COMMISSION STAFF WORKING PAPER IMPACT ASSESSMENT
Date: 2011-12-15
Institutions: European Commission
Subjects: anti-discriminatory measure, capital transfer tax, cross-border cooperation, double taxation, equal treatment, small and medium-sized enterprises, tax relief

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} 

 
 
 
 
  
 
 
TABLE OF CONTENTS 

1. 

2. 

2.1. 

2.2. 

3. 

3.1. 

3.2. 

3.3. 

Introduction and Background....................................................................................... 0 

Procedural issues and consultations of interested parties ............................................ 4 

Organisation and timing............................................................................................... 4 

Consultation and expertise sought ............................................................................... 5 

The problems to be addressed − the “WHY”............................................................... 6 

Identification of the problems that may require action ................................................ 6 

Causes and drivers........................................................................................................ 7 

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?......................................................................................................... 22 

3.5. 

3.6. 

4. 

How would the problem evolve if no action is taken (baseline scenario)?................ 23 

Does the EU have the right to act?............................................................................. 24 

Objectives − the “WHAT" ......................................................................................... 25 

4.1.  What are the general and the more specific policy objectives? ................................. 25 

4.2. 

Are these objectives consistent with other EU policies? ........................................... 25 

5. 

5.1. 

5.2. 

Policy options − the “HOW"...................................................................................... 26 

Definition of policy options ....................................................................................... 26 

Description of policy options ..................................................................................... 27 

5.2.1.  Policy Options A: Addressing tax discrimination related to cross-border inheritances27 

5.2.2.  Policy Options B: Addressing unrelieved double taxation of cross-border 

inheritances ................................................................................................................ 28 

5.3. 

Options discarded at an early stage............................................................................ 29 

6. 

6.1. 

6.2. 

Analysis of impacts of the policy options .................................................................. 29 

Impact of the Policy Options addressing problems of discrimination (Policy Option 
A) ............................................................................................................................... 30 

Impact of the Policy Options addressing problems of double taxation (Policy Option 
B)................................................................................................................................ 31 

7. 

Comparison of main options ...................................................................................... 32 

EN 

1 

   EN 

 
7.1. 

7.2. 

7.3. 

Definition of the assessment criteria .......................................................................... 32 

Comparison of Policy Options A that address problems of tax discrimination related 
to cross-border inheritances ....................................................................................... 32 

Comparison of Policy Options B that address problems of unrelieved double taxation 
on cross-border inheritances ...................................................................................... 33 

7.4. 

Comparison tables...................................................................................................... 36 

8. 

9. 

The preferred option................................................................................................... 37 

Monitoring and Evaluation ........................................................................................ 38 

List of Annexes  

Annex 1: Comparison of Income/Capital Taxation 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 

2 

   EN 

 
1. 

INTRODUCTION AND BACKGROUND 

More EU citizens than ever are moving abroad within the Internal Market to find work, marry or 
retire,  leaving  family  members  behind  in  their  country  of  origin,  or  are  purchasing  property  and 
investing  in  assets  abroad.  In  these  circumstances,  the  application  of  inheritance  taxation  to 
bequests made across borders may become an increasingly contentious issue.  

Inheritance and estate taxes generate about 0,5 % of total tax revenues in the EU1. Even in countries 
where  tax  revenues  are  relatively  important  (like  the  United  Kingdom  or  the  United  States)  this 
share does not exceed one percent2. Tax literature lists several economic 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 for redistribution. It also meets the 
efficiency criterion as estates always have an accidental 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  types  of  taxation.  Social  advantages  include  increasing  the  labour 
supply by reducing the value of inheritances to heirs of rich people and providing an incentive for 
charitable giving. 

We have observed that some European countries have recently abolished inheritance taxation. This 
may be explained by certain drawbacks in such taxes. One is that the rich often avoid them by using 
tax planning. Therefore, the pre-crisis real estate  boom  which placed middle-class testators above 
the zero-rate threshold has meant that 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 countries 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  heirs,  particularly  in  the  cases  of  transfers  of 
business on the death of an owner of a small or medium sized enterprise (SME), this initiative does 
not  call  into  question  the  existence  of  inheritance  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 death of a person. Gifts are often made in order to 
anticipate later inheritances. Such gifts are in many Member States taxed under the same provisions 
as inheritances. This initiative would therefore cover cases where gifts are covered by the same tax 
provisions as inheritances.  

Note also that income taxes come within the scope of this Impact Assessment only insofar as they 
apply to inheritances. In most Member States inheritances are taxed under separate rules to income. 

1  

2 ' 
3 

4  

EN 

Own calculations based on Taxes in Europe database 
(http://ec.europa.eu/taxation_customs/taxation/gen_info/info_docs/tax_inventory/index_en.htm). 
The case for death duties', The Economist, 25 Oct. 2007, https://www.economist.com/node/10024733 
No. 

taxation, 
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=283734 
Inheritance tax: It just won't die', The Economist, 26. Aug. 2004. http://www.economist.com/node/3135923 

CESifo  Working 

Sadka,(2002),Estate 

Paper 

and 

E. 

Blumkin,T. 

558, 

3 

   EN 

 
                                                 
Where  bilateral  arrangements  exist  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 appears necessary, therefore, 
to  examine  actual  and  potential  problems  in  the  application  of  inheritance  taxes  in  cross-border 
situations and see how any such problems can be resolved.  

Furthermore,  the  number  of  problems  in  the  inheritance  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  protect  their  tax  bases,.  The 
Commission said that it is considering initiatives in several areas, including inheritance tax, in this 
context.  

The  recent  trends  in  inheritance  taxation  show  that  several  Member  States  have  abolished  death 
taxes  in  recent  years  while  others  have  lowered  their  effective  taxation  on  inheritances  and/or 
broadened the scope of tax reductions and exemptions. 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,  cross-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 the adoption of a non-legislative initiative to 
promote coordination of inheritance taxation 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  Services,  Legal  Service, 
Secretariat General. The Employment, Social Affairs and Equal Opportunities department was also 
invited and consulted. The Group has been continuously kept updated and consulted throughout the 
preparation of the impact assessment. It met three 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 been significantly redrafted in order to take the recommendations 
of the Board into account. In particular, 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  
6  
7  

See Annex 1 for a short comparison of income and capital taxation with inheritance taxation 
COM(2006) 823 of 19 December 2006 
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 

4 

   EN 

 
                                                 
macroeconomic aspects,  by elaborating examples to show the possible considerable effects of the 
problem for individuals and SMEs, and by further elaborating on how the functioning 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  concrete  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 determine 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 has received input from  various sources on this 
impact assessment work. 

In 2010 the Commission launched two public consultations on the internet. One concerned actual 
cases of double taxation8, including of inheritances. The other, which dealt exclusively with cross-
border  inheritance  tax  issues,  was  designed  to  obtain  views  from  all  interested  stakeholders 
(individual citizens, academic representatives, tax practitioners and organisations) on the extent of 
cross-border inheritance tax 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 replies to the consultation from a 
broad  range  of  stakeholders,  including  205  individual  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-registered and 9 registered organisations; and 2 public authorities. 

Stakeholders  reported  on  possible  cases  of  discrimination,  highlighting  discrepancies  between 
Member  States'  inheritance  tax  systems  and  shortcomings  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  general  public  consultation  on  double 
taxation  problems.  There  were  two  such  replies.  In  addition,  some  stakeholders  expressed  their 
views in reply to both consultations. The main feedback 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 document to the inheritance tax 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  EU11"  (hereafter  referred  to  as  the 
Copenhagen Economics Study). It explored 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,  inheritance  taxation  was  discussed  in-depth  at  the  64th 
Annual  Congress  of  International  Fiscal  Association  (IFA).  The  Commission  contributed  a  report 

8  

9  
10  
11  

EN 

ran 

to  30 

consultation 

from  24  April 

This 
http://ec.europa.eu/taxation_customs/common/consultations/tax/2010_04_doubletax_en.htm 
http://ec.europa.eu/taxation_customs/common/consultations/tax/2010_06_inheritance_en.htm 
See Annex 2 
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. 

June  2010.  For 

further  details 

see 

at 

5 

   EN 

 
                                                 
on the relevant case law of the court. The General Report (hereafter referred to as the IFA General 
Report) on this subject concluded that further coordination at EU level is necessary12.  

In  the  margins  of  the  IFA  conference,  the  Commission  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. Another expert meeting was held in December 
2010  to  discuss  both  any  possible  impact  on  an  EU-wide  inheritance  taxation  initiative  of  the 
Commission's  2009  proposal  for  a  Regulation  on  cross-border  successions13  and  the  possible 
technical features of an inheritance taxation initiative. 

In  November  2010  the  Commission  presented  the  main  findings  of  the  Copenhagen  Economics 
Study to Member States' tax officials at a meeting of the Commissions' Working Party IV on Direct 
Taxation.  Member  States  welcomed  the  Commission's  initiative  to  explore  the  problems  but 
considered  any  EU-wide  binding  solution  disproportionate.  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  that  Member  States'  inheritance  tax  rules  as  applied  in  cross-
border situations may hinder EU citizens from benefiting 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 situations. 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  discrimination  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,  without  this  difference  in  treatment  being  justified  by 
objective reasons. 

Second, there is the risk of unrelieved double or even multiple 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 appreciably 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  unrelieved  double  taxation,  may 
negatively  affect  the  value  of  an  inheritance  and  may  cause  great  difficulties  for  citizens  and 

12  

13  

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. 
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 

6 

   EN 

 
                                                 
businesses  who  take  advantage  of  the  right  to  move  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 international successions but the same may not be 
true  of  less  wealthy  individuals  who  may  only  realise  the  extent  of  the  problems  when  they  are 
actually facing cross-border inheritance tax bills.  

As regards the problems related to transfer of business in the case of the death of an SME owner, 
the Copenhagen Economics Study noted, and some stakeholders (in particular tax practitioners and 
associations) in their responses to the inheritance tax consultation agreed, that both discrimination 
and double taxation can create barriers to business continuity.  

Member States' tax systems must respect the fundamental freedoms, notably the rules relating to the 
free movement of workers, services and capital and the freedom of establishment (Articles 45, 49, 
56  and  63  Treaty  on  the  Functioning  of  the  European  Union  -  TFEU),  as  well  as  the  general 
principle of non-discrimination on grounds of nationality (Art. 18 TFEU). Nevertheless, these rules 
do not provide protection against unrelieved 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  accumulation  of  taxes  imposed  by  more  than  one  State 
might lead to results that, in some Member States at least, would be considered 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  individuals  inherit  property  or  other  assets  across 
borders, they may be subject to inheritance tax rules which conflict 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  provided  for  less  favourable  rules 
where  either  the  assets  or  the  deceased  person/donator  or  indeed  the  beneficiaries  were  located 
outside the Member State applying the inheritance taxation. These Court decisions have brought a 
certain amount of clarity and certainty to this matter. However, it is also true that Court actions may 
involve high costs for both taxpayers and administrations. Moreover, in many instances, it may not 
be entirely clear what consequences a ruling involving legislation of one Member State should have 
on legislation of another Member State. The current legal approach also tends to be asymmetrical in 

14  
15  

16  

Case C-67/08, Block. [2009] ECR I-883. 
For instance in Belgium, the Wallon tax rate of 90% for non-related persons, on inherited parts exceeding a 
certain  threshold, has been declared unconstitutional  (Decision 107/2005).  The German  Constitutional  Court 
has ruled that inheritance tax must not lead to a situation 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.  
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 

7 

   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  taxation  problem,  this  can  arise  because  of  the 
significant  differences  in  international  private  laws,  and  in  the  private  and  tax  laws  of  Member 
States,  in  the  field  of  inheritances  in  addition  to  the  widely  varying  rules  in  Member  States 
concerning how an inheritance is taxed. 

First,  there  may  be  a  conflict  between  Member  States'  rules  concerning  which  inheritance  law  is 
applicable to a succession which involves cross-border elements17.  

Second, Member States' national private laws differ considerably. There are common law and civil 
law systems and there are considerable variations even between those Member States that apply one 
or other of these two systems.  A basic difference 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 directly transferred from the deceased person to the 
heirs  who  are  then  responsible  for  paying  the  inheritance  tax.  Meanwhile,  common  law  countries 
generally  require  the  assets  first  to  be  transferred  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 possibility that tax paid by the personal representative may not be credited 
against inheritance tax due by another person in another country. Some contributors noted also the 
difficulties concerning the civil law countries' treatment of trusts, which are characteristic features 
of the common law concept of inheritances.  

In  addition  to  the  differences  in  the  relevant  international  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 Sweden) have neither an 
estate tax nor an inheritance tax, although some tax 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  increase  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  commenced  infringement  proceedings  against  several 
Member States over aspects of their laws. Furthermore, the Court decided in eight out of ten cases 

17  

18  

19  

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 located, without aiming to harmonise the 
national  substantive  rules  on  successions.  More  on  the  link  between  the  draft  Regulation  and  the  present 
inheritance tax initiative could be found under 4.2. 
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. 
See  Annex  5  on  "Approximate  type  and  number  of  inheritance  tax  questions    2006  -2009"  received  by  the 
Your Europe Advice service. 

EN 

8 

   EN 

 
                                                 
examined  since  2003  that  the  national  inheritance  tax  and  gift  tax  rules  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  which  are  different.  In  order  for  a 
national scheme providing for a difference in treatment 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 provisions may not in any event be more restrictive 
than is necessary in order to achieve the aim pursued; they must, in other words, 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  reason  of  nationality  but  also  all  covert  forms  of  discrimination 
which, by the application of other criteria of differentiation, lead to the same result.  

The Court, in applying these principles to  Member States' inheritance tax provisions, 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 within 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  favourable  treatment  in  general  with  regard  to 
inherited  assets  located  abroad  or  otherwise  connected  with  the  territories  of  the  other 
States,  for  example  for  inheritances  of  family  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, inherited from his mother (a German resident 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 net estate of DEM 1 737 
167. The German inheritance tax rules imposed taxation on the entire estate of a person who died 
while  domiciled  in  Germany.  Assets  situated  outside  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  assets,  the  result  of  which  meant  a  tax  value  of 
only 10% of their fair market value. In the present case such a 10% valuation 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  Court  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 value of domestic immovable property, while setting 
the value of property situated abroad at the normal market value. 

Example 2 – the Eckelkamp case, C-11/07 

EN 

9 

   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 legislation, different tax 
regimes  applied  for  inheritance,  depending  on  where  the  testator  resided  at  the  time  of  his  death. 
Inheritance tax was due on the value 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  gathered  estate.  In  the  first  case,  debts  and  liabilities 
pertaining to the inheritance were taken into account for the assessment of the inheritance tax. On 
the  contrary,  no  debt  and  liability  could  be  deducted  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  assessing  the  transfer  tax  due.  The  transfer  duties 
payable  were  estimated  at  EUR  110 000.  Had  the  Belgian  law  allowed  the  deduction  of  the  debt 
over the estate, the value of the estate for inheritance tax purposes would be nil. The Court decided 
against  these  Belgian  rules,  stating  that  it  is  illegal  for  a  Member  State  not  to  allow  mortgage-
related charges to be deducted from 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 Belgium at the time of his death. His heirs, who were 
also resident in Belgium, inherited shares in two Dutch companies. After deduction of liabilities, the 
taxable estate amounted to EUR 3 598 717.33. On  this estate they paid tax of EUR 839 485.60. The 
Belgian tax law granted an exemption from inheritance 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, however, were not residents of the 
Flemish  Region.  If  they  were,  the  exemption  would  have  applied.  The  Court  established  that 
Member States cannot deny an exemption to inheritances 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 been 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 taxation. This may give rise to significant social and 
economic  impacts  if  the  individuals  concerned,  who  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 could contain possible discriminatory features can be found in the IFA 
General Report and in the various national Branch Reports discussed at the above-mentioned IFA 
Congress;  in  the  Copenhagen  Economics  Study;  and  in  replies  to  the  inheritance  tax  public 
consultation. The responses to the consultation mostly concerned the tax laws of Spain, the United 
Kingdom, Belgium and Germany. The Copenhagen Economics Study highlights that while Member 
States have made progress in reducing the discriminatory 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 

10 

   EN 

 
                                                 
inheritance  taxation.  In  this  respect,  the  competent  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 Functioning 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 inheritance tax on the heirs, so that the 
taxable event is the enrichment of the beneficiary, while other Member States 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). Therefore 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 personal representative as a different 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.   

