper ty located in the foreign state and 
cannot exceed the payable amount of  the Capital Acquisitions Tax. 
• Bilateral treaties Inheritance tax treaties are in force between Ireland and the following 
Member States: UK. 
Compatibilit y with EU 
law The following potential conf lict has been identified: 
• A reduction in the valuation of bus iness property requires shares 
to be held in an Irish incorpor ated company and thereby excludes 
businesses not carried on mainly in Ireland. 
Tax revenue in% of total  tax revenue 0.64% in 2008 (incl. revenue from bo th inheritance and gift taxes).  
Source: Survey by Deloitte, Maisto  (2010), AGN International ( 2010) and Global Property Guide. 
 
 
EN 81   EN  
 
Italy 
 Description 
Taxes levied  
• Estate tax - 
• Inheritance tax An inheritance tax is levied in the case of transfers upon death to the 
heir/legatee, who is the person liable to tax. In particular, each heir is subject to tax on the corresponding quota of the overall es tate transferred 
to the heirs and each legatee is subject to tax on the corresponding legacy.  
• Other taxes Transfers upon death of r eal estate located in Italy (and rights on real 
estate located in Italy) are also subject to mortgage and cadastral taxes. Such taxes apply to the transfer of r eal estate located in Italy regardless 
of whether such a transfer happens upon death, is at gratui tous title or for 
consideration (and irrespective of the residence of the transferor and of 
the transferee). Since these taxes do not only occur in the event of death, 
no further information will be provided.  
Connecting factors  
• Personal nexus 
rule The residence principle: It applies to all properties and rights 
transferred, if the decease d is a resident of Ital y at the time of his/her 
death, whether situated in Italy or abroad. 
• Source rule Yes, a source applies to all properties and rights situated at the date of 
his/her death in Italy in the case where the deceased is not a resident of Italy at the time of his/her death. 
  The following assets are deemed to be situated in Italy:  
i. Assets enrolled in the public registers of Italy (such as real estate, 
ships and aircrafts, trademarks and patents) and connected rights 
of enjoyment.  
ii. Shares and quotas of companies with  either the legal seat or the 
seat of management or the main object in Italy.  
iii. Quotas of entities, other than comp anies, with either the legal seat 
or the seat of management or  the main object in Italy.  
iv. Bonds and other securities in seri es, other than shares, issued by 
Italy or by companies and entities under points (ii) and (iii) above.
v. Securities representing g oods if the goods are situated in Italy. 
vi. Receivables and cheques if the debtor  or the issuer is a resident of 
Italy (irrespective of the locati on of the security, if any). 
vii. Receivables secured by property situated within Italy up to the 
value of the property, irrespective of  the residence of the debtor.  
viii. Goods-in-transit with the point of destination within Italy or 
restricted by the export/import la ws covering temporary export.  
 
EN 82   EN ix. Assets not mentioned but effectiv ely located in Italy are also 
subject to inheritance tax. 
 
EN 83   EN Tax rates The following tax rates apply depend ing on the relationship between the 
deceased and the beneficiary:  
• 4%, if the transfer is made to spouses and direct descendants or 
ancestors.  
• 6%, if the transfer is made to brothers and sisters.  
• 6%, if the transfer is made to re latives up to the fourth degree, to 
persons related by direct affinity as well as to persons related by 
collateral affinity up to the third degree.   
• 8%, in all other cases. 
Exemptions Objective exemptions:  
• Transfers to (domestic and forei gn) public entitie s or legally 
recognized foundations or associ ations having the exclusive 
purpose of assistance, study, scie ntific research, education, 
instruction or any other pur pose with public benefit.  
• Transfers to legally recognized (domestic and foreign) public 
entities and foundations and asso ciations other than those 
mentioned above, as long as such  transfers be made for the 
purposes indicated above (assistance, etc.).  
• Certain assets with cultural value. 
Allowances For spouses, direct descendants, ancestors, brothers and sisters: 
€1,000,000 for each beneficiary. 
  If the transfer is in favour of an individual that suffers from a qualifying 
handicap, an exempt amount of 
€1,500,000 applies, in lieu of the 
ordinary exempt amounts.  
Deductions Deductible items: 
• The (domestic and foreign) debts of the deceased upon death 
according to their quota in the tax base (e.g. if only partially 
included in the tax base, only the included share can be deducted). 
Debts incurred by the deceased in the last six months prior to his/her demise (other than debt incurred in the furtherance of a 
business or profession) s hould not be deductible.  
• Tax debts if the taxable event occurs prior to the demise 
irrespective of the date of assessment.  
• Debts resulting from a foreign final judicial decision to the extent 
that such a decision is  recognized in Italy.  
• Legacies by the heirs that are subj ect to such legacies and burdens 
that the heirs/legatees  may be subject to. 
Transfer of family-
owned or closel y held 
businesses An exemption from inheritance tax a pplies to majority transfers of a 
business or of a participation in comp anies or partnershi ps to the spouse 
or descendants provided the spouse or descendants carry out an effective 
business activity (rather than passively  enjoy the ownership of assets). It 
is not clear if the exemption applies to participations into non-resident companies and partnerships. 
 
