COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL AND THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE Tackling cross-border inheritance tax obstacles within the EU
Date: 2011-12-15
Institutions: European Commission
Subjects: European tax cooperation, capital transfer tax, cross-border cooperation, double taxation

EUROPEAN COMMISSION 

Brussels, 15.12.2011 
COM(2011) 864 final 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL AND THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE 

Tackling cross-border inheritance tax obstacles within the EU 

 
 
 
 
  
 
1. 

INTRODUCTION  

In  its  "Europe  2020  strategy"  for  smart,  sustainable  and  inclusive  growth  in  the  EU1,  the 
European  Commission  stresses  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 in giving them 
the confidence to do so.  

Within the EU all citizens are able to cross borders freely to live, work study or retire, and to 
purchase property and invest in other EU Member States. However, the Single Market Act2
and the "EU Citizenship Report"3
 have identified many legal and practical obstacles that deter 
people from actually exercising these rights across borders within the EU, as well as actions 
that need to be taken in a whole range of areas so that EU citizens' rights are fully effective. 
Taxation is one of these areas. The European Commission's Communication of 20 December 
2010 on "Removing cross-border tax obstacles for EU citizens"4 examined the most pressing 
tax  problems  that  citizens  face  when  active  across  borders  within  the  EU  and  outlined 
solutions to these problems.  

Inheritances  received  across  borders  are  one  of  the  problem  areas  identified  in  the 
Communication of 20 December 2010. The problems consist mainly of double taxation and 
discriminatory tax treatment. The snapshot of citizens' and businesses' concerns in the Internal 
Market published in August this year confirmed that inheritance taxes feature among the 20 
top problems faced by citizens and businesses when active across borders.5  

The Communication on "Double taxation in the Single Market"6 recognised that existing and 
planned instruments to relieve double taxation of income and capital cannot efficiently tackle 
cross-border  inheritance  tax  issues  and  that  separate  solutions  would  be  required  in  that  tax 
field.  

the  present  Communication 

Therefore, 
together  with  a 
Recommendation7, and that will be accompanied by Staff Working Papers8, outlines solutions 
to these cross-border inheritance tax problems.  

is  being  adopted 

that 

The approach in the package adopted today reflects the Commission's view that some cross-
border tax problems can be solved effectively through coordination of national legislation (as 
well as cooperation in the area of enforcement). The Commission underlined some years ago9 
that in many cases it may be sufficient for Member States to abide by the rules set out in the 
Treaties  and  to  implement  unilaterally  certain  well  defined  solutions,  in  order  to  eliminate 
discrimination  and  double  taxation  and  reduce  the  compliance  costs  for  businesses  and 

1 
2 
3 
4 
5 

6 
7 
8 
9 

COM(2010) 2020  
COM(2011) 206 
COM(2010) 603 
COM(2010) 769 and Staff Working Paper SEC(2010) 1576 
The  Single  Market  through  the  eyes  of  the  people:  a  snapshot  of  citizens'  and  businesses'  views  and 
concerns - Staff Working Paper SEC(2011) 1003 
COM(2011) 712 
C(2011) 8819 
SEC(2011) 1488, SEC(2011) 1489 and SEC(2011) 1490 
Commission  Communication  on  "Coordinating  Member  States'  direct  tax  systems  in  the  Internal 
Market" COM(2006) 823 of 19 December 2006 

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citizens associated with being involved with more than one tax system. Coordination of this 
type  would  also  strengthen  Member  States'  ability  to  protect  their  tax  revenues  and  avoid 
litigation concerning individual provisions.  

The  present  initiative  is  also  designed  to  complement  the  Commission  proposal  for  a 
Regulation  “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”,  adopted  in  October  200910.  The  proposed  Regulation  would  provide  a 
mechanism for determining which Member State's succession law would apply in the case of 
an inheritance across borders to which otherwise several, possibly conflicting, sets of national 
rules might apply. That draft Regulation does not deal with the taxation issues that arise in the 
case of cross-border inheritances.  

2. 