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** 

9 

No  inheritance  or 
estate tax 
*   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 

Austria,  Cyprus,  Estonia,  Latvia,  Malta,  Portugal,  Romania,  Slovakia, 
Sweden 

Different personal  nexus rules In the case of both taxes on estates and taxes on beneficiaries, tax 
liability  is  determined  on  the  basis  of  a  connecting  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 tax law. Some Member States even apply taxation on the basis of 
the personal nexus of either a deceased or an heir.  

EN 

11 

   EN 

 
 
 
 
Table 2: Principles for determining the personal nexus of the deceased or heir(s) 

Principle 

Residence 
principle 

Domicile 
principle 

Member States using principle 

Belgium, Czech Republic,* Denmark, Finland, Germany, Hungary, Ireland, Italy, Lithuania, 
Luxembourg, the Netherlands, Poland, Slovenia, Spain. 

France, Germany, Greece, United Kingdom. 

Bulgaria, Czech Republic, Greece, Hungary, the Netherlands, Poland. 

Nationality 
principle 
* 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 jurisdictions. 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  assets  concerned  by  the  "situs"  taxation  rules  may 
vary from country to country. 

Table 3: Scope of location rules in the domestic tax rules on inheritance 

Scope of taxations 

All assets 

Member States 
Czech  Republic,  France, Greece,  Ireland,  Italy,  Lithuania,  Slovenia,  Spain, 
United Kingdom. 
Belgium, Bulgaria, Denmark*, Germany**, Finland, Hungary, Luxembourg, 
Poland. 

The Netherlands 

Real estate 
(immovable assets) 
only 
No taxation based 
only on the location 
of the inherited 
property  
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  meanings  of  the  "personal  nexus"  and 
"situs" terms can differ from jurisdiction to jurisdiction, so that two 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  and  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 inheritance tax upon death by gifts inter vivos) is to levy gift taxes in addition to 
inheritance taxation. For this purpose, many Member States aggregate gifts made by the same donor 
to the same recipient during a certain period of time and tax the donor or the recipient on that basis. 
Such  aggregation  periods  vary  from  Member  State  to  Member  State.  Issues  also  arise  with 
creditability of previously paid gift 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 

12 

   EN 

 
 
 
the subject of this impact assessment could be applied 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 inheritance tax rates for certain beneficiaries 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 the beneficiary are not related. Many stakeholders, 
mostly individual citizens, point to such inordinately high rates and lack of exemptions for bequests 
to persons other than immediate family. The high effective tax rates in Member States are illustrated 
in Table 4 below. The issue is not the differences between Member States in effective tax rates but 
the  fact  that  two  Member  States  apply  taxation  at  sometimes  high  levels  without  double  taxation 
relief.  

EN 

13 

   EN 

 
Table 4: Effective tax rates applicable in selected Member States in 2010/2011 (depending on 
availability) 

Country 

Remarks 

The closest family 
(spouse and/or child) 
€ 250 000

€ 50 000

Non relatives 

Other remarks 

€ 50 000

€ 250 000 

Austria 

Cyprus 

Estonia 
Latvia 
Malta 
Romania 
Slovakia 
Sweden 

Belgium 

Bulgaria 

Czech 
Republic 

Denmark 

Finland 

France 

Germany 

Greece 

Hungary 

Ireland 
Italy 
Lithuania 
Luxembourg 

Netherlands 

Poland 

Portugal 

Slovenia 

Spain 

UK 

(Flanders) 
(Walloon) 
(Brussels) 

spouse 
child 
spouse 
child 
spouse 
child 

spouse 
child 
spouse 
child 

spouse 
child 

No inheritance tax 

7.80% 41.25%
9.70% 46.25%
10.12% 40.0%

0%

0%

0% 3.68%

0%
13.75%
8.16%
11.28%
0%
6.54%

28.29%

13.40%

58.09%

21.00%

17.60%

0% 3.60%
0%
0.40%
16.87%
0%
0% 14.65%
0% 8.00%
0% 4.71%
0% 6.00%
0%
13.72%

28.79%

0% 19.06%

0% 10.00%

0% 15.20%

3.00%
3.50%
2.10%

0%

0%

0%
4.38%
0%
5%

0%

0%
0%
0%
11.00%
0%
0%
0%
0%
0%
0%
6.18%
0%

0%

0%

0%

0%

Tax on land 
transfers and 
contribution to 
private foundations  
Tax on land 
transfers 
Various fees  

Transfer duty 
Real estate tax 

63.25% 
71.25% 
63.50% 

between 1.61% 
and 3.23% 

Rates set by 
municipal 
authorities 

5.52% 

34.66% 

28.04% 

59.62% 

27.60% 

26.64% 

32.50% 

22.93% 
8.00% 
9.88% 
18.00% 

34.93% 

19.81% 

10.00% 

20.68% 

Stamp duty upon 
death. Spouses and 
children are exempt.

Assuming the pre-
existing net assets of 
the heir do not 
exceed € 402 678.11 
A nil rate band 
applies up to GBP 

0% 6.16%

15.55% 

0%

0%

0% 

EN 

14 

   EN 

 
 
  
 
  
  
  
  
  
  
  
  
  
  
  
  
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
325 000. Above this, 
the rate is 40%  

Note:  For  calculation  purposes  only  lump  sum  allowances  or  general  exemptions  are  included; 
personal tax deductions, such as those dependent on age or other special features 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. The conflicts can be categorised as follows:  

Table 5: Types of conflicts that may result in double taxation  

Type of conflict 
Personal  nexus 
Situs  

- 

Personal 
personal nexus  

nexus- 

Situs-Situs  

Description of conflict 
The same bequest is taxed twice, first by the 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.    
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 the beneficiary is taxed in the other. 
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 intangible assets such as shares.

Source: based on information in Rohatgi (2005)  and Copenhagen Economics  

Limitations to existing tools to eliminate the double taxation of inheritances  

At present, in the absence of appropriate 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 inadequate domestic mechanisms 
to  relieve  cross-border  double  taxation  of  inheritances.  These  domestic  provisions  are  often 
minimal,  leaving  much  to  administrative  interpretation.  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  the  specific  issues  regarding  inheritance  taxation;  several  sets  of 
circumstances that can give rise to double taxation of inheritances are not common in the area of 
income taxation.21 In general, these unilateral relief provisions are targeted at the "personal nexus – 
situs" conflict and the two other types of conflicts can remain unaddressed. 

21  

See Annex 1 for more on the differences and similarities between income and inheritance taxation. 

EN 

15 

   EN 

 
  
                                                 
Table  6:  Unilateral  relief  for  international  double  taxation  on  inheritances  provided  by 
Member States applying inheritance taxation  
All foreign located assets* 
 Finland, France, Germany*, Ireland, 
Italy,  Lithuania,    Spain,  UK,  the 
Czech Republic*** 

Subset of foreign located assets** 
Belgium  (real  estate),  Denmark  (real  estate  and 
to  a  permanent 
business  assets  attributable 
establishment),  Greece 
the 
Netherlands 
(real  estate  and  business  assets 
attributable to a permanent establishment) 

(movable  assets), 

Hungary, Slovenia 

Bulgaria 
property) 

(real  estate),  Luxembourg 

(movable 

Method 
Credit method 
Crediting inheritance 
taxes paid in another 
Member States 
against the domestic 
inheritance tax due. 
Exemption method 
Exemption from the 
tax base of the assets 
located in another 
Member State 
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 assets 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 between Member States' inheritance 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  consultation  emphasised  the  need  for  a 
pragmatic, rather than formalistic, approach regarding 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 immovable property. Furthermore, the relief 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,  deriving  from  the  diverging  definitions  between  the 
different tax systems on what qualifies as immovable 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 the 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 net amount to be taxed. Incomplete tax credit due to 
different  valuation  methods  or  the  different  allocation  of  debts  was  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  constraint  can  be  limiting  the  amount  of  the  foreign 

EN 

16 

   EN 

 
 
 
creditable tax to the tax paid abroad 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 foreign 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 stakeholders (in particular associations of tax practitioners ) 
mentioned was the fact that unilateral relief was subjected 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  35122.  Furthermore,  even  these  few  conventions  are  not  always 
efficient in eliminating double taxation. Stakeholders (in particular associations of tax practitioners) 
highlighted  the  limited  availability  of  treaty  relief  for  foreign  located  property  and  varying  rules 
regarding allocation of taxing rights in those tax treaties. Another problem is that the treaties do not 
normally cater for situations where more than two Member States may have taxing rights over an 
inheritance  (e.g.  in  cases  where  immoveable  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 based on the OECD Model Tax Convention 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. Otherwise the property should be taxed in the Contracting 
State  where  the  deceased  or  the  donor  was  domiciled  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 Model 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:  

• 

• 

• 

• 

22  

The taxes covered are taxes imposed by reason of death and not on occasion of death. That 
means that registration taxes levied on the transfer of real estate are outside the scope as are 
capital gains and income taxes applied on bequests. 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 taxable person (e.g. credit against inheritance 
tax  levied  on  a  beneficiary  in  respect  of  estate  tax  levied  on  the  deceased  in  another 
country) is left for bilateral negotiations 
Discrimination is not fully eliminated, as domestic provisions that, inter alia, contain more 
restrictive rules for the valuation of foreign located assets or the deduction of foreign debts, 
compared to domestic located assets and debts, are not expressly prohibited. 

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 

17 

   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  systems,  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 inheritances in the EU. 
Discrimination is a violation of fundamental freedoms, and as such, is a problem irrespective of the 
material harm it causes. For the double taxation issue, it is important to note that, due to the relief 
provisions in place, not all inheritances are twice taxed or are completely taxed twice. Nevertheless 
the  total  amount  of  taxes  on  cross-border  inheritances  is  indicative  of  the  scale  of  the  double 
taxation and discrimination problems. 

EN 

18 

   EN 

 
Unfortunately,  there  is  no  EU-wide  dataset  available  which  can 
provide specific information about the amount of inheritance 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  information.  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  those  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  generally  in  regard  to  cross-border 
inheritances.  For  this  reason,  we  assume  that  the  average  value 
involved  in  cross-border  inheritance  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 average 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

Bulgaria

Czech Republic

Denmark

Germany

Estonia

Ireland

Greece

Spain

France

Italy

Cyprus*

Latvia 

Lithuania

Luxembourg

Hungary**

Malta

Netherlands

Austria

Poland

Portugal

Romania

Slovenia

Slovakia

Finland

Sweden

UK

17975

0

0

11544

5543

0

11972

1352

7552

14290

573

1174

0 

0

14916

255

0

13283

0

0

0

0

0

0

13130

0

6775

5193
in  Europe, 

Total EU
Source:  Taxes 
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 
Hungary 

www.origo.hu 

for 

EN 

19 

   EN 

 
 
Table 8: Estimate of number of cross-border inheritance cases per year in the EU 

Cases due to foreign located assets 

Cases due to foreign located heir 

Cases due to foreign located deceased 

Subtotal 

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)  

Subtotal for double counting 

Total (rounded) 
Source: Copenhagen Economics  

Number of potential 
cases 

32 000 – 44 000

200 000 – 300 000

75 000

300 000 – 400 000

Minus 4 000 – 12 000

Minus 5 000 – 25 000

Minus 9 000-37 000

290 000 – 360 000

The  Impact  Assessment  on  the  proposal  for  a  Regulation  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  actual  figures.  That  is  because  the  figures  could 
only take account of cross-border cases of real estate ownership and not of other assets such as bank 
savings.  Copenhagen Economics states that, as the financial crisis caused considerable 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  South  derives  from  individuals  who  can  afford  to 
move in order to enjoy a pleasant climate and are, therefore, more likely to own property abroad. 
Therefore,  the  latter  migration  flow  seems  to  be  more  relevant  as  regards  distributional  effects 
across Member States.  

EN 

20 

   EN 

 
 
 Table 9: Top 10 migration streams in the EU-27. 
Case# 

Citizenship of migrant 

Member State of 
residence 

Romania 
Romania 
Italy 
Portugal 
Poland 
UK 
Ireland 
Greece 
Germany 
Austria 

1 
2 
3 
4 
5 
6 
7 
8 
9 
10 
Total 
Source: Eurostat and Copenhagen Economics. 

Spain 
Italy 
Germany 
France 
Germany 
Spain 
UK 
Germany 
Spain 
Germany 

Double taxation 
treaty present 

No. of migrants 

No  
No  
No  
Yes 
No  
No  
Yes 
No  
No 
No  

799 225 
796 477 
560 364 
491 983 
419 555 
375 856 
369 470 
306 402 
191 080 
190 150 
4 500 062 

As mentioned above, revenue from domestic and cross-border inheritances taxes combined account 
for less than 0.5% of total tax revenues in EU Member States. Therefore, cross-border cases alone 
must account for far less than that figure. However, 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 concerned. 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 tax revenues, at the individual level, some citizens 
can be affected heavily.  

The  following  examples,  based  on  cases  reported  through  the  Your  Europe  Advice  services 
illustrate real-life examples of effective double taxation of cross-border inheritances. The examples 
show the considerable impact of the problem for the individual citizen affected. For reasons of data 
protection, we used false names. As taxpayers rarely provide figures in their complaints, we used 
our own estimations based on research to elaborate 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 writing the present report.    

CASE 1 Filip, a Polish citizen resident in Poland, inherits moveable and immoveable property in 
Belgium  from  his  uncle  resident  in  Brussels.  Filip  must  pay  inheritance  tax  in  Belgium  on  the 
property because the deceased was a Belgian resident. Belgian tax amounts 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 treaty in place to avoid double taxation between the two countries. In 
addition, Poland has no domestic provision to provide relief for foreign inheritance taxes.  

Assuming that the inherited property was a house in Brussels valued at EUR 232 000 and bank and 
investment  assets  valued  at  EUR  193  000,  the  Belgian  tax  would  amount  to  EUR  255  000.  The 
Polish tax would be a further 12% of the total value of the assets = 51 000. The liquid assets would 
not be sufficient to cover the tax bills arising in the two countries, and Filip could find 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 the level of valuation for inheritance tax purposes. 

CASE 2  

EN 

21 

   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  formalised.  Peter  had  to  pay  French  inheritance  tax  in 
view of his residence in France and of the fact that 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 inheritance tax, Dutch nationals 
are deemed to have resided within the national territory for 10 years following 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 the legislation applied 
by  the  Netherlands,  foreign  taxes  are  deductible  as  a  liability  on  the  inheritance  received  and, 
therefore,  the  tax  applied  by  France  led  to  a  reduction  of  the  taxable  base  in  the  Netherlands. 
Nevertheless,  double  taxation  was  not  fully  eliminated  and  the  total  tax  due  on  the  property 
concerned was higher than it would have been had the inheritance been confined to any one of the 
two Member States concerned. 

CASE  3  Jette,  a  Danish  national,  inherited  a  summer  house  in  Portugal  and  a  long  term  savings 
account  in  Denmark  from  her  uncle  who  was  domiciled  in  Denmark.  Jette  must  pay  Portuguese 
stamp  duty  amounting  to  10%  of  the  net  value  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 the Portuguese summer house because under Danish 
rules,  worldwide  property  of  the  deceased  is  subject  to  inheritance  tax  in  the  hands  of  Danish 
resident  heirs,  at  a  rate  in  her  case  of  effectively  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 valued at EUR 125 000, and that there is EUR 75 
000  in  the  long  term  savings  account,  Jette  might  have  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  effects  of  inheritance  taxes  on  small  businesses. 
However,  in  reality  it  is  generally  the  actual  application  of  inheritance  taxes  to  transfers  of 
businesses  to  which  SME  organisations  object  rather  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 single application of inheritance tax can pose challenges to family 
businesses. These problems can then be aggravated in cross-border situations. As stated above, the 
present report concentrates on cross-border inheritance tax obstacles and does not call into question 
the  existence  of  inheritance  taxes.  However,  solutions  to  the  cross-border  difficulties  identified 
would also benefit those who inherit SMEs across borders.   