EN 84   EN Double taxation relief  
• Unilateral relief The credit method : Foreign tax credits can be granted (per country) 
against the Italian inheritance tax equal to taxes paid to a foreign State, in 
relation to the same succession and in relation to the assets situated in such a State, up to the amount of th e Italian inheritance tax that is 
attributable to such assets. 
• Bilateral treaties*Inheritance tax treaties are in for ce between Italy and the following 
Member States: Sweden (1956), Gre ece (1964), Denmark (1966), the UK 
(1966), and France (1990). 
Compatibilit y with EU 
law The following potential conflic ts have been identified: 
• Italy values foreign-located assets differently than assets located 
in Italy.  
• Transfers to EU public entities, associations and foundations from 
non-residents are denied exemption from inheritance tax. 
• No exemption is made for public debt securities from other EU 
Member States. 
• Foreign assets of cultural value cannot be partial or full exempt 
for the inheritance tax as can  assets located in Italy. 
• The tax authorities cannot dispute the value of the Italian real 
estate if at least equal to the cadastral value. This rule does not 
apply to foreign real estate. 
• Debts incurred by a non-resident are wholly non-deductible. 
Tax revenue in% of 
total  tax revenue 0.09% in 2008 (covers both inheri tance and gift tax revenue). 
Note: * Years in bracket is the year wh ere the treaty entered into force.  
Source: Maisto (2010), Saccardo (2010), AGN International (2010) and Global Property Guide. 
 
EN 85   EN Lithuania 
 Description 
Taxes levied  
• Estate tax - 
• Inheritance tax An inheritance tax applies to the market value of the property.  
• Other taxes - 
Connecting factors  
• Personal nexus 
rule The residence principle: The taxable base of re sident beneficiaries 
includes all kinds of inherited prop erty, irrespective of whether their 
source is in Lithuania or abroad. 
• Source rule Non-resident beneficiaries are subjec t to inheritance tax only on movable 
property subject to legal registra tion in Lithuania and on immovable 
property located in Lithuania. 
Tax rates The tax rate is 5% for inheri ted property up to LTL 500,000 (€144,810).  
If the value exceeds LTL 500,000 ( €144,810), the whole amount is 
subject to a 10% rate. 
Exemptions Personal exemptions: 
• Property inherited from a spouse.  
• Property inherited by children (adop ted children), parents (foster 
parents), by persons under guardia nship, guardians, grandparents, 
grandchildren, brothers, or sisters.  
Allowances Property with a taxable value not exceeding of LTL 10,000 ( € 2,896) are 
exempt from inheritance tax. 
Deductions - 
Transfer of family-
owned or closel y held 
businesses - 
Double taxation relief  
• Unilateral relief The credit method: It is applicable to all EU countries.  
• Bilateral treaties - 
Compatibilit y with EU 
law No potential conflicts identified. 
Tax revenue in% of 
total  tax revenue In 2009 it was 6,140, 000 LTL (266,000 LTL from cross- border 
inheritances). In 2008 it was 6,076,000 LTL (81, 000 LTL from cross-border inheritances)* 
Source: Survey performed by Deloitte for Copenhagen Ec onomics, AGN International (2010) and Global Property 
Guide. * Information provided by Lithuania upon invitation of the Commission to the Member States 
 
 
EN 86   EN Luxembourg 
 Description 
Taxes levied  
• Estate tax - 
• Inheritance tax Inheritance taxes consists of both a su ccession tax levied on the estate of 
a deceased who was a Luxembourg resident  at the time of his/her death, 
and a death transfer tax on Luxembour g situated real estate owned by a 
deceased who was not resident in Luxembourg at the time of his/her death.  
 Inheritance tax is not le vied on the total estate of the deceased but only 
on the portion transferred to each heir and in vi ew of the relationship 
between the deceased and the heir. 
• Other taxes - 
Connecting factors  
• Personal nexus 
rule The residence principle: It applies to, with the exception of real estate 
located abroad, on the worldwide asse ts of the Luxembourg tax resident. 
• Source rule Yes, if the deceased is a non-resident  Luxembourg inheritance tax is due 
only on real estate located in Luxembourg, held by the deceased in ownership or in bare ownership. 
Tax rates The basic rates of succession and death transfer taxes depend on the 
degree of kinship between the heir and the deceased. 
 For residents (succession tax):  
i. Between spouses without common descendants: 5%  
ii. Between declared partners for more than 3 years prior to the 
opening of the succession without common descendants: 5%  
iii. Between brothers and sisters:  
o on their intestate portion: 6% 
o on the exceeding portion: 15% 
i. Between uncles or aunts and nephews or nieces, as well as 
between adoptant and adopted: 9% 
o on their intestate portion: 9% 
o on the exceeding portion: 15% 
ii. Between great-uncles or great-a unts and great-nephew or great-
niece, as well as between th e adoptant and the adopted 
descendants 
o on their intestate portion: 10% 
 
EN 87   EN o on the exceeding portion: 15% 
iii. Between other relatives or third parties 15%  
 