CURRENT RULES ON INHERITANCE TAXATION  

There  is  no  EU-wide  law  in  the  area  of  inheritance  taxation11  so  Member  States  are  free  to 
design their rules in that area as they wish provided that they do not discriminate on the basis 
of  nationality  and  do  not  apply  unjustified  restrictions  to  the  exercise  of  the  freedoms 
guaranteed by the Treaty on the Functioning of the EU.  
At present, Member States' rules on the taxation of inheritances vary considerably. Eighteen 
levy specific taxes upon death while nine (Austria, Cyprus, Estonia, Latvia, Malta, Portugal, 
Romania, Slovakia and Sweden) do not do so but some of those nine tax inheritances under 
other headings such as income tax. Member States applying inheritance taxes differ regarding 
whether they tax the estate or the heir i.e. whether they tax on the basis of a personal link of 
the heir or the deceased, or both, to those Member States. They may treat as a personal link 
the residence, domicile or nationality of the deceased or of the heir12 and some Member States 
use  more  than  one  of  these  factors.  The  meaning  of  these  terms  may  also  differ  from  one 
Member State to the other. Furthermore, most Member States apply inheritance tax to assets 
located in their jurisdictions even if neither the deceased nor the heir has a personal link with 
the jurisdiction in question. While effective rates of inheritance tax may be low in the case of 
inheritances passed to heirs who are closely  related to the  deceased, the rates can reach 60-
80% in some Member States in cases where the deceased and the beneficiary are not related. 
Some of the nine Member States that do not apply inheritance taxes have abolished them in 
recent  years.  This  may  be  because  of  certain  drawbacks  in  such  taxes.  One  is  that  the  rich 
often avoid them by using tax planning so that the burden falls on the less wealthy. Another 
disadvantage is the public perception that taxation on death is unfair in that it is taxing wealth 
that has already been taxed. However, this initiative does not call into question the existence 
of inheritance taxes, but focuses on the difficulties that EU citizens can face when they inherit 
across borders. 

10 
11 

12 

COM(2009) 154 
Inheritance tax is taken to mean taxes levied upon the death of an individual, irrespective of the name of 
the tax, of the manner in which it was levied, whether it was applied at national, regional or local level 
and whether it was imposed on the estate or on the heir. It also includes taxes on gifts where these are 
made in anticipation of later inheritances and where they are taxed under the same or similar provisions 
as inheritances. See Annex I for non-exhaustive list of relevant taxes in Member States. 
An individual could be "domiciled" (i.e. considered a permanent resident because of strong ties) in one 
country  and  at  the  same  time  be  "habitually  resident"  in  another  country  and  be  a  national  of  a  third 
country.  

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3. 

THE PROBLEMS AND THEIR SCALE  

Studies demonstrate that increasing numbers of EU citizens are moving from one country to 
another within the European Union during their lifetimes to live, study, work and retire; the 
number  of  EU-27  citizens  that  reside  in  a  Member  State  other  than  their  State  of  origin 
reached  approximately  12.3  million  in  2010,  an  increase  of  3  million  compared  to  2005.13 
Studies also show that cross-border real estate ownership in the EU increased by up to 50% 
between  200214  and  2010  and  that  there  is  also  a  massive  growing  trend  in  cross-border 
portfolio investment15.  

Given these statistics, it is likely that more assets may be inherited across borders in the future 
and therefore that more inheritance tax issues will arise. At present, the number of potential 
cross-border  inheritance  cases  is  conservatively  estimated  at  between  290,000  and  360,000 
per  year16.  SME  organisations  frequently  point  to  the  particularly  damaging  effects  of 
inheritance taxes on small businesses, and say that the application of double taxation would 
aggravate  the  problems  further17.  There  is  already  some  evidence  of  an  increase  in  cross-
border  inheritance  tax  problems  in  recent  years.  The  Commission  has  received  many  more 
complaints  and  enquiries  from  EU  citizens  in  this  area  in  the  last  decade  than  ever  before. 
Furthermore, the Court of Justice of the European Union (the Court), which never dealt with 
an inheritance tax case before 2003, has, since then had to make decisions in ten such cases. 
In cross border situations the following difficulties may arise: 

(1) 

(2) 

Member States may discriminate between cross-border inheritances and inheritances 
with  no  cross-border  element.  In  other  words,  they  may  apply  a  higher  rate  of 
inheritance  tax  where  the  assets,  deceased  persons  and/or  heirs  are/were  based  in 
other countries than they would apply in purely domestic situations (i.e. in the case 
of  inheritances  of  assets  located  in  the  territory  of  the  taxing  Member  State 
bequeathed  by  previously  domestically  resident  deceased  persons  to  domestically 
resident heirs).  