23  

24  

EN 

Note  that  the  main  addressee  of  an  inheritance  tax  is  the  individual  citizen,  not  legal  persons  such  as 
companies. 
See,  for  example,  position  paper  for  Conference  "transfer  of  Ownership  in  Private  Business  –  European 
Experiences", 
http://www.ownershiptransfer2010.org/wp-
2010: 
content/uploads/2010/03/transferofownership_newsletter4_en.pdf 

March, 

25-26 

22 

   EN 

 
                                                 
As  regards  third  country  nationals,  free  movement  of  capital  extends  to  flows  between  Member 
States and third countries. Thus, any action of the 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 grounds of nationality, because such actions would 
be  limited  to  nationals  of  Member  States.  It  remains  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 Treaty 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 action 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  indications  that  the  problems  will  increase  in  magnitude  over  the 
coming years. 

The Cross-border Succession Impact Assessment also concludes that the magnitude of the problem 
related to cross-border successions is very likely to increase in the future.  

The following chart provides for the migration indicators25: 

Chart 1: Citizens of EU-27 resident outside their Member State of citizenship 

Millions

12

11

10

9

8

2005

2006

2007

2008

2009

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  

26  
27  

It is worth emphasising that the number of deaths of migrants (i.e. cases due to foreign-located deceased) is 
just one of the three main types of cross-border inheritance situations. Consequently, we took into account also 
the foreign-located heirs. 
See Table 4.2 on page 64 of the Copenhagen Economics' Study, on tendencies in foreign home ownership.  
See page 70 in the Copenhagen Economics Study.  

EN 

23 

   EN 

 
 
 
 
                                                 
Chart 2: Cross-border portfolio investments within EU-27 

D
S
U
5
0
0
2

f
o
s
n
o

i
l
l
i

M

140000

120000

100000

80000

60000

40000

20000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Source: IMF Coordinated Portfolio Investment Survey, http://www.imf.org/external/np/sta/pi/datarsl.htm 

This  chart  shows  a  massively  growing  trend  in  cross-border  portfolio  investment.  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 number of complaints and referrals to 
the Court about discriminatory aspects of Member States' inheritance tax laws will increase, as will 
double  taxation.  Notwithstanding  the  trends  towards  lower  general  levels  of  inheritance  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  inheritance  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 the 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  believes  that  EU  law  has 

EN 

24 

   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 appropriate for the Commission to carry out an EU-
wide examination of the potential and actual discrimination problems in the area of the taxation of 
inheritances and consider whether and what kind of action might be needed, including under Article 
115  TFEU,  to  improve  compliance  with  the  fundamental  freedoms  in  the  area  concerned.  Such 
action  could  usefully  complement  the  infringement  proceedings  that  the  Commission  can,  in  any 
event, initiate.  

As  regards  double  taxation,  it  is  clear  from  the  complaints  received,  and  from  the  replies  to  the 
public  consultations,  that  problems  of  double  taxation  of  inheritances  are  not  currently  being 
resolved  in  a  satisfactory  manner  except  to  the  extent  that  they  are  addressed  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 interest of the Union, to investigate 
the  impact  of  the  lack  of  appropriate  mechanisms  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.  Proportionality  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 citizens to exercise their right to move and operate 
freely within the Internal Market and not be deterred by cross-border inheritance tax obstacles. To 
this end, the initiative would aim at 
• 
• 
in particular in order to avoid an excessively high tax burden  or  even confiscatory rate of overall 
taxation.  

promoting the elimination of discrimination in the area of inheritance taxation; and 
reducing the double taxation of inheritances within the EU, 

Translation of these into operational objectives would imply: 
• 

achieving a reduction in the number of complaints of EU citizens and requests from national 
courts for preliminary rules concerning discriminatory inheritance tax rules; and  
improved scope of national provisions 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 operate freely across borders. 
In its "Europe 2020 strategy"28 for smart, sustainable and inclusive growth in the EU, the European 
Commission  concluded  that  an  element  of  putting  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 strategy, and as announced in the 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 

25 

   EN 

 
                                                 
border  tax  obstacles  for  EU  citizens"29,  the  Commission  wants  to  address  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  inheritance  tax  problems  would  complement  the  legislative 
proposal for a Regulation dealing with cross-border successions and wills  which the Commission 
presented  in  October  2009.  While  that  Regulation  could,  whether  adopted  or  not,  mean  that  the 
taxable  beneficiaries  of  inheritances  would  change  in  some  cases,  it  would  not  change  Member 
States' laws on taxing cross-border inheritances. Thus, whether adopted or not, the Regulation will 
not  address  the  situations  where  citizens  taking  advantage  of  the  Internal  Market  are  exposed  to 
double taxation or to discriminatory rules on inheritances.  

The  Commission  has  been  considering  the  problems  that  Member  States'  inheritance  tax  regimes 
could  create  for  SMEs  since  199430.  As  explained  above,  it  is  generally  the  actual  application  of 
inheritance  taxes  per  se  to  transfers  of  businesses  which  create  problems  for  SMEs.  The  present 
report concentrates on cross-border inheritance tax obstacles and does not challenge the existence of 
inheritance taxes. However, as explained above, solutions to the discrimination and double taxation 
issues would be applicable and beneficial also to those who inherit SMEs across borders.   

The  present  initiative  would  also  aim  at  supporting  and  complementing  the  Commission's 
infringement actions against discriminatory inheritance tax provisions.  

Furthermore,  it  would  be  in  line  with  the  fundamental  rights  recognised  by  the  Charter  of 
Fundamental Rights of the European Union (Charter) and indeed strengthen the citizens's position 
under certain headings (cf. below ). Thus, measures 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 possessions. They will also have a positive impact 
on free movement of EU citizens (Article 45). 

5. 

POLICY OPTIONS − THE “HOW" 

5.1. 

Definition of policy options  

Possible  policy  options  to  address  the  problems  identified  are  listed  below  and  briefly  described.  
The preferred option could combine elements from both of these sets. 

29  
30  

COM (2010) 769 and Staff Working Paper SEC/2010/1576 
Most recently, Communication from the Commission to the Council, the European 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 

26 

   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 inheritance tax systems  
•  Policy Option A3: Compulsory rules 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 regarding relief of double taxation through 
bilateral treaties between Member States designed to relieve double taxation of inheritances  
•  Policy Option B4 – Binding rules governing bilateral 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  

•  Policy Option B5– EU- wide multilateral 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 discrimination related to cross-border inheritances  

Policy Option A1 – No change. Continuation of current regime (baseline scenario) 

Policy Option A2 Publication of principles for non-discriminatory inheritance tax systems 

Under this option, a staff working paper would be developed that would assemble he principles of 
non-discrimination flowing from case-law and which need to be respected by national inheritance 
tax systems. These principles are 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 document could also assist Member States in bringing 
their inheritance  tax provisions into line with EU law. This would also support  the Commission's  
legal action against infringements in the inheritance tax area.  

Policy Option A3 - Compulsory rules on abolishing of discriminatory features of Member States' 
domestic inheritance tax legislation   

Under  this  option,  as  suggested  by  some  stakeholders  in  their  replies  to  the  inheritance  tax 
consultation,  the  Commission  would  propose  the  principles  set  out  in  the  relevant  European  case 
law for adoption as compulsory rules at EU level.  

EN 

27 

   EN 

 
 
5.2.2.  Policy Options B: Addressing unrelieved double taxation of cross-border inheritances 

Policy Option B1 – No change. Continuation 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 Member 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  inheritance  taxation.  It  is  likely  to,  inter  alia,  cover  inheritances  of  both 
immoveable and moveable property and suggest an order 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 existing 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 designed to relieve double taxation of inheritances 
The Commission could recommend that Member States complete a full network of bilateral double 
taxation  conventions  on  inheritances,  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  (Policy  Option  B3.c).  Bilateral  double  taxation 
conventions share taxation, in the case of two countries that have taxing rights over income, on the 
basis of a set of principles defining concepts such as the location of assets or income, the basis of 
liability  and  the  domicile  or  residence  of  the  persons  involved.  They  contain  dispute  resolution 
provisions which are not, however, binding on the two participating countries. 

Policy Option B4 – Binding rules governing bilateral 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  stakeholders  in  their  reply  to  the  inheritance 
tax public consultation, 

Policy  Option  B5  –  EU-  wide  multilateral  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 alone, 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  combination  of  features  of 
Policy Options B6.a, b and c i.e. single harmonised basis, common definitions and a binding dispute 
settlement mechanism (Policy Option B6.d).  

EN 

28 

   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  inheritances,  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 situations. While the OECD Model Convention on Income and Capital 
is  constantly  updated,  the  Model  Convention  on  Estates,  Inheritances  and  Gifts  has  not  been 
amended  to  address  shortcomings  identified  and  therefore  would  not  resolve  all  the  problems 
effectively. Another reason why the Model might not be an ideal point of departure is the fact that 
the    OECD  is  currently  considering  its  update.  This  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 concluded 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 bilateral 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.  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  agreements.  The  effort  involved  in  achieving  this  result  in  bilateral 
relations, might still leave the problem of multilateral situations unresolved, and would not solve the 
problem as long as Member States are not prepared to enter into bilateral inheritance tax agreements 
in the first place. 

Policy  Option  B5  –  EU-  wide  multilateral  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 unlikely that Member States would agree on such a convention  given a  previous 
failed attempt at such a solution for income tax31. Moreover, such a convention 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  (Article  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 unless combined with common definitions such as of 
assets and with rules to deal with dual residence/nexus, as proposed in another sub option (Policy 
Option B.6.b). Therefore, Policy Option B.6.a appears inappropriate.  

6. 

ANALYSIS OF IMPACTS OF THE POLICY OPTIONS 

This  chapter  analyses  the  different  Policy  Options  for  eliminating  discrimination  and  reducing 
double  taxation  of  cross-border  inheritances  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  impacts  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 matière d'impôts directs). 11414/XIV/68-F of 1 July 1968. 

EN 

29 

   EN 

 
                                                 
increased  mobility,  but  that  factor  would  not  be  a  particular  consequence  of  any  initiative 
addressing cross-border inheritance tax problems.  

Administrative  costs  imposed  on  citizens  and  businesses  will  not  be  any  different  following  any 
changes to current regimes, because taxpayers will always have to make declarations to two or more 
tax  authorities  in  cross  border  situations.  That  is  a  fact  of  life  that  will  not  change  as  long  as 
Member  States  have  different  tax  systems.  However,  legal  costs  and  the  time  and  inconvenience 
involved  in  making  complaints  would  be  reduced  if  there  was  less  discrimination  and  double 
taxation about which to complain. For tax administrations, again costs will not change much except 
that  less  cross-border  inheritance  tax  problems  would  translate  into  fewer  complaints  and  legal 
cases to handle. 

As  regards  budgetary  impacts  on  Member  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 States 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' total revenues (see 3.3.3). Above all, as 
it is not the macroeconomic but the microeconomic impact 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 particular, 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 (Article 21), the right to property (Article 17), freedom to conduct a 
business (Article 16) and EU citizens' right to move freely within the EU (Article 45). 

6.1. 

Impact  of  the  Policy  Options  addressing  problems  of  discrimination  (Policy  Option 
A) 

Policy Option A1 - No change. Continuation of current regime (baseline scenario)  

(i) Fundamental freedoms: The Commission would in any event continue to take actions against 
Member  States  that  breach  the  non-discrimination  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 discriminatory features of Member States' domestic 
rules  are  likely  to  cause  more  problems.  Continuation  of  the  current  situation  is  most  likely  to 
impact on the middle classes as the 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 

30 

   EN 

 
 
 
                                                 
Policy Option A2 – Publication of principles for non-discriminatory inheritance tax systems 

(i)  Fundamental  freedoms:  The  publication  of  principles  for  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 principles applicable could 
reduce  the  need  for  court  actions.  (iii)  Social  and  economic  effects:  This  option  should  bring 
increased  confidence  about  the  implications  of  cross-border  movement  and  more  trust  in  the 
Internal Market.  

Policy Option A3 - Compulsory rules on abolishing of discriminatory features 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  rights  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  confidence  about  the  implications  of  cross-border  movement  and 
more trust in the Internal Market.  

6.2. 

Impact of the Policy Options addressing problems of double taxation (Policy Option 
B) 

Policy Option B1 - No change. Continuation 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  confronted  in  cross-border  inheritance  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) taxation can reach levels that could be considered 
confiscatory.  Although  double  taxation  as  such  has  been  not  been  considered  incompatible  with 
fundamental  freedoms,  it  makes  the  exercise  of  these  freedoms  more  difficult.  (ii)  Costs  to 
taxpayers  and  tax  administrations:  The  lack  of  availability  of  relief  can  be  costly  in  individual 
cases,  as  indicated  in  the  examples  at  Chapter  3.3.3.  Member  States'  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 coming years, the absence of comprehensive double 
taxation relief is likely to cause more problems over time. The lack of comprehensive 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 not 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 make use of their right to engage in cross-border 
activity.  The  ensuing  economic  consequences  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  double  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 for Member States.  Tax administrations would also 
face  the  administrative  costs  of  making  changes  to  their  tax  rules.  However,  fewer  complaints 

EN 

31 

   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  over  time,  in  particular  the  middle  compared  to 
wealthier classes. (iv) Economic effects: The availability of comprehensive double taxation relief 
for cross-border inheritances would 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  because  both  involve  a  Commission 
recommendation on action to be taken by Member States. 

Policy Option B6 – Binding EU legislation 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 compel 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. 

7.1. 

COMPARISON OF MAIN OPTIONS  

Definition of the assessment criteria  

For  assessing  the  policy  options  to  eliminate  discrimination  (Policy  Options  A),  the  following 
criteria will be used: 

(cid:190)  Incentive: Incentive for Member States to change their discriminatory rules  
(cid:190)  Effectiveness:  in  terms  of  achieving  the  objective  of  enforcing  EU  law  and  increasing 

certainty regarding the types of provisions that are discriminatory 

(cid:190)  Proportionality: Going no further in terms of EU measures than is necessary to achieve the 

objective 

(cid:190)  Efficiency:  The  extent  to  which  the  objectives  can  be  achieved  for  a  given  level  of 

resources/at least cost 

(cid:190)  Flexibility: Ease of adjustment to reflect changes in case law and domestic legislation 

For assessing the policy options to reduce double taxation (Policy Options B), the following criteria 
will be used: 

(cid:190)  Effectiveness: in terms of achieving the objective of reducing double taxation and ensuring 

certainty in this regard 

(cid:190)  Proportionality: Going no further in terms of EU measures/EU harmonisation than is 

necessary to achieve the objective 

(cid:190)  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  particular  regarding  ease  of 
implementation 

(cid:190)  Flexibility: in terms of scope, ease of adjustability to reflect changes in laws and practices 

7.2. 