In addition, a progressive surcharge is levied depending on the value of 
the estate inherited or the real estate transferred: 
 € 10,000 without exceeding € 20,000:             1/10 € 20,000 without exceeding € 30,000:             2/10 € 30,000 without exceeding € 40,000:             3/10 € 40,000 without exceeding € 50,000:             4/10 € 50,000 without exceeding € 75,000:             5/10 € 75,000 without exceeding € 100,000:           6/10 € 100,000 without exceeding € 150,000:         7/10 € 150,000 without exceeding € 200,000:         8/10 € 200,000 without exceeding € 250,000:         9/10 € 250.000 without exceeding € 380,000:        12/10 
€ 380,000 without exceeding € 500,000:        13/10 
€ 500,000 without exceeding € 620,000:        14/10 € 620,000 without exceeding € 750,000:        15/10 € 750,000 without exceeding € 870,000:        16/10 € 870,000 without exceeding € 1,000,000:     17/10 € 1,000,000 without exceeding € 1,250,000:  18/10 € 1,250,000 without exceeding € 1,500,000:  19/10 € 1,500,000 without exceeding € 1,750,000:  20/10 € 1,750,000 and exceeding:                            22/10  For instance, in the case of legacy to an unrelat ed person, the basic rate is 
15%. If the beneficiary receives assets worth of EUR 140,000, the 
surcharge will be 7/10, so that the effective rate is 25.5%. 
 
EN 88   EN  
For non-residents (death transfer tax): 
i. In the direct ascending line: 2% 
ii.  Between spouse having common ch ildren or descendants: 5%  
iii. Between partners, connected by a declaration of partnership 
registered for more than three years before the opening of the 
succession, having common children or descendants: 5% 
Exemptions Personal exemptions: 
• The entire share inherited in di rect line (except for the share 
exceeding the intestate share). 
• The entire share inherited from a spouse or a declared partner for 
more than 3 years prior to th e opening of the succession with 
whom the heir has common descendants. 
• The entire share inherited either with the right to derive profit 
from property, as a pension or as  a periodic retribution by the 
surviving spouse or declared part ner more than 3 years prior to 
the opening of the succession wh ere the descendants of a prior 
marriage or partnership of the deceased have inherited the full ownership of the assets or are lia ble for the pension or retribution.
• The deceased’s real estate located abroad when the deceased is a 
Luxembourg resident. 
• Families and personnel of diploma tic agents and European Union 
officials under certain circumstances. 
 
Objective exemptions: 
• Successions where the aggregate value of the estate, net of any 
debts, does not exceed €1,250. 
 
Furthermore, successions received by charitable organisations are subject 
to the same rates as those applicable to unrelated persons. However, several subjective exemptions apply. 
Allowances A € 38,000 relief is available for the de termination of the tax base of the 
succession tax on the estate inherited by the surviving spouse or declared partner without common descendants with the deceased. 
Deductions The following liabilities are deductible:  
• Debts of the deceased, including accrued interest, debts relating to 
the deceased’s profession. 
• Debts in relation to domestic expenses, regional or municipal 
charges.  
• Taxes levied for the maintenance of polders, water mills and other 
contributions of the same nature.  
• Funeral expenses.  
 
EN 89   EN  
Debts relating to real estate situated abroad are not deductible and a 
lump-sum amount proportional to th eir value is deducted from the 
qualifying debts of the succession.  
Transfer of family-owned or closel
y held 
businesses Luxembourg does not provide specific ru les of taxation for inheritance of 
going concerns, participations in fam ily-owned or closely-held business. 
Double taxation relief  
• Unilateral relief The exemption method : It only applies to movable properties for 
Luxembourg nationals. There are currently no rules for the avoidance of double taxation where the deceased was a non-resident. 
• Bilateral treaties No inheritance tax treaties are in force between Luxembourg and other 
Member States. 
Compatibilit y with EU 
law No potential conflicts identified. 
Tax revenue in% of 
total  tax revenue 0.34% in 2007. 
Source: Maisto (2010), Goebel and Schaffner (2010), AGN International (2010) and Global Property Guide . 
 
 
EN 90   EN Netherlands 
 Description 
Taxes levied  
• Estate tax - 
• Inheritance tax Dutch inheritance tax is due on the va lue of all that is  acquired by an 
individual or a legal entity as a re sult of the death of a person. The tax 
payable is calculated per beneficiary.  
• Other taxes - 
Connecting factors  
• Personal nexus 
rule The residence and nationality principle: If the deceased is a resident 
(or a deemed resident) of the Neth erlands at the time of his death, 
inheritance tax is due on any value (worldwide) acquired on account of a 
person’s death.  
A person who dies within ten years after leaving the Netherlands, is 
deemed resident in the Netherlands if he was a Dutch national at the time of his emigration and of his death. 
• Source rule No, if the deceased is neither a reside nt of the Netherlands nor a deemed 
resident at the time of his death no Du tch transfer tax is due with regard 
to property located in the Netherlands (this system was put in place as of 
January 1, 2010). 
Tax rates The tax rates for spouses, register ed partners, (under conditions) 
unmarried people living together and children (group I) and for other beneficiaries (group II) are as follows: 
 
Taxable acquisition Inheritance tax Inheritance tax Inheritance tax 
G roup I  G roup I.a  G roup II 
0  -  €  118 . 0 0 0    10 %    18 %    30 %  
€ 1 1 8.000 - and more  20%   36%   40%  
Properties inherited by two married people (incl. registered partners) are 
considered one acquisition for inheri tance tax purposes unless they are 
living separated. For descendants of the second or fu rther degree there 
are special rates in order to avoi d generation skipping. The rates are 
acquired by applying a multiplier of  1.8 to the rates in group I. 
Exemptions Objective exemptions:  
• Acquisitions by the State, province or a municipality in the 
Netherlands, e.g. acquisitions of  pension rights or certain 
annuities comparable to pension rights.  
• Acquisitions of public benefit or ganizations, i.e. charities or 
social benefit organizations. 
• Pension rights. 
 