Where two or more countries have taxing rights over the same inheritance, situations 
of unrelieved double or multiple taxation may arise and, unlike in the case of income 
and capital taxation, there are few national or international arrangements in place to 
relieve such double/multiple taxation in an effective way. 

Discrimination is prohibited under the principles of the EU Treaty, and the Court has already 
found  aspects  of  Member  States'  inheritance  tax  laws  discriminatory  in  eight  out  of  the  ten 
cases examined since 2003. However, there may be many cases of discrimination which have 
not reached the Court, in particular because court cases may involve high costs for taxpayers. 

13 

14 
15 
16 

17 

Eurostat  data  and  the  Copenhagen  Economics  Study  on  Inheritance  Taxes  in  EU  Member  States  and 
Possible Mechanisms to Resolve problems of Double Inheritance Taxation in the EU, August 2010, 
See Copenhagen Economics Study for details of these other studies – page 63 - 64 
See Impact Assessment on solutions to cross-border inheritance tax problems – SEC(2011) 1489. 
Impact  Assessment  on  solutions  to  cross-border  inheritance  tax  problems  –  SEC(2011)  1489.  Please 
note  that  the  methodology  used  is  likely  to  underestimate  the  actual  figures  because  the  figures 
indicated could only take account of cross-border cases of real estate ownership and not of other assets 
such as bank savings. 
See  European  Family  Businesses  –  GEEF  contribution  to  the  Commission's  Consultation  on  possible 
approaches  to  tackling  cross-border  inheritance  tax  obstacles  within  the  EU  -  http://www.efb-
geef.eu/documents/EFB-
EEF%20contribution%20to%20EU%20consultation%20on%20inheritance%20tax.pdf 

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However, the Court has found that double taxation caused by the parallel exercise of taxing 
rights by two or more Member States is not in breach of the Treaty18.  

In  these  circumstances,  those  receiving  inheritances  across  borders  may  potentially  face  tax 
problems leading to inordinately high levels of inheritance tax. The overall tax bill in the case 
of some inheritances received across borders could potentially be so high that an heir might 
have to take out a loan or sell the inherited property in order to pay the tax bills. In this respect 
it may 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.  The 
following example of double taxation of a cross-border inheritance is based on a case reported 
through the Commission's Your Europe Advice service19: 

Example: A Dutch citizen pursuing his career in France 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. The Dutch citizen 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 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. 

While at individual level citizens can be affected heavily by double taxation, revenues from 
domestic and cross-border inheritances taxes account for a very small share - less than 0.5% - 
of total tax revenues in EU Member States. Cross-border cases alone must account for far less 
than that figure.  

18 
19 

The Block case (C-67/08) 
See  Impact  Assessment  on  solutions  to  cross-border  inheritance  tax  problems,  pages  21-22,  for  other 
real-life examples 

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Inheritance tax revenues as a share of total tax revenues, EU-15, 1995-2007 and 8 new Member States, 
2004-2007

EU-15

EU-8

0,55%

0,50%

0,45%

0,40%

0,35%

0,30%

0,25%

0,20%

0,15%

0,10%

0,05%

0,00%

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Note:  The  eight  new  Member  States  in  the  sample  are:  Cyprus,  Czech  Republic,  Estonia, 
Hungary, Lithuania, Malta, Slovakia, and Slovenia. Data were not available for the other four 
new Member States. 