Comparison of Policy Options A that address problems of tax discrimination related 
to cross-border inheritances 

Policy Option A1 – No change Continuation of current regime (baseline scenario) 

EN 

32 

   EN 

 
Incentive: While infringement proceedings and Court decisions 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 insufficient 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  achieve  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-border  inheritances.  It  could  also  assist  Member 
States  in  bringing  their  inheritance  tax  provisions  into  line  with  EU  law,  in  particular  in  a 
coordinated way. Effectiveness: The publication of such a set of principles would enable taxpayers 
to better understand the implications of EU law for Member States' inheritance tax systems 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  and  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' legislation and practice. 
This  in  turn  could  minimise  the  number  of  infringement  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 features 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 prevail as regards how to design tax systems in a non-
discriminatory  way.  Proportionality:  Proportionality  standards  would  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 diverse national systems could give rise. This makes it 
difficult  to  formulate  general  principles  through  binding  secondary  legislation  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 address problems of unrelieved double taxation 
on cross-border inheritances 

Policy Option B1 - No change. Continuation of current regime (baseline scenario) 

Effectiveness:  This  option  would  not  achieve  the  objective  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 

33 

   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  appears  unlikely  on  the  basis  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 generally apply double taxation relief provisions under their 
domestic  law  but  these  are  not  comprehensive,  and  therefore  improvements  to  these  provisions 
would help to meet the objective set out in Chapter 4.1. This option would not, however, impose 
any  binding  obligation  on  Member  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: A recommendation  for   appropriate 
self-regulation  may  achieve  the  desired  results  without  protracted,  time-consuming  discussions  in 
the Council. For Member States, changing their own laws is obviously 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  means  of  administrative  guidance  rather  than  by  changing  laws. 
Flexibility: This option should be designed to ensure that unilateral double taxation relief measures 
would have a sufficiently  broad scope, would be easily adjustable to reflect  changes in  laws, and 
would allow administrative interpretation and a non-formalistic approach so as to ensure 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 inheritances, based on an alternative model to the 
OECD model tax treaty drawn 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 Chapter 4.1. This option would not, 
however,  impose  any  binding  obligation  on  Member  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  consultation  with  Member  States,  have  to  draw  up  a  model  double 
taxation  treaty.  This  might  take  a  considerable  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 Member States did decide to do so, their finalisation 
could be an extremely lengthy process. Flexibility: Tax treaties would 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 and might be insufficiently flexible to respond quickly to unforeseen circumstances.   

Policy Option B.3.c – The Commission could recommend the inclusion of inheritance tax provisions 
within the scope of existing bilateral income tax treaties (Policy Option B3.c).  

Effectiveness:  If  inheritance  tax  provisions  were  included  in  a  comprehensive  network  of  double 
taxation  treaties  between  Member  States,  this  would  help  meet  the  objective  of  reducing  double 
taxation  of  cross-border  inheritances  within  the  EU.  However,  this  would  assume  that  the 
provisions would be sufficiently comprehensive which might not be possible given that they would 

EN 

34 

   EN 

 
be  included  in  a  treaty  with  a  different  scope.  Furthermore,  this  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 include inheritance tax provisions which 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 definitions 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  Chapter  4.1  would  be  largely  met.  Proportionality:  This  option  would 
involve  substantial  changes  to  Member  States  tax  laws  which  would  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 proved 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,  the  objective  outlined  in  Chapter  4.1  should  be 
completely  met.  Proportionality:  This  option  should  not  involve  substantial  changes  to  Member 
States'  inheritance  tax  laws  as  it  would  deal  only  with  the  interaction  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  insufficient  in  any  way.  Nevertheless,  this  provision 
could be made more flexible than the previous option. 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 combination 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  objective  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 adoption of tax proposals, is most 
likely  unrealistic.  Flexibility:  Such  an  instrument  would  have  to  be  renegotiated  if  it  proved 
insufficient in any way.  

EN 

35 

   EN 

 
7.4. 

Comparison tables 

The following tables provide a comparison of the ratings 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 

Incentive to change law 

Effectiveness 

Proportionality 

Efficiency 

Flexibility 

A1 – no 
change 

A2 – 
publication 
of a set of 
principles 

A3 - 
legislation 

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 current tax discrimination 
problems efficiently, flexibly and in a cost-effective way. 

Table  11  –  Comparison  of  policy  options  B  that  address  problems  caused  by  unrelieved 
double taxation of cross-border inheritances 

Criteria 

B1 

B2 

B3.b  

B3.c 

B6.b 

B6.c 

B6.d 

no 
change 

improved 
unilateral 
relief 

Inheritance 
tax treaties 
based on EU 
Model 

Income tax 
treaties with 
inheritance 
provisions 

Binding 
common 
definitions 
and basis 

Binding 
relief plus 
dispute 
settlement 

Effectiveness 

Proportionality 

Efficiency/ease 
implementation 

- 

0 

0 

Flexibility 

n/a 

+ 

+ 

++ 

++ 

+ 

+ 

-- 

- 

+ 

+ 

-- 

- 

++ 

- - 

- - 

- - 

++ 

- 

- 

- 

B6.b 

+ 

B6.c 

++ 

- - 

- - 

- - 

Conclusion:  As  regards  policy  options  B,  the  preferred  option  is  Policy  Option  B.2  as  an 
effective  and  certainly  proportionate  way  to  tackle  the  problem.  Other  options  would  be 
significantly  less  cost-effective  and  there  is  a  question  mark  over  their  political  feasibility,  given 
Member States' reactions during relevant discussions. This preference is also in line with the view 

EN 

36 

   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 solutions via bilateral actions by Member States, is 
also  based  on  the  fact  that  Member  States  do  not  seem  to  prioritise  the  conclusion  or  revision  of 
double taxation treaties on inheritances. 

8. 

THE PREFERRED OPTION  

The preferred solution to deal with 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  inheritance  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 remove 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  principles  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 the principles which Member States must respect 
when taxing cross-border inheritances. This would support the Commission's  legal action against 
infringements in the inheritance tax area. The principles would, for example, describe the types of 
rules which the Court has identified as breaches of the fundamental 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 informed in a quick and efficient way about their 
legal position. This could make 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,  help  to  ensure  that  problems  of    EU  citizens, 
confronted  for  example  with  a  significantly  higher  tax  burden  through    not  qualifying  for  an 
exemption or for more beneficial valuation rules because either the assets or the deceased and/or the 
beneficiary were located outside the taxing Member State, are solved more rapidly.  

In  addition,  the  Commission  could  adopt  a  Recommendation  identifying  the  elements  that  would 
make the very disparate national tax rules interact more coherently with each other, without in any 
way  harmonising  those  laws,  so  as  to  eliminate  double  taxation  in  a  comprehensive  way.  The 
Recommendation would suggest that Member States make changes to their domestic mechanisms 
for double taxation relief on that basis. It could suggest an order 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 the deceased and that of the heir);  it could propose a less formalistic 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 applied at national or local level; and 
it  could  propose  retroactive  credit  for  foreign  inheritance  taxes  applied  at  a  later  date  on  an 
inheritance.  The  ultimate  aim  could  be  to  ensure  that  the  overall  tax  burden  on  a  cross-border 
inheritance would not be higher than in an internal situation.  

Assuming the existence of this unilateral relief mechanism, the taxpayers referred in our examples 
in 3.3.2 would only bear tax comparable to a domestic situation. 

EN 

37 

   EN 

 
 
Member States all subscribe to the international principle that double 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 without reference to budgetary implications. Therefore the impact of making these 
already-existing  unilateral  reliefs  work  better  in  practice  should  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  States,  as  the  objective  might  be 
achieved by means of administrative guidance interpreting 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 relevance, it is an issue of principle that 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 helpful in clarifying the 
civil  law  background,  it  would  not  address  the  problems  presented  in  this  report.  In  addition,  the 
preferred  solution  outlined  in  this  report  would  not  interfere  with  the  underlying  private  law 
divergences  as  it  would  not  incorporate  any  private  law  concepts.  The  Recommendation  would, 
therefore,  have no impact on the outcome of the future Regulation. 

The  combination  of  the  two  options  is  appropriate  to  deal  with  cross-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  administrations  would  certainly  be 
reduced if there was less discrimination and double taxation about which to complain.  

9. 

MONITORING AND EVALUATION 

to  monitor 

the  success  of 

the  principles  eliminating  discrimination  and 

the 
In  order 
Recommendation  on  reducing  double  taxation,  the  Commission  could  prepare  regular  evaluation 
reports  based  on  monitoring  Member  States'  relevant  domestic  practices  in  areas  covered  by  the 
initiatives. The first evaluation could be carried out 3 years after adoption of the initiatives. Member 
States  could  be  asked  in  the  meantime  to  record  cross-border  inheritance  tax  revenues  and 
complaints and inform the Commission of any changes made to their domestic inheritance tax laws. 
There are two broad areas where refined and systematic data collection appears necessary.  

First, the overall extent of the problem could be monitored. Data should be collected on an annual 
basis  on  cross-border  migration;  cross-border  ownership  of  assets  (including  financial  assets  and 
immovable property); and domestic inheritance tax rates. 

Second,  the  legal  background  to  cross-border  inheritance  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 agreements; 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 proposal in the future, if 
deemed appropriate, would, of course, remain unaffected. 

EN 

38 

   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  imposed  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  property  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 entails that, in the great majority of cases, they are 
levied on individuals, while income taxes are levied on both individuals 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  territories  with  a  view  to  exercising  their  taxation 
rights  on  that  person.  In  accordance  with  internationally  accepted  principles,  income/capital  taxes 
are levied by countries on persons who are resident in their territories (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  their  income,  regardless  of  the  source),  while  source  State  taxation  is 
limited to the specific type of income that can be considered as sourced in that State.  

On the other hand, in the case of inheritance/estate taxes the personal 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. Countries 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  territorial  link  gives  rise  to  taxation  solely  on  assets 
situated in the territory of the State. However, some countries exempt 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  connecting  criteria  are  more  or  less  similar  and  follow  international 
practice),  give  rise  to  potential  exposure  of  inheritances  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  cases,  by  means  of  unilateral  mechanisms  or  by 
negotiating bilateral tax treaties.  

Domestic rules on foreign tax credit in the field of inheritance/estate tax are generally modelled on 
relief  provision  laid  down  for  income  tax  purposes.  However,  while  the  provisions  related  to 

EN 

39 

   EN 

 
 
 
 
 
 
 
income taxes are normally very detailed and/or accompanied by administrative guidance clarifying 
their  scope  and  functioning,  the  domestic  rules  concerning  unilateral  relief  in  the  field  of 
inheritance/estate  taxes  are  very  basic  and  there  is  very  little  guidance  on  them.  Moreover,  the 
reliance  on  income  tax  provisions  is  problematic  because  the  different  connecting  factors  and  tax 
legislation give rise to double taxation issues which 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 (MCEI) which constituted a self-contained document with no reference 
to its Model Convention on Income 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" while the MCEI refers to "the deceased"; 

-  the  connecting  factors  mentioned  in  the  MCIC  are  "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  network  of  bilateral  income  tax  treaties  is  almost 
complete and the relevant MCIC is kept updated, there are only few bilateral conventions between 
Member States in the inheritance tax area (there are, in fact, only 33 bilateral inheritance tax treaties 
between Member States out of a possible total of 351) and the MCEI dates back to 1982.  

EN 

40 

   EN 

 
ANNEX 2: MAIN FEEDBACK RECEIVED IN THE RELEVANT PUBLIC CONSULTATIONS 

In  2010  the  Commission  launched  a  public  consultation  on  the  internet  to  obtain  views  from  all 
interested stakeholders and individuals 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 aware and to suggest solutions to 
these problems. The consultation paper listed possible solutions already mentioned in literature and 
commentaries,  such  as  guidance  on  interpretation  of  EU  case  law  to  help  Member  States  in 
designing  their  inheritance  tax  systems  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 were invited to reply were the following: 

1)  Have you any information on cross-border inheritance tax problems in the 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 inheritance problems that exist? Why do you prefer that 
option? 

3)  Would you prefer a completely different solution 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 the area of inheritance taxes? 

5)  Do you have knowledge of cross-border inheritance tax problems faced by SMEs and, if so, do 
you think that the above-mentioned or different solutions are needed 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 taxation; the economic significance 
of the problems; and possible policy 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  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-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 

41 

   EN 

 
 
                                                 
from 24 April to 30 June 201034. There were 2 such replies and some stakeholders expressed their 
views in reply to both consultations. 

The consultation paper and the external study can be accessed at: 

http://ec.europa.eu/taxation_customs/common/consultations/tax/2010_06_inheritance_en.htm  

2. 

GENERAL COMMENTS 

In  general,  respondents  expressed  their  appreciation  at  the  launch  of  this  public  consultation 
initiative  and  emphasised  that  there  was  a  strong  need  to  tackle  tax  obstacles  to  cross-border 
inheritances. The majority of replies also concurred with the main findings of the external study and 
with the Commission's own research.  

Some stakeholders, including tax practitioners 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  emphasised  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. 

A. 

1) 

KEY ISSUES 

Evidence of the existence of cross-border inheritance tax problems within the EU 

The discrimination problem  

Many respondents of all types (individual citizens, academic representatives, tax practitioners and 
organisations)  reported  on  possible  discriminatory  provisions  of  domestic  inheritance  tax 
legislation.  The  competent  Commission  services  are  currently  examining  these  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 practitioners and citizens provided real-life examples of double taxation 
of inheritances. Others provided similar responses to the present consultation. 

The majority of the replies described as the underlying causes of this phenomenon the various types 
of mismatches between different national inheritance rules. 

Many pointed out that, to start with, Member States differ considerably both as regards their civil 
legislation  and  their  tax  legislation  in  the  field  of  inheritances.  The  basic  difference  in  concept 
between  the  civil  law  and  common  law  systems  concerns  the  transfer  of  assets.  While  civil  law 

34 http://ec.europa.eu/taxation_customs/common/consultations/tax/2010_04_doubletax_en.htm 

EN 

42 

   EN 

 
 
 
                                                 
countries  follow  the  principle  of  direct  transmission,  where  the  inheritance  is  directly  transferred 
from the deceased person to the heirs, under common 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  contributors,  including  tax  practitioners  and  lawyers, 
noted  also  the  difficulties  concerning  the  civil  law  countries'  treatment  of  trusts  and  personal 
representatives,  which  are  characteristic  features  of  the  common  law  concept  of  inheritances.  For 
instance,  double  taxation  may  arise  if  a  civil  law  Member  State  considers  the  trust  or  a  personal 
representative as a different 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  different  taxable  persons,  different  taxable  events  and 
different bases of taxation.  

Some Member States apply a tax on the heirs, while other Member States apply a tax on the basis of 
the estate.  In both cases tax liability is determined 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  property,  or  a  combination  of  these 
factors.  Furthermore  definitions  and  meanings  of  these  terms  can  differ  from  jurisdiction  to 
jurisdiction, so 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. In 
addition, several Member States apply anti-abuse measures which provide for an extended concept 
of residence or domicile. Difficulties with determining the tax residence of the deceased were also 
highlighted, such as possible complications related to temporary residence.  

Other  significant  differences  between  Member  States'  rules  that  respondents  emphasised  were 
different  valuation  methods  regarding  real  estates,  and  usufruct  of  personal  assets  and  business 
assets;  and  the  diverging  conditions  for  deducting  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  beneficiaries.  Many  stakeholders,  mostly  individual  citizens,  pointed  to 
inordinately  high  rates  and  the  lack  of  exemptions  for  non-relatives  or  distant  relatives.  This  was 
particularly a problem in regard to stepchildren.  

As for the existing mechanisms in place to eliminate double taxation of cross-border inheritances, 
the  situation  is  far  from  ideal  in  the  view  of  stakeholders.  They  complained  about  the  very  low 
number  of  bilateral  tax  treaties  concluded  between  Member  States  for  the  avoidance  of  double 
taxation  on  estate  and  inheritance  tax  (there  are,  in  fact,  only  33  bilateral  inheritance  tax  treaties 
between  Member  States  out  of  a  possible  total  of  351)  and  they  also  pointed  out  that  the  current 
OECD Model Convention on Inheritance and Estate Tax has not been updated since 1982. Limited 
availability  of  treaty  relief  for  foreign  located  property  and  varying  rules  regarding  allocation  of 
taxing rights in those tax treaties were 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  mismatches  were  pointed  out  which  lead  either  to 
incomplete  or  non-availability  of  relief.  Mismatches  can  also  occur  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 

43 

   EN 

 
In  addition,  unilateral  reliefs  may  have  a  limited  scope  as  regards  the  taxes  covered,  such  as 
applying only to inheritance or estate 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  credit  foreign  local  inheritance  taxes,  i.e.  taxes 
applied by political subdivisions at local rather than national level.  