EN 91   EN Allowances • Spouses, registered partners and (under conditions) unmarried 
people living together: € 600.000. Deducted from this amount is 
half of the cash value of pension rights derived by a spouse etc. from the death of the deceased. However, a minimum exemption of € 155.000 always remains.  
• (Grand) children: € 19.000.  
• Disabled children: € 57.000.  
• Parents: € 45.000.  
• Others: € 2.000.  
Deductions Deductible are funeral expenses, debts (only if they are enforceable by 
law at the time of death), legacies and charges as far as they may be taken into account according to article 20 IGTA 1956. 
Transfer of family-owned or closel
y held 
businesses In case a family business is inherited, relief can be provided if the 
deceased possess a qualifying business for one year and the recipient continues this business for a period of  five years after the death of the 
deceased.   The business succession facilities appl y to both personal enterprises and 
enterprises run in the form of a limited liability company in which the deceased had an interest of at leas t 5% of the issued share capital. 
Double taxation relief  
• Unilateral relief The credit method: It applies to the inheritance tax levied in the country 
of residence of the deceased a nd for inheritance tax on foreign 
immovable property and assets be longing to a foreign permanent 
establishment.  
 The credit is limited to the tax actually levied abroad (first maximum) or 
the Dutch tax attributable to the assets situated abroad (second maximum), whichever is lower. The foreign inheritance tax has to be comparable with the Dutch inheritance tax. The second maximum is calculated as follows: (foreign pr operty /total property x total 
Netherlands tax due on total taxable income). 
 The credit method also applies to deemed residents. 
• Bilateral treaties*Inheritance tax treaties are in force between the Netherlands and the 
following Member States: Sweden (1952), Finland (1954), the UK 
(1979), and Austria (2001). 
Compatibilit y with EU 
law No potential conflicts identified. 
Tax revenue in% of 
total  tax revenue 0.77% in 2008 (covers revenue from both inheritance and gift tax). 
Note: * Years in bracket is the year wh ere the treaty entered into force.  
 
EN 92   EN Source: Maisto (2010), Sonneveldt (2010), AGN International (2010) and Global Property Guide. 
 
 
EN 93   EN Poland 
 Description 
Taxes levied  
• Estate tax - 
• Inheritance tax The inheritance tax is imposed on a person who acquires the deceased’s 
estate. This specific inheritance tax c oncerns only natural (and not legal) 
persons. Minors may be payers of this tax. The parents of a minor submit a tax declaration in his or her name; however, they shall not be obliged to 
pay this tax out of their assets. 
• Other taxes - 
Connecting factors  
• Personal nexus 
rule The nationality and residence principle:  It applies to acquisitions of 
goods and property rights, if at th e moment the decedent dies the 
beneficiary has Polish nationality or has a place of permanent residence 
in Poland.  
• Source rule Inheritance tax is levied on the acquisition, inter alia, by way of 
inheritance of things (assets) loca ted in Poland and property rights 
executed on the territory of Poland.  
 
Inheritance tax is not applicable to inherited movable property located in 
Poland or rights executed on the territory  of Poland if neither heir nor the 
deceased at the moment of death were citizens of Poland or had a 
permanent place of residence/stay in Poland. 
Tax rates Individuals acquiring the estate  belong to different groups:  
• Group I includes the spouse, de scendants, ascendants, the 
stepchild, the son-in-law, the daughter-in-law, siblings, the 
stepfather, the stepmother and in-laws.  
• Group II includes descendants of the siblings, siblings of the 
parents, descendants and spouses of the stepchild, spouses of the 
siblings and siblings of the spouses, spouses of the siblings of the spouses, spouses of other descendants.  
• Group III includes the remaining individuals.  
 
TAXABLE  
INHERITANCE, PLN (€) TAXABLE RATE 
ON DIFFERENT CA TEGORI ES 
(Excess over Ta
x-Free 
Amount) I II III 
Up t o 10,278 (€2,743) 3% 7% 1 2%
10 , 278  – 20,556 (€5,485) 5% 9% 1 6%
Over 20,556 (€5,485) 7% 1 2% 20%
  
 
EN 94   EN Exemptions Polish inheritance tax is imposed on ly on natural persons. Legal persons 
are not liable to inherita nce tax, so there cannot be any special exemption 
rules for legal persons. 
 Exemptions apply for individuals w ho, at the moment of acquiring the 
estate, were citizens of Poland or any other country in the European 
Union or EFTA, or whose place of resi dence was situated in the territory 
of the Republic of Poland or EU & EFTA  in the following instances (independent of location): 
 Personal exemption: 
• Acquisition of ownership of thin gs [assets] or property rights, 
including family-owned businesse s, by the spouse, descendants, 
ascendants, stepchildren, siblings, stepfather and stepmother, if the acquirer notifies the competent Head of Tax Office about the acquisition of ownership within six months from the date on 
which the court verdict on inheritance becomes final. 
• Acquisition by individu als from groups I and II of furnishings, 
bed linen, clothes, underwear a nd tools used in the household. 
• Acquisition by individuals from groups I and II of immovable 
historic monuments entered onto the list of historic monuments if 
the acquiring person ensures thei r protection and conservation in 
accordance with the binding regulations.  
• Special exemption rules, dependent on which group the 
beneficiary belongs to, apply if th e estate is com posed of a house 
or a flat. 
 