Source:  Copenhagen 
Study 
http://ec.europa.eu/taxation_customs/taxation/gen_info/economic_analysis/tax_structures/arti
cle_5985_en.htm. 

on  National 

Economics 

based 

Tax 

List: 

SUGGESTED SOLUTIONS 

4. 
The Commission believes that cross-border inheritance tax problems may be resolved without 
any harmonisation of Member States' inheritance tax rules which thus would remain a matter 
of policy choice for each Member State. It may be sufficient simply to ensure that Member 
States' rules interact more coherently with each other so as to reduce the potential for double, 
or  even  multiple,  taxation  of  inheritances.  Besides,  by  virtue  of  the  fundamental  freedoms 
enshrined in the Treaties, Member States must in any event abstain from inheritance taxation 
which would discriminate against cross-border situations. Better knowledge of the applicable 
rules by all stakeholders could further contribute to compliance with these freedoms.  

As regards double  taxation, the accompanying  Commission Recommendation suggests how 
Member  States  could  cooperate  to  provide  comprehensive  double  taxation  relief  for  cross-
border  inheritances  within  the  EU.  Given  that  Member  States  have  few  bilateral  treaties  to 
eliminate  double  taxation  of  inheritances20  and  seem  not  to  have  taken  the  initiative  to 
negotiate  more  such  treaties,  the  Recommendation  focuses  instead  on  improving  Member 
States' existing national measures to relieve double taxation of inheritances. In the short term, 
without  any  prejudice  to  the  conclusion  in  the  future  of  bilateral  or  multilateral  double 

20 

Annex  II  to  the  present  Communication  gives  an  overview  of  the  existing  double  tax  treaties  on 
inheritances. 

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taxation  arrangements,  the  Commission  wishes  to  encourage  a  broader  and  more  flexible 
application of these existing national solutions to double taxation.  

The Recommendation sets out solutions for cases in which several Member States have taxing 
rights,  because  of  the  location  of  the  assets  included  in  the  inheritance  and  because  of 
personal  links  of  the  deceased  and/or  the  heir  with  those  States.  Furthermore,  the 
Recommendation  addresses  the  case  of  multiple  personal  links,  due  either  to  the  diverging 
situations of the deceased and the heir or to the fact that one single person has personal links 
to more than one Member State (e.g. resident in one the State and domiciled in another).  

Member States are invited to introduce the solutions suggested either in legislation or by way 
of  administrative  measures  which  may  entail  adopting  a  more  flexible  interpretation  of 
existing provisions. The ultimate aim of such measures is to ensure that the overall tax burden 
on a cross-border inheritance is no higher than in an internal situation in one or other of the 
Member States involved. While these solutions are unlikely to have major budgetary impacts 
on Member States' revenues, given the low share that inheritance taxes represent of Member 
States' total revenue, the positive effects on the individuals concerned could be considerable. 

As regards tax discrimination, the accompanying Commission Staff Working Paper21 sets out 
the  EU  case-law  principles  for  non-discriminatory  inheritance  taxation  and  aims  to  explain 
and  illustrate  the  operation  of  the  fundamental  freedoms.  EU  citizens  would  thus  be  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  law22  and  would  thus  support  and  complement  the  Commission's  ongoing  infringement 
actions against discriminatory inheritance tax provisions. In these circumstances EU citizens 
would be less likely to encounter discriminatory taxation in the future.  

The  solutions  proposed  would  also  be  applicable  and  beneficial  to  those  who  inherit  SMEs 
across borders.  

While  the  Commission  is  not  proposing  any  legislative  measure  at  this  time  in  relation  to 
double taxation, it may do so at a later stage if this proves necessary. The Commission will, 
therefore, carefully monitor Member States' laws and practices in taxing inheritances to assess 
what, if any, changes are made as a result of the solutions proposed today and whether these 
changes effectively tackle the problems outlined. 

CONCLUSION AND FOLLOW-UP 

5. 
Inheritance tax rules were not designed to cope with the reality that citizens now change their 
countries of residence more frequently and purchase and invest abroad. Appropriate solutions 
must be found to address cross-border inheritance tax problems that are likely to increase in 
the future if no action is taken. That is why the Commission: 

• 

21 
22 

has adopted a Recommendation for a comprehensive system of double taxation relief 
for cross-border inheritances within the EU and will launch discussions with Member 
States to ensure appropriate follow-up to this Recommendation;  

SEC(2011) 1488 
Note that where an inheritance covers business assets and a selective advantage is granted in the form of 
a differential inheritance tax treatment, such a measure should also be in line with EU State aid rules 
which are not dealt with in detail in the Staff Working Paper. 