In  addition,  unilateral  reliefs  may  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  definitions  of  domestic  and  foreign  located  assets,  in  particular  in 
relation to bank assets, were identified s a serious concern for stakeholders35.  

Another  general  problem  pointed  out  was  the  limitation  of  credit  to  foreign  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 the existing tax credits concerning the material 
scope.  This  included  divergence  between  the  different  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 methods 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  competent  authority  was  also 
considered problematic. 

As  a  general  remark  concerning  the  above-mentioned  problems  of  double  taxation  of  a  single 
inheritance, some stakeholders, including individual citizens and tax practitioners also pointed out 
that expert advice is highly needed, which can prove costly and time consuming.  

3) 

Miscellaneous  

A  large  number  of  individual  citizens  expressed  their  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  testators  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 wills36. This Regulation would 
provide  for  the  use  of  a  single  basis  for  determining  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  authentic  instruments  in  matters  of  succession  and  the  creation  of  a 
European Certificate of Succession, COM(2009)154 fin. of 14 October 2009. 

EN 

44 

   EN 

 
 
                                                 
choose  to  have  the  law  of  their  country  of  nationality  made  the  law  applicable  to  their  entire 
succession.  

The proposed Regulation does not deal with tax matters so would not, therefore, reduce the number 
of situations where citizens taking advantage of the Internal Market are exposed to double taxation 
or  to  discriminatory  rules  on  inheritances.  In  this  respect,  some  stakeholders  pointed  out  that  a 
proposal to address cross-border inheritance tax obstacles would be a timely initiative. 

B. 

1) 

Possible approaches to cross-border inheritance tax problems 

Solutions to the discrimination problem  

To  tackle  the  discrimination  problem,  some  stakeholders  agreed  that  it  could  be  helpful  if  the 
Commission  provided  the  Member  States  with  guidelines  on  how  to  bring  their  inheritance  tax 
systems  into  line  with  EU  law.  Some  also  suggested  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  solutions  concerned  the  unilateral  relief  mechanisms. 
Even  though  some  contributors,  including  tax  practitioners,  pointed  out  possible  shortcomings  of 
such a system (for instance its inability to address all double taxation problems), the vast majority 
advocated the need to improve such unilateral solutions.  

Many of them envisaged unilateral solutions as short term measures, or as complementary solutions 
to completing the gaps in the relevant bilateral treaty network.  

In  addition,  some  stakeholders,  including  tax  practitioners,  suggested  introducing  either  an  EU 
model relief provision or an EU-wide standard 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 unrealistic to expect Member States to complete the relevant treaty network. 
On the other hand, more stakeholders, 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  explicitly  expressed  a  preference  for  greater  treaty 
coverage,  either  by  the  update  of  the  OECD  Model  Convention  on  Inheritance  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 standard common rules for bilateral conventions. 

Around  half  of  the  opinions  on  the  suggested  approach  concerned  solutions  at  EU  level.  While  a 
few stakeholders, including associations, considered that the introduction of binding mechanisms in 
this area was not an EU competence, many contributors suggested EU wide solutions to cover all 

EN 

45 

   EN 

 
 
 
situations  which  unilateral  or  bilateral  solutions  could  not  address.  Many  argued  for  harmonised 
common concepts and definitions – such as for location (situs) of inheritances or for the residence 
or  permanent  residence  of  the  testator/beneficiary.  Some  suggested  introducing  an  Arbitration 
Convention  or  a  Multilateral  Treaty.  The  majority  of  stakeholders,  including  individual  citizens, 
academics,  tax  practitioners,  organisations  and  a  public  authority  advocated  the  establishment  of 
common  rules  to  determine  the  basis  of  taxation.  Most  of  these  were  in  favour  of  common  rules 
regarding  taxation  on  the  basis  of  the  location  of  the  assets  of  an  inheritance,  though  some 
suggested adopting as the basis of taxation that of the (last permanent) residence of the deceased, 
with in some cases an exception for immovable property.  

As for the form of any possible EU-wide binding mechanism, more explicitly favoured a Directive 
than a Regulation. In addition, some stakeholders, including tax practitioners, raised the abolition of 
inheritance taxes as a possible solution to eliminate double taxation. 

3) 

Miscellaneous  

Some stakeholders, including tax practitioners and associations suggested that a future initiative on 
inheritance taxation should cover gift taxes as well. 

In  other  contributors'  views,  any  upcoming  proposal  should  also  address  the  tax  treatment  of 
usufructs, donations and distributions out of trusts and foundations.  

Other  stakeholders,  including  also  tax  practitioners  and  associations,  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-border inheritance issues. 

Cross-border  inheritance  tax  problems  faced  by  small  and  medium-sized  enterprises 

C.  
(SMEs) and possible solutions  

As regards the problems related to transfer of business in the case of the death of an SME owner, 
many  stakeholders  expressed  the  view  that  both  discrimination  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  available  in  the  various  Member  States  was  also 
highlighted.  

As  for  tackling  cross-border  inheritance  tax  obstacles  for  SMEs,  the  suggested  solutions  in  the 
majority of replies did not differentiate between the position of individual citizens and businesses.  

Nevertheless, some contributors, including tax practitioners and organisations suggested particular 
solutions for SMEs, such as a common EU framework for business property relief which could be 
set out in EU-wide harmonised exemption rules; or including a provision on the transfer of business 
into an EU Model Convention on inheritances.  

EN 

46 

   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 Member 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 resided 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 exemption 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  applying  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 different tax rules for the 
assessment of inheritance and transfer taxes payable 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 that 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 charities if the foreign charities satisfy the 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  discriminatory  to  set  different  limitation 
periods for the valuation of registered shares for 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 Court 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  Treaty  did  not  prevent  a  Member  State  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 rules concerning property 
depending on the place where the deceased was resident or depending on the location of the assets.  

EN 

47 

   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  paid  abroad  against  their 
own inheritance tax.  

Other relevant cases 

As a result of the Stauffer 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  States,  or  that  provide  for  tax  exemptions  from 
inheritance/gift tax on condition that the recipient is a domestic charity, may be contrary to EU law.  

EN 

48 

   EN 

 
   
ANNEX 4: SURVEY OF THE DOMESTIC RULES ON TAXES LEVIED UPON DEATH 

This  attachment  established  by  the  Copenhagen  Economics  provides  an  overview  of  some  of  the 
domestic rules on taxes levied upon death in the 27 Member States. The survey is limited to taxes 
that are levied exclusively in event of death implying that taxes 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 States with no inheritance or estate taxes. 

A) Member States with inheritance or estate taxes 

The  survey  has  revealed  that  18  of  the  27  Member  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 Member State an estate tax as well as an inheritance 
tax, cf. Table 1. 

Table 1: Inheritance taxes in the 27 Member States 

Inheritance 
tax 

Member States 
Bulgaria,  Czech  Republic,  Denmark,  Finland,  France, 
Germany, Greece, Hungary, Ireland, Italy, 
Lithuania,  Luxembourg,  the  Netherlands,  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 overview of the domestic rules on inheritance and estate taxes in these 
18 Member States. 

EN 

49 

   EN 

 
 
 
 
Belgium 

Taxes levied 

•  Estate tax 

Description 

Belgium has an estate tax called the ‘estate duty’ for residents and ‘right 
of transfer upon death’ for non-residents. The tax is collected locally by 
the regions Brussels, Flemmish and Walloon.  

Inheritance tax 

• 
•  Other taxes 

- 

- 

Connecting factors 
•  Personal 
rule 

nexus 

The  residence  principle:  The  fiscal  residence  is  the  place  where  the 
deceased had his actual residence in the last 5 years before his death. If 
he resided in more than one region during 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 Belgian real estate, where the tax is 
chargeable on the gross value of the estate without any deductions. 

EN 

50 

   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  lineal  relatives,  between  spouses  and  between 
cohabitants: 

Bracket of the net share in €

From  

                              0.01  
                          50,000  
                        100,000  
                        175,000  
                        250,000  
                  More than  

to (including)

                         50,000
                       100,000
                       175,000
                       250,000
                       500,000
                       500,000

Tax rate in %
Upon lineal relatives and between spouses
3
8
9
18
24
30

Inheritances between brothers and sisters: 

Bracket of taxable amount in €

From  
                    0.01  
                12,500  
                25,000  
                50,000  
              100,000  
              175,000  
         More than  

to (including)

                 12,500
                 25,000
                 50,000
               100,000
               175,000
               250,000
               250,000

Tax rate in %
between brothers and sisters
20
25
30
40
55
60
65

Inheritances between uncles or aunts and nephews or nieces: 

Bracket of taxable amount in €

From  
                    0.01  
                50,000  
              100,000  
         More than  

to (including)

                50,000
              100,000
              175,000
              175,000

Tax rate in %
between uncles or aunts and nephews or nieces
35
50
60
70

Inheritances between any other persons: 

Bracket of taxable amount in €

From  
                    0.01  
                50,000  
                75,000  
         More than  

to (including)

                 50,000
                 75,000
               175,000
               175,000

Flemish Region: 

Tax rate in %
between any other persons
40
55
65
80

Inheritances  between  lineal  relatives,  between  spouses  and  between 
cohabitants: 

Bracket of the net share in euro

From  
                           0.01  
                       50,000  
               More than  

To
50,000
250,000
250,000

Tax rates in %
Upon lineal relatives and between spouses
                                        3
                                        9
                                      27

Inheritances  between  brothers  and  sisters  or  between  “others”:

Bracket of taxable amount in euro

Tax rates in %

From  

To  

                          0.01  
                          75,000  
                  More than  

                           75,000
                    125,000
                         125,000

Between brothers 
and sisters
30
55
65

Between “others”  

45
55
65

EN 

51 

   EN 

 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tax rates (continued)  Walloon Region: 

Inheritances between lineal relatives, between spouses and between legal 
cohabitants: 

From  
                              0.01  
                     12,500.01  
                     25,000.01  
                     50,000.01  
                   100,000.01  
                   150,000.01  
                   200,000.01  
                   250,000.01  
                  More than  

Bracket of the net share in €

to (including)  

Tax rates in %
Upon lineal relatives and between 
spouses and legal cohabitants

                    12,500.00
                    25,000.00
                    50,000.00
                  100,000.00
                  150,000.00
                  200,000.00
                  250,000.00
500,000.00
                  500,000.00

3
4
5
7
10
14
18
24
30

Inheritances between collateral relatives and between non-relatives: 

Bracket of the net share in €

From  
                    0.01  
           12,500.01  
           25,000.01  
           75,000.01  
      More than  

to (including)

            12,500.00
            25,000.00
            75,000.00
          175,000.00
          175,000.00

Between brothers 
and sisters  

Tax rate in %
Between uncles or 
aunts and nephews or 
nieces  

Between all 
other persons 

20
25
35
50
65

25
30
40
55
70

30
35
60
80
90 (*)

Inheritances  of  dwellings  between  lineal  relatives,  spouses  or  legal 
cohabitants (preferential rate): 

Bracket of the net share (€)

Tax rate in %

from  
                    0.01  
           25,000.01  
           50,000.01  
         175,000.01  
         250,000.01  
         More than  

to (including)

                  25,000.00
                  50,000.00
                175,000.00
                250,000.00
                500,000.00
                500,000.00

Between lineal relatives, between spouses  
and between legal cohabitants  

1
2
5
12
24
30

Exemptions 

Personal exemptions:  

•  Legacies in favour of the region where the deceased has his fiscal 

residence are tax exempt.  

Objective exemptions: 

•  Social  rights  in  Undertakings  for  Collective  Investments  in 

• 

Transferable Securities 
(UCITS) 
recognised by the Flemish government.  

investing 

in  service  flats  for  elderly  people, 

if 

•  Certain land of ecological interest in Flanders and Wallonia  
•  Forests in Flanders. 

Allowances 

Brussels region: 

•  The spouse, direct descendants 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, inheritances not exceeding €1,250 are not 

taxable. 

Flemish region: 

•  No allowances.  

Walloon region: 

•  The spouse, direct descendants 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,  inheritances  not  exceeding  €620  are  tax-

EN 

exempt. 

52 

   EN 

 
 
 
 
   
   
 
 
   
   
 
 
 
 
 
Deductions 

Residents: All debts are deductible as well as the cost of the funeral.  

Non-residents: Debts are deductible to some extent. 

Transfer  of 
family-
owned  and  closely  held 
businesses 

Tax  exemptions  (full  or  partial)  apply  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). 

Compatibility  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  deductibility  of  over-endowment  debts 

for non-residents. 

1.23% in 2008. 

Tax  revenue  in%  of 
total  tax revenue 
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 

53 

   EN 

 
 
 
 
 
Bulgaria 

Taxes levied 

•  Estate tax 
• 

Inheritance tax 

•  Other taxes 
Connecting factors 
•  Personal 
rule 

nexus 

•  Source rule 

Tax rates 

Exemptions 

Allowances 
Deductions 

Transfer  of 
family-
owned  and  closely  held 
businesses 
Double taxation relief 

Description 

- 
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. 
- 

The  nationality  principle:  Bulgarian  nationals  are  liable  to  inheritance 
tax on all inherited property in Bulgaria or abroad, inherited by will or by 
law.   
For foreign nationals in Bulgaria, inheritance tax is levied on all property 
within the territory of the country. 
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%. 
The surviving spouse and relatives in the direct line are not liable to pay 
inheritance tax on their own inheritance. 
The first BGN 250,000 (€ 128,995) is exempt from taxation. 
The debts of the deceased, as evidenced to the tax authorities and certain 
funeral expenses up to BGN 1,000 (€ 516) are deductible. 
- 

•  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 

Compatibility  with  EU 
law 

Member States. 
The following potential conflicts have been identified: 

• 

• 

It is not clear how immovable property abroad, except from real 
estate,  should  be  valued,  which  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 purposes, so it is not 
clear if differential treatment exists under this provision.  

Tax  revenue  in%  of 
total  tax revenue 

Not available. 

EN 

54 

   EN 

 
 
 
 
 
 
Source: Survey by Deloitte, AGN International (2010) and Global Property Guide. 

EN 

55 

   EN 

 
 
Czech Republic 

Taxes levied 

•  Estate tax 
• 

Inheritance tax 

•  Other taxes 
Connecting factors 
•  Personal 
rule 

nexus 

Description 

- 
Inheritance tax is levied on the acquisition of the deceased’s estate upon 
death. Subject to certain exemptions, inheritance tax is chargeable on the 
net value of all assets. 
- 

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 Republic, tax shall be levied only on 

his movable property located in Czech Republic.  

As  regards  real  estate,  Czech  Republic  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 

56 

   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, CZK (€)  

                    TAX RATE

Up t o 1 million (€48,916)  

1 million – 2 million (€97,833)  

2 million – 5 million (€244,583)  

5 million – 7 million (€342,416)  

7 million – 10 million (€489,165)  

10 million – 20 million (€978,330)  

20 million – 30 million (€1,467,495)  

7% 

9% 

12% 

14% 

18% 

21% 

25% 

30 million – 40 million (€1, 956,660)  

30% 

40 million – 50 million (€2,445,825)  

35% 

Over 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 

57 

   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  personal  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  Czech  Republic,  local  regional 
authorities,  voluntarily  associated  municipalities,  public  research 
institutions  and  universities,  public  non-profit  health  care 
institutions and regional councils of solidarity’s region. 

- 

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 connection with inheritance proceeding 
and other duties levied in inheritance proceeding and documented 
inheritance  dues  paid  to  another  state  in  respect  of  inherited
property there, if such property is also liable to inheritance tax in 
Czech Republic. 