Objective exemptions: 
• Acquisition of works of art and manuscripts being the output of 
the testator as well as of library materials if the testator dealt with 
artistic, scientific, educational, literary or publishing work.  
• Acquisition of movable histor ic monuments and collections 
entered onto the list of historic  monuments as well as monuments 
lent to a museum for scientific or exhibition purposes for a period 
not shorter than 2 years.  
• Acquisition of copyrights and relate d rights, rights to inventive 
designs, trademarks and decora tive patterns, and of claims 
resulting from the acquisition of such rights (in Poland and 
abroad). 
• Funds from an employee pension scheme, funds collected on the 
account of the deceased member of an open pension fund, and 
funds collected on the indi vidual retirement account. 
 
EN 95   EN Allowances Group I: PLN 9,637.  
Group II: PLN 7,276.  Group III: PLN 4,902.   See under ‘Tax rates’ for a defini tion of the different groups of 
beneficiaries. 
Deductions Debts and liabilities such as:  
• The costs of medical treatment a nd care during the last disease of 
the deceased if these costs were not covered during his time and
by his funds. 
• The costs of the fune ral and gravestone.  
• The costs of inheritance proc eedings, remuneration of the 
executor of the will, legacies and testamentary instructions. 
• Legitim payments and other liabilities under the inheritance 
provisions of the Civil Code. 
Transfer of family-
owned or closel y held 
businesses Inheritance tax exemption applies to natural persons (in every tax group) 
acquiring an arable farm or its part  provided that the acquiring person 
runs this farm for at least 5 years from its acquisition date. This exemption concerns only these i ndividuals who, at the moment of 
acquiring the estate, were citizens of Poland or any othe r country of the 
European Union or EFTA, or whose pl ace of residence was situated in 
the territory of the Republic of Poland or EU & EFTA. 
 The exemption does not cover residen tial buildings, buildings used for 
breeding poultry or animals, gr eenhouses, and fruit storehouses. 
Double taxation relief  
• Unilateral relief No unilateral relief exis ts in Poland. The only measure applicable for the 
purposes of avoidance of double taxati on of inheritance is the general 
competence provided to the Minister of  Finance to decide in a way of 
regulation/decree to refrain fr om collecting particular tax. 
• Bilateral treaties* Inheritance and estate tax treaties are in force between Poland and the 
following Member States: Czech Re public (1925), Slovakia (1925), 
Austria (1928), and Hungary (1931). 
Compatibilit y with EU 
law No potential conflicts identified. 
Tax revenue in% of 
total  tax revenue 0.14% in 2009 (covering revenue from both inheritance and gift taxes). 
Note: * Years in bracket is the year wh ere the treaty entered into force.  
Source: Maisto (2010), Kardach and Olesinska (2010), AGN International (2010) and Global Property Guide. 
 
EN 96   EN  
  
 
EN 97   EN Slovenia 
 Description 
Taxes levied  
• Estate tax - 
• Inheritance tax Inheritance tax is levied on the tran sfer of properties upon death and are 
payable to the municipal government by the beneficiary. 
• Other taxes - 
Connecting factors  
• Personal nexus 
rule The residence principle: It applies to immova ble property, movable 
property, or property righ t and rights in Slovenia.  Securities and cash are 
considered as movable property.  
• Source rule Yes, inheritance tax is paid on propert y inherited, including securities, by 
a non-resident that inherits property located in Slovenia. 
Tax rates The heirs are classified as follows: 
• Class 1: Parents, siblin gs, and their descendants 
• Class 2: Grandparents 
• Class 3: Others 
 
TAX BASE, €   TAX RATE
    Cl a s s  1  Cl a s s  2  Cl a s s  3  Up to €1 0,000  5%  8%  1 2% 
€1 0,000 - €60,000  6%  9%  1 6% 
€60,000 - €1 60,000  7%  1 0%  20% 
€1 60,000 - €360,000  8%  1 1 %  25% 
€360,000 - €660,000  1 0%  1 3%  30% 
€660,000 - €1 ,060,000  1 2%  1 5%  35% 
€1 ,060,000 – €1 ,460,000  1 4%  1 7%  39%  
 
The taxable base for immovable proper ty is 80% of its market value. 
Exemptions Personal exemptions: 
• The spouse, children and grandchildren. 
 Objective exemptions: 
• Taxpayers who inherit a house or  apartment and who own only 
one house or apartment themselves and have lived in the same 
house as the decedent;  
• Farmers who inherit agricultural  land or an entire farm; 
Legal persons of private la w established for religious, 
humanitarian, educational, cultural, charitable and certain other activities. 
• Movable property up to a value of € 5,000. 
Allowances A tax threshold of € 5,000 applies. 
Deductions - 
Transfer of family-
owned or closel y held 
businesses - 
Double taxation relief  
 
EN 98   EN • Unilateral relief The exemption method: It applies to the full inheritance if the taxpayers 
have declared their liabilities to the local tax authority within 15 days of 
receiving an inheritance. 
• Bilateral treaties - 
Compatibilit y with EU 
law No potential conflicts identified. 
Tax revenue in% of 
total  tax revenue - 
Source: Survey performed by Deloitte for Copenhagen Ec onomics, AGN International (2010) and Global Property 
Guide. 
 