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• 

• 

• 

is ready to assist Member States in bringing their inheritance tax laws into line with 
the EU Treaty but will also, in its role as guardian of the Treaties, take the steps it 
considers  necessary  to  act  against  discriminatory  features  of  Member  States' 
inheritance taxation rules; 

will  prepare  an  evaluation  report  in  three  years  time  based  on  monitoring  Member 
States' practices and any changes made as a result of the initiatives presented today. 

may, if the report demonstrates that cross-border inheritance tax problems persist and 
subject  to  the  results  of  an  Impact  Assessment,  make  an  appropriate  proposal  to 
eliminate those obstacles.  

The Commission invites the Council, the European Parliament, national parliaments and the 
European  Economic  and  Social  Committee  to  examine  this  Communication  and  related 
documents and to give their full support to the present initiative.  

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ANNEX I. LIST OF TAXES APPLIED TO INHERITANCES IN MEMBER STATES 

Country 

Belgium 

Taxes/other duties 

Droits  de  succession  et  de  mutation  par  décès  /  Rechten  van  successie  en  van 
overgang bij overlijden, (Inheritance tax and transfer duty upon death) 

Bulgaria 

Данък върху наследствата (Inheritance tax) 

Czech Republic 

Daň dědická (Inheritance tax) 

Denmark 

Germany 

Estonia 

Ireland 

Greece 

Spain 

France 

Italy 

Cyprus 

Latvia 

Afgift af dødsboer og gaver (Tax on Estates of deceased persons and Gift Tax) 

Erbschaftsteuer (Inheritance tax) 

No inheritance tax 

Various  charges  including  income  and  capital  gains  tax  in 
certain instances 

Inheritance and gift tax 

Φόρος  κληρονοµιάς,  δωρεών  και  γονικών  παροχών  (Tax  on  inheritance,  gifts  and 
parental provision) 

Impuesto sobre sucesiones y donaciones (Succession and gift duty) 

Droits de mutation entre vifs (donations) et par décès (successions), (Succession duty 
- Transfer duty) 

Imposta sulle successioni e donazioni (Succession and gift duty) 

No inheritance tax 

Αποθανόντων Προσώπων –(Tax on land transfers) 

No inheritance tax 

Lithuania 

Paveldimo turto mokesčio (Inheritance tax) 

Luxembourg 

Droits de succession (Inheritance tax) 

Hungary 

Malta 

Öröklési illeték (Inheritance tax) 

No inheritance tax 

Transfer duty in certain instances 

Netherlands 

Schenk- en erfbelasting (Inheritance and gift tax ) 

Austria 

No inheritance tax 

Stiftungseingangssteuer,  Grundwerbsteuer  (Tax  on 
transfers and contribution to private foundations) 

land 

Poland 

Portugal 

Romania 

Slovenia 

Slovakia 

Finland 

Sweden 

Podatek od spadków i darowizn (Tax on inheritances and gifts)  

No inheritance tax 

Imposto do selo (Stamp duty) 

No inheritance tax 

Davek na dediščine in darila (Inheritance and Gift Tax) 

No inheritance tax 

Perintövero/Arvsskatt (Inheritance tax) 

No inheritance tax 

Various charges including income and capital gains in tax in 
certain instances 

UK 

Inheritance tax 

Source : Taxes in Europe Database (2011) and IBFD (2011) 

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ANNEX II. EU MEMBER STATES' DOUBLE TAX CONVENTIONS ON 
INHERITANCES 

Note: √ means in force since before 1 January 2000; √* means new since 1 January 2000. The 
treaties  between  the  Nordic  countries  are  part  of  a  multilateral  agreement  signed  by  the 
Nordic countries in 1983: Nordiska skatteavtalet (Nordic convention), signed in Helsinki on 
22 March 1983. In the matrix each treaty is shown twice, e.g. a treaty between UK and SE is 
marked for both SE-UK and UK-SE. 

Source: Copenhagen Economics based on IBF, Tax treaties database. 

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