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, siblings or a spouse as well 
as other persons within family or similar relationship. 

(Credit  method):  The  tax  rules  does  not  have  a  clear  rule,  but  it 
provides the possibility to deduct the documented inheritance taxes paid 
to another state in respect of inherited property there, provided that such 
property is also liable to inheritance tax in Czech Republic.   

Allowances 
Deductions 

Transfer  of 
family-
owned  and  closely  held 
businesses 

Double taxation relief 
•  Unilateral relief 

EN 

58 

   EN 

 
 
 
•  Bilateral treaties* Inheritance  tax  treaties  are  in  force  between  Czech  Republic  and  the 

Compatibility  with  EU 
law 

following Member States: Austria (1996). 

The following potential conflicts have been identified:  

•  Czech  Republic’s 

for 
contributions do not cover those paid abroad.  

tax-exemptions 

private 

pension 

•  No tax-exemption applies for foreigners in the third tax category 
to an acquisition of a property share in agricultural co-operatives.  

0.02% in 2008.  

Tax  revenue  in%  of 
total  tax revenue 
Note: * Years in bracket is the year where the treaty entered into force.  
Source: Maisto (2010), Zoubek (2010), AGN International (2010) and Global Property Guide. 

EN 

59 

   EN 

 
Denmark  

Taxes levied 

•  Estate tax 

Description 

A tax is levied on the estate as a whole, 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 defined relationship with the deceased. 
- 

•  Other taxes 
Connecting factors 
•  Personal 
rule 

nexus 

•  Source rule 

Tax rates 

Exemptions 

The residence principle: If the deceased was resident in Denmark at the 
time  of  his  death,  all  property  worldwide  belonging  to  his  estate  is 
subject to estate tax. 
Yes,  if  the  deceased  was  not  resident  in  Denmark  at  the  time  of  death, 
estate tax is due on immovable property including property accessory to 
immovable  and  movable  business  property  of  permanent  establishments 
situated in Denmark. 
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%.  
Personal exemptions:  

•  The spouse of the deceased is not liable to the estate tax.  
•  The spouse and certain close relatives (children/ stepchildren, and 
their  descendants,  spouses  of  children/  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  the  tax-liable  inheritance  including 
the tax-liable inheritance from a deceased resident abroad whose estate is 
subject to limited tax liability in Denmark. 

All liabilities are allowed as deductions. 

Denmark  has  no  specific  rules  (e.g.  exemption)  concerning  transfers 
upon  death  of  going  concerns  or  participations  in  family-owned  or 
closely-held businesses. 

Deductions 
Transfer  of 
family-
owned  and  closely  held 
businesses 

Double taxation relief 

•  Unilateral relief  The  credit  method:  Applies  for  real  estate  located  in  foreign  countries 
where  a  foreign  estate/inheritance  tax  is  also  imposed.  The  foreign  tax 

EN 

60 

   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). 
No potential conflicts identified. 

Compatibility  with  EU 
law 
Tax  revenue  in%  of 
total  tax revenue 
Note: * Years in bracket is the year where the treaty entered into force.  
Source: Maisto (2010), Michelsen (2010), AGN International (2010) and Global Property Guide. 

0.42% in 2006. 

EN 

61 

   EN 

 
 
 
Finland 

Taxes levied 

•  Estate tax 
• 

Inheritance tax 

•  Other taxes 
Connecting factors 
•  Personal 
rule 

nexus 

Description 

- 

The  inheritance  tax  is  payable  to  the  state  by  the  heirs  and  any 
testamentary beneficiaries. The beneficiaries of the deceased are liable to 
pay inheritance tax on their portion of the estate.  

- 

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 inheritance tax concerns both movable and 
immovable property, and both domestically 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 more 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,  spouse’s  children,  adopted  children, 
parents, adoptive parents, and direct heirs of children or adopted children, 
betrothed  in  certain  circumstances,  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 
Am ount 

Plus Percent on 
the Excess 

20,000 - 40,000 
40,001 - 60,000 
60,001 - over 

100
1,5
3,5

7
10
13 

2) Category II - Other relatives and strangers.  

Value of Taxation 
Property (EUR) 

Basic Tax 
Am ount 

Plus Percent on 
the Excess 

20,001 - 40,000 
40,001 - 60,000 
60,001- over 

100
4,1
9,3

20
26
32 

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 alternatively, 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 

62 

   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 state, county, municipality, parish or 
other  religious  community  or  school,  no  inheritance  tax  will  be 
levied on the received assets.  

•  Non-profit associations or foundations do not pay tax on received 

assets. 

EN 

63 

   EN 

 
 
Allowances 

The  surviving  spouse  is  entitled  to  a  deduction  of  €60,000  (concerns 
spouses in marriage and partners 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  death  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 derived from using another person’s property.
•  For  non-resident  descendents,  only  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  closely  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 inheritance tax would be more than €850 
considering the proportions of business or farm assets in relation 
to other inherited assets.  

If the form of legal entity is corporate, 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  resident  in  Finland.  Maximum 
credit will equal the Finnish inheritance 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 treaty with Denmark in contrast to the 
treaties with the Netherlands and France, which rely on exemptions.  

Compatibility  with  EU 
law 

The following potential conflict has been identified: 

•  Finland  restricts  deductions  of  debts  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 

64 

   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 

65 

   EN 

 
France 

Taxes levied 

•  Estate tax 

Description 

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 
rule 

nexus 

•  Source rule 

Tax rates 

- 
- 

The  domicile  principle: The  tax  is  due  in  France  in  the  following 
instances:  

•  All  transfers  in  which  the  decedent  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.  

A  source  rule  applies  to  all  transfers  covering  French  Property  or 
property located in France if the deceased was not resident in France at 
the time of death.  

The  term  “French  Property”  broadly  covers  immovable  property, 
amounts due by a French debtor, investment securities issued by a French 
company as well as interests in companies holding immovable property. 

Estate taxes are calculated in three stages on the net fraction accruing to 
each  heir  or  legatee.  The  duties  are  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 the net share of each taxpayer.  
2.  Calculation  of  the  taxes  on  the  basis  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 

66 

   EN 

 
 
 
 
 
 
 
TAXABLE INHERITANCE (€)                    TAX RATE

Up to €7,699    

€ 7,699 to €11,548  

€ 11,548 to €15,195  

€ 15,195 to €526,760  

€ 526,760 to €861,050  

€ 861,050 to €1,722,100  

Over €1,722,100  

5% 

10% 

15% 

20% 

30% 

35% 

40% 

Tax rates for siblings (2010): 

TAXABLE INHERITANCE (€)                    TAX RATE

Not exceeding €24,069 

Beyond 

35% 

45% 

Tax rates for others (2010): 

TAXABLE INHERITANCE (€)                    TAX RAT E

Between relatives to the  

Fourth degree inclusively: 

55% 

Between parents beyond the 

Fourth degree and between 

Persons who are not relatives: 

45% 

Exemptions 

Objective exemptions: 

•  Conveyances  upon  death  of  certain  agricultural  properties  (land 
and  forests,  interests  in  forestry  groupings,  interests  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 

Allowances 

Allowances (2010): 

general interest. 

•  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 and foreign) liabilities are deducted 
from  the  estate,  on  the  basis  of  supporting  documentation  submitted  by 
the heirs.  

EN 

67 

   EN 

 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-domiciles:  Only  those  liabilities  related  to  the  property  located  in 
France may be deducted.  

Transfer  or 
family-
owned  and  closely  held 
businesses 

Heirs  or  legatees  are  exempt  from  estate  taxes  up  to  75%  of  the 
enterprise’s  value  (without  any  limitation  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  applicable  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  earmarked  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 between France and the following Member 
States:  Finland  (1959),  Belgium  (1960),  Spain  (1963),  UK  (1964), 
Austria (1994), Italy (1995), Sweden (1996), and Germany (2006) 

Compatibility  with  EU 
law 

The following potential conflict has been identified: 

•  The  preferential  rule  of  exemption  in  favour  of  the  reversion  of 
life  annuities  between  spouses  or  relatives  in  direct  line  do  not 
apply to property located abroad.   

Tax  revenue  in%  of 
total  tax revenue 
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. 

2.31% in 2008 (covers both estate and gift conveyance taxes of aggregate 
state’s revenues. Estate taxes comprise around 90% in 2008).  

EN 

68 

   EN 

 
 
 
 
 
Germany 

Taxes levied 

•  Estate tax 
• 

Description 

- 

Inheritance tax  An  inheritance  tax  is  applicable  to  the  transfer  of  property.  If  a  person 
makes a gift, this transfer is regulated by the inheritance tax as well. The 
inheritance tax is reduced if the estate is divided among more heirs.  

•  Other taxes 
Connecting factors 
•  Personal 
rule 

nexus 

•  Source rule 

Tax rates 

- 

The  residence  and  domicile  principle:  It  is  applied  on  a  worldwide 
basis  to  all  foreign  property  if  a  person  has  a  residence  or  domicile  in 
Germany. 

 Residence is defined as the possession of housing space. A domicile is 
given  when  a  person  stays  continuously  for  more  than  six  months  in 
Germany.  

For emigrants and German officials abroad, their nationality is a criterion 
for  determining  tax  liability.  Every  German  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 seat 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. 

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. 

There  are  three  different  tax  classes.  The  closer  the  relationship  to  the 
deceased is, the lower is the tax burden is.  

•  Tax Class I: Spouses, children, stepchildren, grandchildren, great 

grandchildren, parents and grandparents.  

EN 

69 

   EN 

 
 
 
 
 
 
 
•  Tax Class II: Brothers, sisters, nephews, nieces, stepparents, sons-
in-law,  daughters-in-law,  parents-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 to and including... 

Tax Class I  

Tax Class II  

Tax Class III 

€ 75,000  

€ 300,000  

€ 600,000  

€ 6,000,000    

€ 13,000,000    

€ 26,000,000   

7%  

11%  

15%  

19%  

23%  

27%  

15%  

20%  

25%  

30%  

35%  

40%  

30% 

30% 

30% 

30% 

50% 

50% 

>€26,000,000  

30% 

 43%  

50% 

The  above  rates  apply  for  the  entire  acquisition  of  the  heir  and  are  not 
taxed at progressive rates. 

EN 

70 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exemptions 

Allowances 

Deductions 

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  same  sex  partner  (after  the  civil 
partnership act), an additional 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  increase  in  the  capital  value  of 
assets during marriage is tax-free. 

Objective exemptions: 

•  Art, art collections, science collections, libraries and archives are 
60%  tax  free  if  the  objects  are  important  for  the  arts,  history  or 
science  and  the  regular  income  from  these  objects  is  lower  than 
the costs. 

•  Foundations  can  be  tax-free  depending  on  whether  they  are 

charitable or not. 

Personal allowances 

Spouse and same sex partner of a civil partnership: 

€500,000 

Children:  

Grandchildren:  

Other persons taxable in Tax Class I:  

Persons taxable in Tax Class II: 

Persons taxable in Tax Class III: 

€400,000 

€200,000 

€100,000 

€20,000 

€20,000 

In the case of taxation based on the location of the assets, the allowance 
is €2,000, unless a double taxation treaty provides otherwise. 

The  heir  can  deduct  all  debt  of  the  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 arising because of the death 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  closely  held 
businesses 

Business  relief  is  applicable  to  all  sole  proprietorships,  participation  in 
partnerships and forestry/agricultural businesses.  

EN 

71 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
Shareholdings  are  subject  to  business  relief  if  the  deceased  holds  more 
than  25%  of  the  corporation’s  share  capital.  Shareholders  can  form  a 
share  pool  to  achieve  the  threshold  of  25%.  There  is  no  minimum 
participation for partnerships.  

The  business  relief  requires  that  not  more  than  50%  of  the  business 
the 
property 
aggregate  wages  for  the  next  five  years  must  be  at  least  400%  of  the 
average aggregate wages during the last five years before the transfer.  

in  non-operating  property.  Furthermore, 

invested 

is 

The  acquisition  of  business  property  for  which  the  business  relief  is 
applicable  always  falls  under  the  tariff  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  against  the  German  tax  (except  from  the 
Canadian  capital  gains  tax,  the  Austrian  withholding  tax,  stamp  duties 
and inheritance taxes included 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 

Compatibility  with  EU 
law 

Member States: Greece (1910), Sweden (1995), and Denmark (1997). 
The following potential conflict has been : 

•  Grants  to  foreign  charities  are  only  exempt  from  the  inheritance 
tax if the two governments have exchanged notes that reciprocity 
is  guaranteed  and,  thereby,  does  not  allow  the  taxpayer  to  bring 
the  necessary  information  about  the  activities  of  the  foreign 
charity. 
0.48% in 2008. 

Tax  revenue  in%  of 
total  tax revenue 
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 

72 

   EN 

 
 
 
 
 
 
Greece 

Taxes levied 

•  Estate tax 
• 

Description 

- 

Inheritance tax  An inheritance tax is levied on the transfer of property and is imposed on 

•  Other taxes 
Connecting factors 
•  Personal 
rule 

nexus 

•  Source rule 

Tax rates 

each beneficiary of the estate.  
- 

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 located in Greece and abroad. Immovable 
property  situated  in  a  foreign  State  is  not  subject  to  Greek  inheritance 
taxation. 

Yes,  a  source  applies  to  all  estate  assets  (movable  and  immovable), 
which at the time of succession are situated in Greece, irrespective of the 
nationality and domicile of the decedent or the heir/legatee.  

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,  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.  

•  Class C includes all other beneficiaries not contained in Classes A 

and B.  

Class  A  and  Class  B  beneficiaries  are  taxed  at  flat  rates,  which  vary 
depending  on  the  type  of  estate  assets  whereas  Class  C  is  still  taxed 
according to a system of tax brackets. 

Tax rates for Class A and B: 

Real 

Stocks, shares             Non-listed stocks 

All other

Property  

and bonds 

            and shares 

estate assets 

Class A 

Class B 

1% 

1% 

0.6% 

1.2% 

            1.2% 

             2.4% 

10% 

10% 

Tax rates for Class C: 

EN 

73 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
TAXABLE AMOUNT           TAX RATE

Up to €6,000   

€ 6,000 – €72,000  

€ 72,000 – €267,000  

Over €267,000  

nil 

20% 

30% 

40% 

Exemptions 

Personal exemptions:  

•  Transfer of crop and livestock faring land.  
•  Acquisition of first house. 
•  Reduction in tax rate for gifts (depends on the beneficiary’s class 

and physical mobility). 

•  Spouses  or  underage  children  are  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  Albania  and  legal  persons  governed  by 
public law.  

•  Non-profit  making  legal  entities  established  or  to  be  established 
in Greece, provided that they are shown to be pursuing charitable 
or educative purposes, or purposes of national interest.  

•  Foreign  natural  entities  where  exemption  is  provided  for  by 

international agreement, subject 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  provision  for  immovable  property  on 

minor islands. 

•  Class A (spouses, children, grandchildren and parents): €95,000   
•  Class  B  (ascendants  and  descendants,  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 threshold, the tax-free amount is first 
allocated  to  real  property,  second,  to  stocks  or  shares,  and  then  to  all 
other estate assets. 

Allowances 

Deductions 

Both liabilities and charges can be deducted from the value of the estate: 

•  Liabilities  include outstanding  debts  incurred  prior  to  death,  tax 

EN 

74 

   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  include  expenses  of  probate 
proceedings,  expenses  for 
inheritance 
the 
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 foreign country and funeral expenses. 

issuance  of  an 

No  favourable  treatment  applies  for  family-owned  or  closely  held 
businesses  per  se.  Instead,  tax  incentives  rely  on  the  degree  of  kinship 
between  the  transferor  and  the  transferee  rather  than  on  the  business 
characteristics. 