 
EN 99   EN Spain 
 Description 
Taxes levied  
• Estate tax - 
• Inheritance tax The inheritance tax is “a transferred tax”, which means that the 
legislative and revenue powers of th e tax are shared between the State 
and the Autonomous Communities.  
• Other taxes A transfer tax and stamp duty is levied upon the beneficiary when the 
ownership of an asset or right, which may be entered into a public 
register, is to be changed. The ta xable base is the value declared, 
although there are specia l valuation rules.  
Connecting factors  
• Personal nexus 
rule The residence principle: Residents in Spain has to pay the inheritance 
tax in the Autonomous Community th ey reside in and thereby also 
determines which tax system they are under.  
• Source rule Non-residents are taxed under State legi slation (in contrary to residents) 
and a source applies to movable and immovable assets and rights located 
in Spain. 
Tax rates In the Autonomous Communities that have adopted their own scale (the 
Balearic Islands, Cantabria, Cata lonia, Madrid and the Valencian 
Community), the total tax liability and the coefficient used to obtain the amount of tax to be actually paid is  calculated applying these scales (not 
listed here). 
 In the rest of the Autonomous Co mmunities the State legislation is 
applied. The State scale to be applied to the assessment base is as follows:  
 
ASSESSMENT TOTAL TAX REST OF PERCENTAGE
BASE LI ABILITY ASSESSMENT RATE
(UP TO) ( EUROS) BASE,  UP TO APPLI CABLE
(EUROS)
0.00 - 7, 993.46 7. 65
7,993.46 61 1.50 7, 987.45 8. 50
15,980.91 1 ,290.43 7, 987.45 9. 35
23,968.36 2, 037.26 7, 987.45 1 0.20
31,955.81 2, 851.98 7, 987.45 1 1.05
39,943.26 3, 734.59 7, 987.45 1 1.90
47,930.72 4, 685.10 7, 987.45 1 2.75
55,918.17 5, 703.50 7, 987.45 1 3.60
63,905.62 6, 789.79 7, 987.45 1 4.45
71,893.07 7, 943.98 7, 987.45 1 5.30
79,880.52 9, 166.06 39, 877.15 1 6.15
119,757.67 1 5,606.22 39, 877.16 1 8.70
159,634.3 23, 063.25 79, 754.30 21 .25
239,389.13 40, 011.04 1 59,388.42 5 . 50
398,777.54 80, 655.08 398, 777.52 9 . 74
797,555.08 1 99,291.4 above 34. 00  
 
 
EN 100   EN  Description 
The coefficient depends on both kinshi p and pre-existing wealth of the 
beneficiary: 
 
PRE-EXISTING KI NSHIPK I NSHIPK I NSHIP
W EALTH Gr oups I and IIG r oup IIIG r oup IV
(EUROS)
0 - 402,678.111 0.000 1 5.882 20. 000
402,678.11 - 2,007,380.43 1 0.500 1 6.676 21 .000
2,007,380.43 - 4,020,770.98 1 1.000 1 7.471 2. 200
Over 4,020,770.98 1 2.000 1 9.059 24. 000  
 
With: 
• Group I: Descendants and adopted children unde r twenty one 
years old. 
• Group II: Descendants and adopted children twenty one year old 
or over, spouses, ascendants and adoptive parents. 
• Group III: Second and third degree collateral relatives, ascendants 
and descendants by marriage. 
• Group IV: Fourth degree collater al relatives, more distant 
relatives and nonfamily. 
Exemptions - 
Allowances CA TEGORY   GROUP REL A TI ONSHI P A LL OW A NCE 
I  direct  and legally adopt ed descendant s under 21  years of  age:  €47,859 max. II  direct  and legally adopt ed descendant s of  21  years or more, spouse,  
and direct  and adopt ive ascendant s:    €15,957 
III  siblings, uncles, aunts, nephews, nieces, and ascendants or  
descendants by marriage:     €7,993 
IV  cousins and ot her more dist ant  relat ives and unrelat ed persons  
or unknown heirs:     none 
 
With the different categor ies being the same as those stated under ‘Tax 
rates’.  Special allowances apply to  disabled individuals: 
 
C ONDITION OF BENEFIC IARY ALLOWANC E 
Disability: 65% and below:      €47,859 D is a bility : more  tha n 6 5 % :      €1 5 0,2 5 3  
 
 
In addition to these tax reductions, other specific ones are also envisaged 
depending on the type of assets transferred. 
Deductions A deduction of 50% - or 99% when  the successor is the spouse, 
descendant or adopted child- is applie d if the deceased had his habitual 
residence at the time of his death a nd during the five ye ars prior to the 
day before the tax becomes due in Ceuta or Melilla.  
 
EN 101   EN  Description 
 
The Autonomous Communities may regulate new deductions. 
Transfer of family-
owned or closel y held 
businesses A reduction of 95% of the value of th e business may be made in addition 
to any other applicable reductions, pr ovided that the acquisition is kept 
for at least ten years after the death of the deceased. 
Double taxation relief  
• Unilateral relief The credit method:  Applies only for residents and allows them to 
deduct from their tax liability the sm aller of the two amounts mentioned 
below: 
• The amount of a similar tax paid abroad on the capital gains 
subject to tax in Spain. 
• The amount obtained applying the e ffective mean tax rate to the 
capital gains corresponding to the as sets and rights abroad when a 
similar tax has been levied on them abroad. 
• Bilateral treaties* Inheritance treaties are in force betw een Spain and the following Member 
States: Greece (1919), Sweden (1963), and France (1963). 
Compatibilit y with EU 
law The following potential conf lict has been identified: 
• Beneficiaries are subject to di fferent tax systems (Autonomous 
Community or State law) in the Basque Country depending on 
when they resided in the area. 
Tax revenue in% of total  tax revenue 0.81% in 2008 (incl. revenue from both inheritance and gift tax). 
Note: * Years in bracket is the year wh ere the treaty entered into force.  
Source: Maisto (2010), Spain (2010), AGN International (2010) and Global Property Guide. 
 
EN 102   EN United Kingdom 
 Description 
Taxes levied  
• Estate tax Estate tax imposes a charge on the va lue of an individual’s estate on 
death. 
• Inheritance tax - 
• Other taxes - 
Connecting factors  
• Personal nexus 
rule The domicile principle: An individual who is domiciled in the UK is 
subject to inheritance tax on his worldwide estate. Nationality and 
residence are irrelevant for these purposes (except in relation to deemed domicile).  
• Source rule Yes, an individual who is not do miciled in the UK is subject to 
inheritance tax only on their estate situated in the UK. This is achieved by excluding “excluded prope rty” from their estate. 
Tax rates Assets over the value of the tax thre shold are charged a 40% inheritance 
tax. 
 
If the deceased dies within 7 year s of making a Potentially Exempt 
Transfer (PET) the transfer becomes chargeable to i nheritance tax upon 
death at the death rate subject to a sliding scale based on the length of 
time the deceased lives after making th e transfer. This ranges from 80% 
(3 to 4 years before death) down to  20% (6 to 7 years before death). 
Lifetime transfers that are chargeable when made are taxable at half the 
death rate. If the deceased dies within  7 years of the transfer, an amount 
equal to the death rate as adju sted by the sliding scale becomes 
chargeable to the extent that it is in  excess of the amount originally paid.  
 Some lifetime gifts are exempt from the inheritance tax. 
Exemptions Personal exemptions: 
•  Legacies to spouses and civil partners (unlimited). 
 Objective exemptions: 
• Legacies to charities (unlimited).  
• Political parties, housing associat ions, business and agricultural 
properties as well as legacies for national purposes (fully or 
partly).   
Allowances The tax threshold per person is £325,000. The allowance is transferable 
between spouses and civil partners.  
Deductions The debts of the deceased can be deducted as well as any liability for 
income tax arising on death. Liabili ties that are encumbrances on any 
property shall reduce its value. De ductions can also be made for 
 
EN 103   EN reasonable funeral expenses and the administration of non-UK assets.  
Transfer of family-
owned and closel y held 
businesses Any transfer of value (under the inhe ritance tax rules) made by a close 
company shall be apportioned to its  shareholders, and inheritance tax 
charged according to those individual s' particular circumstances, albeit 
that any tax due is primarily recoverable from the company.  
Double taxation relief  
• Unilateral relief The credit method: The credit available against UK tax applies to any 
foreign tax similar to the inheritance tax or, even if not similar, if it is chargeable on death or a lifetime gift. It is available on assets of all kinds 
and wherever situated outside the UK. 
• Bilateral treaties*Inheritance tax treaties are in force between UK and the following 
Member States: France (1963), Ital y (1968), Ireland (1978), Netherlands 
(1980), and Sweden (1981).   
Compatibilit y with EU 
law No potential conflicts identified. 
Tax revenue in% of 
total  tax revenue 0.68% in 2005. 
Note: * Years in bracket is the year wh ere the treaty entered into force.  
Source: Maisto (2010), Mckeever and Skeffington (2010), AG N International (2010) and Global Property Guide. 
 
EN 104   EN B) Member States without inheritance or estate taxes 
The survey has revealed that 9 of the 27 Member St ates do not have an inhe ritance or estate tax.  
 The absence of inheritance and estate taxes does not imply that no tax is levied on transfers upon 
death. In all Member States with no inheritance or estate taxes, except Slovakia, other more general 
taxes may apply to the transfer to  the heirs. All of these taxes are, however, not only payable upon 
death, but also under other circumstances where the value of the assets is realized. A few of the 
Member States have entered into inheritance tax tr eaties despite they do not have an inheritance tax 
themselves. 
 This section provides a brief ove rview of the relevant other ta xes in these 9 Member States. 
 