Transfer  of 
family-
owned  or  closely  held 
businesses 

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  force  between  Greece  and  the  following 

Compatibility  with  EU 
law 

Member States: Germany (1910), Spain (1919), and Italy (1964). 
The following potential conflicts have been identified: 

•  The descendant’s children or surviving spouse have to have lived 
in Greece for one full year to get the tax exemptions on house or 
land  acquired  by  virtue  of  succession,  in  case  they  do  not  own 
real property that is sufficient for their dwelling needs. 

•  The  favourable  tax  regime  is  denied  to  transfers  upon  death  of 
shares in foreign companies, which are then taxed at regular rates.

0.20% in 2008. 

Tax  revenue  in%  of 
total  tax revenue 
Note: * Years in bracket is the year where the treaty entered into force.  
Source: Maisto (2010), Tsourouflis (2010), AGN International (2010) and Global Property Guide. 

EN 

75 

   EN 

 
 
Hungary 

Taxes levied 

•  Estate tax 
• 

Inheritance tax 

•  Other taxes 
Connecting factors 
•  Personal 
rule 

nexus 

Description 

- 

Inheritance tax is levied on property transferred 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. 

- 

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 residents in Hungary.  

•  Source rule 

Yes,  a  source  applies  to  all  property  located  in  Hungary  for  all  non-
nationals and non-residents.  

Tax rates 

Inheritance  tax  rates  depend  on  the  proximity  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.  

Category 

General rate 

Rate in cases of residential

property

spouse/foster parent 

Siblings 

Other legate es 

If the heir is the foster child/ 

-to 18 million HUF –

   U

p
15
From 18 million HUF to 35 million HUF
%  

–

From 35 million HUF –

11
%  

21
%  

U
p

-to 18 million HUF –

2,5%

HUF – 
  6% 
From 18 million HUF to 35 million 

From 35 million HUF –

11
%  

-to 18 million HUF –

U
p
From 18 million HUF to

6%

35 million

From 35 million HUF –

15
%  

HUF – 
  8% 

U
p

-to 18 million HUF –

8%

HUF – 
From 18 million HUF to 35 million 
  12
%    

From 35 million HUF –

21
%  

-to 18 million HUF –

U
p
21
From 18 million HUF to 35 million HUF
%  

15
%  

–

From 35 million HUF –

30
%  

-to 18 million HUF –

U
p
30
From 18 million HUF to 35 million HUF
%  

21
%  

–

From 35 million HUF –

40
%  

In  the  case  of  inheritance  of  vehicles  (including  rights  with  monetary 
value regarding vehicles), the respective transfer tax rates are doubled. 

Exemptions 

Personal exemptions: 

•  Any  property  inherited  by  the  descendants  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  residential  property  or  a  right  to 
profit on a residential property by the surviving spouse. 

•  Estate  where  the  deceased  was  a  minor  and  the  beneficiary  is 

EN 

76 

   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  property  up  to  HUF  300,000  per 
beneficiary (excluding vehicles).  
Inheritance of land suitable for constructing a residential property 
or  inheritance  of  rights  with  monetary  value  on  such  land  if  the 
beneficiary builds a residential property on it within four years. 
•  Beneficiaries of inherited art, cultural property, collections or any 
of  part  of  a  collection  in  the  case  of  a  donation  to  the  state,  a 
municipality or an institution of higher education. 

• 

In addition, lower rates apply for inherited agricultural land or rights with 
monetary value.  

EN 

77 

   EN 

 
 
 
Allowances 
Deductions 

family-
Transfer  of 
owned  or  closely  held 
businesses 
Double taxation relief 

- 

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. 

The inheritance of a number of business assets, such as business shares, 
is currently exempt. Special rules apply if agricultural land is inherited. 

•  Unilateral relief  The exemption method: There is no explicit unilateral relief. However, 
movable  property  located  outside  Hungary  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), Romania (1949), and Austria (1976). 
No potential conflicts identified. 

Compatibility  with  EU 
law 
Tax  revenue  in%  of 
total  tax revenue 
Note: * Years in bracket is the year where the treaty entered into force.  
Source: Maisto (2010), Csikós and Löcsei (2010), AGN International (2010) and Global Property 
Guide. 

0.1% in 2008. 

EN 

78 

   EN 

 
 
 
Ireland 

Taxes levied 

•  Estate tax 
• 

Description 

- 

•  Other taxes 
Connecting factors 
•  Personal 
rule 

nexus 

•  Source rule 

Tax rates 

Exemptions 

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 beneficiary is liable to pay the tax.  
- 

The  residence  principle: If  either  the  donor  or  the  beneficiary  is  a 
resident or ordinarily resident in Ireland at the date of the inheritance the 
taxable  inheritance  consists  of  the  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  Ireland  for  the  five  consecutive  tax  years 
prior to the inheritance.  
For non-residents a source applies to all assets situated in Ireland. 
A  flat  rate  of  25%  applies  to  any  taxable  assets  over  the  threshold  (see 
‘Allowances’). 
Personal exemptions: 

Inheritances and gifts taken by one spouse from the other.  

• 
•  Normal  and  reasonable  expenditure  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 conditions 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 

Group  

Group A  

Group B  

Threshold (€)

Relat ionship 

434,000 

43,400 

Son/ daughter/
fost er-child  
Parent / niece/ neph
ew/ brot her/ sister/
grandchild  
Stranger/ cousin 

Group C  

21,700 

Deductions 

The following deductions apply:  

•  Liabilities (not further specified). 
•  90% of the market value of agricultural land and buildings taken 

by a donee or successor who is a farmer.  

EN 

79 

   EN 

 
 
 
 
 
 
 
 
•  90% of the market value of trees and underwood.  
•  90% of the market value of relevant business property.  

- 

Transfer  of 
family-
owned  and  closely  held 
businesses 
Double taxation relief 

•  Unilateral relief  The  credit  method:  It  applies  to  foreign  taxes,  which  arises  upon  the 
death  of  a  person.  It  concerns  property  located  in  the  foreign  state  and 
cannot exceed the payable amount of the Capital Acquisitions Tax. 
Inheritance  tax  treaties  are  in  force  between  Ireland  and  the  following 
Member States: UK. 
The following potential conflict has been identified: 

•  Bilateral treaties 

Compatibility  with  EU 
law 

•  A reduction in the valuation of business property requires shares 
to be held in an Irish incorporated company and thereby excludes 
businesses not carried on mainly in Ireland. 

Tax  revenue  in%  of 
total  tax revenue 
Source: Survey by Deloitte, Maisto (2010), AGN International (2010) and Global Property Guide. 

0.64% in 2008 (incl. revenue from both inheritance and gift taxes).  

EN 

80 

   EN 

 
 
 
Italy 

Taxes levied 

•  Estate tax 
• 

Description 

- 

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 estate transferred 
to  the  heirs  and  each  legatee  is  subject  to  tax  on  the  corresponding 
legacy.  

•  Other taxes 

Transfers  upon  death  of  real  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 real estate located in Italy regardless 
of whether such a transfer happens upon death, is at gratuitous 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 
rule 

nexus 

•  Source rule 

The  residence  principle:  It  applies  to  all  properties  and  rights 
transferred,  if  the  deceased  is  a  resident  of  Italy  at  the  time  of  his/her 
death, whether situated in Italy or abroad. 

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.  
Shares  and  quotas  of  companies  with  either  the  legal  seat  or  the 
seat of management or the main object in Italy.  

ii. 

iii.  Quotas of entities, other than companies, with either the legal seat 

iv. 

v. 

vi. 

vii. 

or the seat of management or the main object in Italy.  
Bonds and other securities in series, other than shares, issued by 
Italy or by companies and entities under points (ii) and (iii) above.
Securities representing goods if the goods are situated in Italy. 
Receivables and cheques if the debtor or the issuer is a resident of 
Italy (irrespective of the location of the security, if any). 
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 laws covering temporary export.  

EN 

81 

   EN 

 
 
 
 
 
 
  
ix.  Assets  not  mentioned  but  effectively  located  in  Italy  are  also 

subject to inheritance tax. 

EN 

82 

   EN 

 
Tax rates 

The following tax rates apply depending 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 relatives 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.   

Exemptions 

•  8%, in all other cases. 

Objective exemptions:  

•  Transfers  to  (domestic  and foreign)  public  entities  or  legally 
recognized  foundations  or  associations  having  the  exclusive 
purpose  of  assistance,  study,  scientific  research,  education, 
instruction or any other purpose with public benefit.  

•  Transfers  to  legally  recognized  (domestic  and  foreign)  public 
entities  and  foundations  and  associations  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) should 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 subject to such legacies and burdens 

that the heirs/legatees may be subject to. 

An  exemption  from  inheritance  tax  applies  to  majority  transfers  of  a 
business or of a participation in companies or partnerships 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. 

family-
Transfer  of 
owned  or  closely  held 
businesses 

EN 

83 

   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  the  Italian  inheritance  tax  that  is 
attributable to such assets. 

•  Bilateral treaties* Inheritance  tax  treaties  are  in  force  between  Italy  and  the  following 
Member States: Sweden (1956), Greece (1964), Denmark (1966), the UK 
(1966), and France (1990). 

Compatibility  with  EU 
law 

The following potential conflicts 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 
Note: * Years in bracket is the year where the treaty entered into force.  
Source: Maisto (2010), Saccardo (2010), AGN International (2010) and Global Property Guide. 

0.09% in 2008 (covers both inheritance and gift tax revenue). 

EN 

84 

   EN 

 
 
Description 

- 

Inheritance tax  An inheritance tax applies to the market value of the property.  

- 

The  residence  principle:  The  taxable  base  of  resident  beneficiaries 
includes  all  kinds  of  inherited  property,  irrespective  of  whether  their 
source is in Lithuania or abroad. 
Non-resident beneficiaries are subject to inheritance tax only on movable 
property  subject  to  legal  registration  in  Lithuania  and  on  immovable 
property located in Lithuania. 
The tax rate is 5% for inherited 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. 
Personal exemptions: 

•  Property inherited from a spouse.  
•  Property inherited by children (adopted children), parents (foster 
parents), by persons under guardianship, guardians, grandparents, 
grandchildren, brothers, or sisters.  

Property with a taxable value not exceeding of LTL 10,000 (€ 2,896) are 
exempt from inheritance tax. 
- 
- 

Lithuania 

Taxes levied 

•  Estate tax 
• 
•  Other taxes 
Connecting factors 
•  Personal 
rule 

nexus 

•  Source rule 

Tax rates 

Exemptions 

Allowances 

Deductions 
Transfer  of 
family-
owned  or  closely  held 
businesses 
Double taxation relief 

•  Unilateral relief  The credit method: It is applicable to all EU countries.  
•  Bilateral treaties 
Compatibility  with  EU 
law 
Tax  revenue  in%  of 
total  tax revenue 

- 
No potential conflicts identified. 

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  Economics,  AGN  International  (2010)  and  Global  Property 
Guide. 
* Information provided by Lithuania upon invitation of the Commission to the Member States 

EN 

85 

   EN 

 
 
 
 
 
 
Luxembourg 

Taxes levied 

•  Estate tax 
• 

Inheritance tax 

Description 

- 

Inheritance taxes consists of both a succession 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 Luxembourg situated real estate owned by a 
deceased  who  was  not  resident  in  Luxembourg  at  the  time  of  his/her 
death.  

Inheritance tax is not levied on the total estate of the deceased but only 
on  the  portion  transferred  to  each  heir  and  in  view  of  the  relationship 
between the deceased and the heir. 

•  Other taxes 

- 

Connecting factors 
•  Personal 
rule 

nexus 

•  Source rule 

The residence principle: It applies to, with the exception of real estate 
located abroad, on the worldwide assets of the Luxembourg tax resident. 

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-aunts  and  great-nephew  or  great-
niece,  as  well  as  between  the  adoptant  and  the  adopted 
descendants 

o  on their intestate portion: 10% 

EN 

86 

   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 unrelated 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 

87 

   EN 

 
 
 
 
For non-residents (death transfer tax): 

In the direct ascending line: 2% 
 Between spouse having common children or descendants: 5%  

i. 
ii. 
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  direct  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  the  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  partner  more  than  3  years  prior  to 
the  opening  of  the  succession  where  the  descendants  of  a  prior 
marriage  or  partnership  of  the  deceased  have  inherited  the  full 
ownership of the assets or are liable for the pension or retribution.
•  The deceased’s real estate located abroad when the deceased is a 

Luxembourg resident. 

•  Families and personnel of diplomatic 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. 

A € 38,000 relief is available for the determination 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. 

Allowances 

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 

88 

   EN 

 
 
 
 
Debts  relating  to  real  estate  situated  abroad  are  not  deductible  and  a 
lump-sum  amount  proportional  to  their  value  is  deducted  from  the 
qualifying debts of the succession.  

Luxembourg does not provide specific rules of taxation for inheritance of 
going concerns, participations in family-owned or closely-held business. 

Transfer  of 
family-
owned  or  closely  held 
businesses 
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. 
No potential conflicts identified. 

Compatibility  with  EU 
law 
Tax  revenue  in%  of 
total  tax revenue 
Source: Maisto (2010), Goebel and Schaffner (2010), AGN International (2010) and Global Property Guide. 

0.34% in 2007. 

EN 

89 

   EN 

 
 
 
 
Netherlands 

Taxes levied 

•  Estate tax 
• 

Description 

- 

Inheritance tax  Dutch  inheritance  tax  is  due  on  the  value  of  all  that  is  acquired  by  an 
individual  or  a  legal  entity  as  a  result  of  the  death  of  a  person.  The  tax 
payable is calculated per beneficiary.  

•  Other taxes 
Connecting factors 
•  Personal 
rule 

nexus 

•  Source rule 

Tax rates 

- 

The  residence  and  nationality  principle: If  the  deceased  is  a  resident 
(or  a  deemed  resident)  of  the  Netherlands  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. 

No, if the deceased is neither a resident of the Netherlands nor a deemed 
resident at the time of his death no Dutch transfer tax is due with regard 
to property located in the Netherlands (this system was put in place as of 
January 1, 2010). 

The  tax  rates  for  spouses,  registered  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 

Group I 

Group I.a 

Group II 

0 - € 118.000    

10%  

€  118.000 - and more  

20%  

18%  

36%  

30% 

40% 

Properties inherited by two married people (incl. registered partners) are 
considered  one  acquisition  for  inheritance  tax  purposes  unless  they  are 
living  separated.  For  descendants  of  the  second  or  further  degree  there 
are  special  rates  in  order  to  avoid  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  organizations,  i.e.  charities  or 

social benefit organizations. 

•  Pension rights. 

EN 

90 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
Allowances 

Deductions 

•  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.  

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  closely  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 apply to both personal enterprises and 
enterprises  run  in  the  form  of  a  limited  liability  company  in  which  the 
deceased had an interest of at least 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  and  for  inheritance  tax  on  foreign 
immovable  property  and  assets  belonging  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  property 
total 
Netherlands tax due on total taxable income). 

/total  property  x 

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). 

No potential conflicts identified. 

Compatibility  with  EU 
law 
Tax  revenue  in%  of 
total  tax revenue 
Note: * Years in bracket is the year where the treaty entered into force.  

0.77% in 2008 (covers revenue from both inheritance and gift tax). 

EN 

91 

   EN 

 
 
 
 
 
Source: Maisto (2010), Sonneveldt (2010), AGN International (2010) and Global Property Guide. 

EN 

92 

   EN 

 
 
Poland 

Taxes levied 

•  Estate tax 
• 

Inheritance tax 

•  Other taxes 
Connecting factors 
•  Personal 
rule 

nexus 

Description 

- 

The inheritance tax is imposed on a person who acquires the deceased’s 
estate. This specific inheritance tax concerns 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. 

- 

The  nationality  and  residence  principle:  It  applies  to  acquisitions  of 
goods  and  property  rights,  if  at  the  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)  located  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,  descendants,  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 (€) 

(Excess over Tax-Free 
Amount) 
Up to 10,278 (€2,743) 
10,278 – 20,556 (€5,485)
Over 20,556 (€5,485) 

TAXABLE RATE 
ON DIFFERENT 
CATEGORIES 

I 

3%
5%
7%

II 

7%
9%
12%

III 

12%
16%
20%

EN 

93 

   EN 

 
 
 
 
 
 
 
 
Exemptions 

Polish inheritance tax is imposed only on natural persons. Legal persons 
are not liable to inheritance tax, so there cannot be any special exemption 
rules for legal persons. 