EN 105   EN Relevant taxes upon death in Member Stat es without inherita nce and estate tax 
 Relevant taxes and bilateral tax treaties 
Austria Acquisitions of land upon death ar e subject to land transfer tax.  
 Inheritance tax treaties are in force between Austria and the following Member 
States: Sweden (1963), Hungary (1976), France (1994), the Czech Republic (2000) 
and the Netherlands (2003). 
Cyprus Donation taxes are imposed on the tr ansfer of real estate by donation between 
family members. The tax is levied on the value at the written deed at varying rates, depending on the relationship between the donor and the beneficiary. 
Estonia A state fee is payable on the issue of  a succession certificate. Notary fees are also 
payable on different procedures. There are up to 11 different fees that are payable 
for deeds related to succession. Most of them are lump sum. 
Latvia Income or assets deri ved through inheritance are exem pt from personal income tax, 
with the exception of royalties gained fr om inherited intellect ual/artistic property. 
Sale of an inherited asset would however be  subject to capital gains tax, where the 
taxable profit would be calcu lated as a difference between the sales price and the 
inheritance value. The legislation does not  differentiate taxation approach, values 
or rates based on the location of the asset. 
Malta A stamp duty is payable by the heir at 5% of the decl ared property value. If the 
property is jointly owned by spouses, and one of the spouses has died, 5% is levied 
on only half the value of the property.  
 While no relief for double taxation is avai lable in Malta with respect to Maltese 
stamp duty, current revenue practice is not to impose stamp duty on transfers of 
foreign immoveable property and fore ign marketable securities upon death. 
Portugal A stamp duty applies upon the death of an  individual on the tran sfer of the assets 
that constitute the succession estate. The stamp duty is a territorial tax of 10%. 
Descendants, spouses and people living as married couples are tax exempt on 
transfer upon death, regardless of tax residency. 
Romania A real estate tax is applicable in case of real estate properties transferred from the 
personal patrimony of individuals.   
It is provided that in case of transfer  of the ownership ri ght over real estate 
properties by way of inheritance, if the i nheritance procedures are not completed in 
two years periods, the heirs (individuals , both residents and non-residents) are 
liable to pay towards the State Budget a 1% tax applicable to th e value of the real 
estate properties include d in the inheritance. 
Slovakia - 
Sweden - 
 Inheritance tax treaties are in force be tween Sweden and the following Member 
States: Hungary (1936), the Netherlands  (1952), Belgium ( 1958), Italy (1958), 
Austria (1963), Spain (1963), the UK (1980) , Nordic countries (1989), Germany 
(1992), and Germany (1994).  
Source: Survey performed by Deloitte for Copenhagen Eco nomics, Fraberger and Stangl (2010), Fernandes Ferreira 
and Gonçalves (2010), Riikjärv  and Vanasaun (2010), Kristo ffersson (2010), Maisto (2010) , AGN International (2010) 
and Global Property Guide. 
 
EN 106   EN ANNEX 5: APPROXIMATE TYPE AND NUMBER OF INHERITANCE TAX QUESTIONS 
RECEIVED BY THE "YOUR EUROPE ADVICE SERVICE "37 DURING 2006  -2009 
 
No. Issue NUMBER OF 
QUERIES  Countries involved 
1.  Lack or complexity of 
inheritance and gift tax 
information38 41 DE, FR, UK, MT, GR, 
ES, HU, CZ, NL, IE, 
IT,PT, AT, SE, FI, LT 
2.  Explicit double/ higher 
taxation of inheritances39 25 BE, NL, PL, DE, IE, 
UK, FR, GR, IT, PL, 
MT 
3.  Scope of allowances, tax 
reliefs and deductions40 8 UK, FR, ES 
4.  Burdensome tax procedures/ 
difficulties with foreign tax 
administrations41 3 ES, DE, IT 
 
                                                 
37 Your Europe Advice provides personalised answers to individual enquiries on the EU rights of citizens in real 
situation. The service is managed by the European Commission and provided by an external contractor with a 
network of lawyers in all Member States. It functions in all 23 official EU languages and ensures replies within 
a week 
38 Citizens lack information on inheritance tax when moving assets or changing residence with particular view of risk 
of double taxation of inheritance; inheritance tax implied as a potential deterring factor to change of residence; 
queries regarding inheritance taxation of  second house, inheritance and gift tax on real estate abroad; concerns 
about double taxation of inheritance trust. 
39 Higher inheritance tax as a result of double residence or deemed residence (even many years after leaving the 
country); double taxation due to location of assets and (different country) residence of the heirs; heavier 
taxation of a heir being a participant of a same-sex union concluded in another Member State; double taxation 
due to relocation to another Member States after deaths  of family members in first Member State; concerns 
about lack of adequate domestic and international mechanisms for the avoidance of double taxation for gifts 
and inheritances. 
40 Limited scope of inheritance tax benefit for non-residents; limited scope of reliefs for civil partners; limited scope of 
tax benefits for residents outside the region. 
41 Problems with proving that inheritance tax has been paid in another country.; the tax number has not been granted to 
foreign resident despite numerous calls and attempts 
 
EN 107   EN ANNEX 6: SME  TEST 
 
(1) Consultation with SMEs 
representatives  See section 2.2. 
A summary of the stakeholders' replies is 
available on the consultation website. The contribution of the European Family Businesses-GEEF (the pan-European umbrella federation for national associations representing long-term family owned enterprises, including small, medium-sized and larger companies) is also available on its website
42 . 
(2) Preliminary assessment of businesses likely to be affected  See section 3.4 ("Who is affected") as well as 
Copenhagen Economics Study, subchapter 2.3 "Transfer of family-owned business". See also section 3.3.1 and 3.3.2 and Annex 4 for an analysis of the inheritance tax rules in Member States. 
 
(3) Measurement of the impact on SMEs See section 4.2 and 6. The policy options other 
than "Do nothing" could  benefit those who inherit SMEs across borders .  
(4) Assess alternative options and mitigating measures  The conclusion of the impact assessment 
contains no indication th at the selected options 
might result in a disproportionate burden for SMEs. Consequently, there is no need for SME specific measures.  
 
                                                 
42  http://www.efb-geef.eu/documents/EFB-
GEEF%20contribution%20to%20EU%20consultation%20on%20inheritance%20tax.pdf