Exemptions  apply  for  individuals  who,  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 residence 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  things  [assets]  or  property  rights, 
including  family-owned  businesses,  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  individuals  from  groups  I  and  II  of  furnishings, 
bed linen, clothes, underwear and 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 their protection and conservation in 
accordance with the binding regulations.  

•  Special  exemption  rules,  dependent  on  which  group 

the 
beneficiary belongs to, apply if the estate is composed 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  historic  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  related  rights,  rights  to  inventive 
designs,  trademarks  and  decorative  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 individual retirement account. 

EN 

94 

   EN 

 
 
 
 
Allowances 

Group I: PLN 9,637.  

Group II: PLN 7,276.  

Group III: PLN 4,902.  

See  under  ‘Tax  rates’  for  a  definition  of  the  different  groups  of 
beneficiaries. 

Deductions 

Debts and liabilities such as:  

•  The costs of medical treatment and 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 funeral and gravestone.  
•  The  costs  of  inheritance  proceedings,  remuneration  of  the 

executor of the will, legacies and testamentary instructions. 

•  Legitim  payments  and  other  liabilities  under  the  inheritance 

provisions of the Civil Code. 

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  individuals  who,  at  the  moment  of 
acquiring the estate, were citizens of Poland or any other country of the 
European  Union  or  EFTA,  or  whose  place  of  residence  was  situated  in 
the territory of the Republic of Poland or EU & EFTA. 

Transfer  of 
family-
owned  or  closely  held 
businesses 

The  exemption  does  not  cover  residential  buildings,  buildings  used  for 
breeding poultry or animals, greenhouses, and fruit storehouses. 

Double taxation relief 

•  Unilateral relief  No unilateral relief exists in Poland. The only measure applicable for the 
purposes  of  avoidance  of  double  taxation  of  inheritance  is  the  general 
competence  provided  to  the  Minister  of  Finance  to  decide  in  a  way  of 
regulation/decree to refrain from collecting particular tax. 

•  Bilateral treaties* Inheritance  and  estate  tax  treaties  are  in  force  between  Poland  and  the 
following  Member  States:  Czech  Republic  (1925),  Slovakia  (1925), 
Austria (1928), and Hungary (1931). 
No potential conflicts identified. 

Compatibility  with  EU 
law 
Tax  revenue  in%  of 
total  tax revenue 
Note: * Years in bracket is the year where the treaty entered into force.  
Source: Maisto (2010), Kardach and Olesinska (2010), AGN International (2010) and Global Property Guide. 

0.14% in 2009 (covering revenue from both inheritance and gift taxes). 

EN 

95 

   EN 

 
 
 
 
EN 

96 

   EN 

 
 
 
 
Slovenia 

Taxes levied 

•  Estate tax 
• 

Inheritance tax 

•  Other taxes 
Connecting factors 
•  Personal 
rule 

nexus 

•  Source rule 

Tax rates 

Description 

- 
Inheritance tax is levied on the transfer of properties upon death and are 
payable to the municipal government by the beneficiary. 
- 

The  residence  principle:  It  applies  to  immovable  property,  movable 
property, or property right and rights in Slovenia. Securities and cash are 
considered as movable property.  
Yes, inheritance tax is paid on property inherited, including securities, by 
a non-resident that inherits property located in Slovenia. 
The heirs are classified as follows: 

•  Class 1: Parents, siblings, and their descendants 
•  Class 2: Grandparents 
•  Class 3: Others 

TAX BASE, €    

TAX RATE

Class 1  

Class 2 

Class 3 

Up to €10,000  

€ 10,000 - €60,000  

€ 60,000 - €160,000  

€ 160,000 - €360,000  

5%  

6%  

7%  

8%  

€ 360,000 - €660,000  

10%  

€ 660,000 - €1,060,000  

12%  

€ 1,060,000 – €1,460,000  

14%  

8%  

9%  

10%  

11%  

13%  

15%  

17%  

12% 

16% 

20% 

25% 

30% 

35% 

39% 

Exemptions 

The taxable base for immovable property is 80% of its market value. 
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; 
for 

Legal  persons  of  private 
religious, 
humanitarian,  educational,  cultural,  charitable  and  certain  other 
activities. 

law  established 

•  Movable property up to a value of € 5,000. 

A tax threshold of € 5,000 applies. 
- 
- 

Allowances 
Deductions 
Transfer  of 
family-
owned  or  closely  held 
businesses 
Double taxation relief 

EN 

97 

   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. 
- 
No potential conflicts identified. 

•  Bilateral treaties 
Compatibility  with  EU 
law 
Tax  revenue  in%  of 
total  tax revenue 
Source:  Survey  performed  by  Deloitte  for  Copenhagen  Economics,  AGN  International  (2010)  and  Global  Property 
Guide. 

- 

EN 

98 

   EN 

 
 
Spain 

Taxes levied 

•  Estate tax 
• 

Inheritance tax 

•  Other taxes 

Connecting factors 
•  Personal 
rule 

nexus 

•  Source rule 

Tax rates 

Description 

- 

The  inheritance  tax  is  “a  transferred  tax”,  which  means  that  the 
legislative  and  revenue  powers  of  the  tax  are  shared  between  the State 
and the Autonomous Communities.  

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  taxable  base  is  the  value  declared, 
although there are special valuation rules.  

The  residence  principle: Residents  in  Spain  has  to  pay  the  inheritance 
tax  in  the  Autonomous  Community  they  reside  in  and  thereby  also 
determines which tax system they are under.  
Non-residents are taxed under State legislation (in contrary to residents) 
and a source applies to movable and immovable assets and rights located 
in Spain. 

In the Autonomous Communities that have adopted their own scale (the 
Balearic  Islands,  Cantabria,  Catalonia,  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  Communities  the  State  legislation  is 
applied.  The  State  scale  to  be  applied  to  the  assessment  base  is  as 
follows:  

REST OF
ASSESSM ENT
BASE, UP TO
(EUROS)

PERCENTAGE
RATE
APPLICABLE

7,993.46 

7,987.45 

7,987.45 

7,987.45 

7,987.45 

7,987.45 

7,987.45 

7,987.45 

7,987.45 

7,987.45 

39,877.15 

39,877.16 

79,754.30 

159,388.4

398,777.5

above 

7.65

8.50

9.35

10.20

11.05

11.90

12.75

13.60

14.45

15.30

16.15

18.70

21.25

25.50

29.74

34.00

ASSESSM ENT
BASE
(UP TO)

0.00 

7,993.46 

15,980.91

23,968.36 

31,955.81 

39,943.26 

47,930.72 

55,918.17 

63,905.62 

71,893.07 

79,880.52 

119,757.67 

159,634.3 

239,389.13 

398,777.54 

797,555.08 

TOTAL TAX
LIABILITY
(EUROS)

- 

611.50 

1,290.43 

2,037.26 

2,851.98 

3,734.59 

4,685.10 

5,703.50 

6,789.79 

7,943.98 

9,166.06 

15,606.22 

23,063.25 

40,011.04 

80,655.08 

199,291.4

99 

   EN 

EN 

 
 
 
 
 
 
 
 
Description 

The  coefficient  depends  on  both  kinship  and  pre-existing  wealth  of  the 
beneficiary: 

PRE-EXISTING
W EALTH
(EUROS)

0 - 402,678.11

402,678.11 - 2,007,380.43

2,007,380.43 - 4,020,770.98

Over 4,020,770.98 

KINSHIP
Groups I and II

KINSHIP
Group III

10.000

10.500

11.000

12.000

15.882

16.676

17.471

19.059

KINSHIP
Group IV

20.000

21.000

2.200

24.000

With: 

•  Group  I:  Descendants  and  adopted children  under  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  collateral  relatives,  more  distant 

relatives and nonfamily. 

Exemptions 
Allowances 

- 
CATEGORY  

I  

II  

III  

IV  

 GROUP RELATIONSHIP 

ALLOWANCE 

direct and legally adopted descendants under 21 years of age:  

€47,859 max. 

direct and legally adopt ed descendants of 21 years or more, spouse,  

and direct and adoptive ascendants:  

siblings, uncles, aunts, nephews, nieces, and ascendants or  

descendants by marriage:  

cousins and other more distant relatives and unrelated persons  

or unknown heirs:  

€15,957 

€7,993 

none 

With  the  different  categories  being  the  same  as  those  stated  under  ‘Tax 
rates’. 

Special allowances apply to disabled individuals: 

CONDITION OF BENEFICIARY 

Disability: 65% and below:    

Disability: more than 65%:    

ALLOWANCE 

€47,859 

€150,253 

In addition to these tax reductions, other specific ones are also envisaged 
depending on the type of assets transferred. 

A  deduction  of  50%  - or  99%  when  the  successor  is  the  spouse, 
descendant  or  adopted  child- is  applied  if  the  deceased  had  his  habitual 
residence  at  the  time  of  his  death  and  during  the  five  years  prior  to  the 
day before the tax becomes due in Ceuta or Melilla.  

Deductions 

EN 

100 

   EN 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Description 

The Autonomous Communities may regulate new deductions. 

A reduction of 95% of the value of the business may be made in addition 
to  any  other  applicable  reductions,  provided  that  the  acquisition  is  kept 
for at least ten years after the death of the deceased. 

Transfer  of 
family-
owned  or  closely  held 
businesses 

Double taxation relief 

•  Unilateral relief  The  credit  method:  Applies  only  for  residents  and  allows  them  to 
deduct from their tax liability the smaller 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 effective mean tax rate to the 
capital gains corresponding to the assets and rights abroad when a 
similar tax has been levied on them abroad. 

•  Bilateral treaties* Inheritance treaties are in force between Spain and the following Member 

Compatibility  with  EU 
law 

States: Greece (1919), Sweden (1963), and France (1963). 
The following potential conflict has been identified: 

•  Beneficiaries  are  subject  to  different  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 
Note: * Years in bracket is the year where the treaty entered into force.  
Source: Maisto (2010), Spain (2010), AGN International (2010) and Global Property Guide. 

0.81% in 2008 (incl. revenue from both inheritance and gift tax). 

EN 

101 

   EN 

 
 
 
 
United Kingdom 

Taxes levied 

•  Estate tax 

Inheritance tax 

• 
•  Other taxes 
Connecting factors 
•  Personal 
rule 

nexus 

•  Source rule 

Tax rates 

Description 

Estate  tax  imposes  a  charge  on  the  value  of  an  individual’s  estate  on 
death. 
- 
- 

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).  

Yes,  an  individual  who  is  not  domiciled  in  the  UK  is  subject  to 
inheritance  tax  only  on  their  estate  situated  in  the  UK.  This  is  achieved 
by excluding “excluded property” from their estate. 

Assets over the value of the tax threshold are charged a 40% inheritance 
tax. 

If  the  deceased  dies  within  7  years  of  making  a  Potentially  Exempt 
Transfer  (PET)  the  transfer  becomes  chargeable  to  inheritance  tax  upon 
death  at  the  death  rate  subject  to  a  sliding  scale  based  on  the  length  of 
time the deceased lives after making the 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  adjusted  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  associations,  business  and  agricultural 
properties  as  well  as  legacies  for  national  purposes  (fully  or 
partly).   

The tax threshold per person is £325,000. The allowance is transferable 
between spouses and civil partners.  
The  debts  of  the  deceased  can  be  deducted  as  well  as  any  liability  for 
income  tax  arising  on  death.  Liabilities  that  are  encumbrances  on  any 
property  shall  reduce  its  value.  Deductions  can  also  be  made  for 

Allowances 

Deductions 

EN 

102 

   EN 

 
 
 
 
 
 
 
Transfer  of 
family-
owned  and  closely  held 
businesses 

Double taxation relief 

reasonable funeral expenses and the administration of non-UK assets.  

Any  transfer  of  value  (under  the  inheritance  tax  rules)  made  by  a  close 
company  shall  be  apportioned  to  its  shareholders,  and  inheritance  tax 
charged  according  to  those  individuals'  particular  circumstances,  albeit 
that any tax due is primarily recoverable from the company.  

•  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), Italy (1968), Ireland (1978), Netherlands 
(1980), and Sweden (1981).   

No potential conflicts identified. 

Compatibility  with  EU 
law 
Tax  revenue  in%  of 
total  tax revenue 
Note: * Years in bracket is the year where the treaty entered into force.  
Source: Maisto (2010), Mckeever and Skeffington (2010), AGN International (2010) and Global Property Guide. 

0.68% in 2005. 

EN 

103 

   EN 

 
 
B) Member States without inheritance or estate taxes 

The survey has revealed that 9 of the 27 Member States do not have an inheritance 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 treaties despite they do not have an inheritance tax 
themselves. 

This section provides a brief overview of the relevant other taxes in these 9 Member States. 

EN 

104 

   EN 

 
 
 
Relevant taxes upon death in Member States without inheritance and estate tax 

Austria 

Relevant taxes and bilateral tax treaties 
Acquisitions of land upon death are 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). 
Donation  taxes  are  imposed  on  the  transfer  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. 
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. 
Income or assets derived through inheritance are exempt from personal income tax, 
with the exception of royalties gained from inherited intellectual/artistic property. 
Sale of an inherited asset would however be subject to capital gains tax, where the 
taxable profit would be calculated 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. 
A  stamp  duty  is  payable  by  the  heir  at  5%  of  the  declared  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  available  in  Malta  with  respect  to  Maltese 
stamp  duty,  current  revenue  practice  is  not  to  impose  stamp  duty  on  transfers of 
foreign immoveable property and foreign marketable securities upon death. 
A stamp duty applies upon the death of an individual on the transfer 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. 
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  right  over  real  estate 
properties by way of inheritance, if the inheritance 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 the value of the real 
estate properties included in the inheritance. 
- 
- 

Cyprus 

Estonia 

Latvia 

Malta 

Portugal 

Romania 

Slovakia 
Sweden 

Inheritance  tax  treaties  are  in  force  between  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 Economics, Fraberger and Stangl (2010), Fernandes Ferreira 
and Gonçalves (2010), Riikjärv and Vanasaun (2010), Kristoffersson (2010), Maisto (2010), AGN International (2010) 
and Global Property Guide. 

EN 

105 

   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 
QUERIES  

OF 

Countries involved 

1.   

Lack 
or 
inheritance 
information38 

complexity 
gift 
and 

of 
tax 

2.   

3.   

4.   

Explicit 
taxation of inheritances39 

double/ 

higher 

Scope  of  allowances, 
reliefs and deductions40 

tax 

Burdensome 
tax  procedures/ 
difficulties  with  foreign  tax 
administrations41 

41 

25 

8 

3 

DE,  FR,  UK,  MT,  GR, 
ES,  HU,  CZ,  NL,  IE, 
IT,PT, AT, SE, FI, LT 

BE,  NL,  PL,  DE,  IE, 
UK,  FR,  GR,  IT,  PL, 
MT 

UK, FR, ES 

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 

106 

   EN 

 
 
 
                                                 
ANNEX 6: SME TEST 

with 

SMEs 

See section 2.2. 

Consultation 

(1) 
representatives 

A  summary  of  the  stakeholders'  replies  is 
the  consultation  website.  The 
available  on 
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 website42 . 

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. 

(2) Preliminary assessment of businesses 
likely to be affected 

(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 
impact  assessment 
the 
contains  no  indication  that  the  selected  options 
might  result  in  a  disproportionate  burden  for 
SMEs. Consequently, there is no need for SME 
specific measures.  

42  
GEEF%20contribution%20to%20EU%20consultation%20on%20inheritance%20tax.pdf  

http://www.efb-geef.eu/documents/EFB-

EN 

107 

   EN